The Dutch competition authority (“ACM“) recently confirmed that the obligation to cooperate fully with an inspection/during a dawn raid is of utmost importance and of great relevance to companies under investigation. On 10 December 2019, the ACM issued an infringement decision fining an unidentified company EUR 1.85 million for obstructing an ACM inspection. This was on the basis that company employees deleted/destroyed potential evidence by deleting electronic chat and messaging services during the inspection.
The ACM’s decision is available here.
Relevant facts of the case
The ACM performed an inspection at the premises of the company concerned back in 2018. The company in question was under investigation for alleged anti-competitive practices in violation of Dutch and EU competition laws.
The ACM’s inspectors informed the company’s manager at the outset of the dawn raid of their rights and obligations and explicitly emphasised that all members of the company were obliged by law to cooperate with the ACM throughout the entire inspection. As is the case with inspections performed by EU officials (and officials in other EU Member States), the obligation to cooperate also extends to an obligation not to destroy, withhold or in any other way dispose of (potential) evidence. Despite these warnings, a number of employees of the inspected company [allegedly] deleted numerous electronic chat and messaging conversations and exited respective chat groups during the course of the inspection.
Actions with significant consequences
The ACM considered this behaviour an infringement of the obligation to cooperate. It determined that the deleted conversations/groups could be relevant as potential evidence in the context of its investigation. As a result, the ACM initiated a proceeding against the company for the procedural breach of non-cooperation and concluded that the company ought to be fined. The ACM initially considered that an adequate fine would be EUR 2.3 million. Nonetheless, on the basis that the company’s management and in-house counsel had promptly informed the ACM inspectors of the infringing activity and, subsequently, provided the ACM with all relevant information and available data (e.g. a list of the deleted chat groups as well as the names of the employees involved), the ACM reduced the fine by 20% to EUR 1.85 million in recognition of the company’s full cooperation.
Background: The authority’s powers to enforce
As a supervisory authority, the ACM is competent to uncover and sanction competition-distorting practices. For that purpose, the authority may perform inspections of a company’s premises and access/seize an unlimited amount of data and/or documents. It addition, the ACM can demand full cooperation from every employee of the company under investigation – throughout the entire inspection (Article 5:20 of the Dutch General Administrative Law, “Algemene wet bestuursrecht”). This obligation to cooperate especially comprises the prohibition to withhold or destroy any evidence and the duty to leave all documents untouched.
Pursuant to Article 20 of EU regulation 1/2003, the European Commission has similar powers to enforce and reprimand these types of procedural infringements of EU competition law. In fact, the European Commission has sanctioned similar infringements regarding the obligation to cooperate in the past. Also, further jurisdictions have similar powers and sanctioning mechanisms and have, in fact, sanctioned such procedural infringements previously (theseinclude the German, French and the Belgian competition authorities with whom the ACM has a very close working relationship).
High fine for limited damage? It’s about the principle!
It is interesting to note that the ACM considered that a procedural infringement had taken place on the basis of the mere possibility that evidence relevant to the ACM’s investigation into anti-competitive behaviour of the company could have been impeded and/or destroyed. Even though the ACM was eventually not able to reconstruct any of the lost content, it considered the mere fact that the electronic conversations and chat groups (in this case: WhatsApp messages and groups) were deleted in the course of the inspection (andthat multiple employees were part of these groups and/or that messages were exchanged between employees), in-and-of-itself, an indication of the data’s evidentiary purpose.
Moreover it must be borne in mind that the ACM has repeatedly clarified in its decision that the obligation to cooperate constitutes an indispensable aspect for the enforcement of Dutch and EU competition law. A company may be considered liable for its employees’ actions once an infringement exhibits any connection to the company itself –whether it occurs on the company’s premises or on company-owned electronic devices.
Key practical take-aways
Dawn raids and inspections are powerful tools used by the European and national antitrust authorities to investigate alleged antitrust violations. In our experience, dawn raids often represent an exceptional and very intensive situation for any company and its employees. Nevertheless, many companies are not sufficiently prepared to deal with such unannounced inspections and, as demonstrated in this case, may commit procedural errors that compound the situation and expose the company to even greater liability.
We see two key take-ways from this ACM decision. First, immediately after arrival of the authorities performing a dawn raid; an internal communication should be sent out to all employees of a company that no documents, e-mails and/ or any other kind of communication should be destroyed (including information on phones, such as messages, e-mails and, even, private information). Second and more general, companies should view this decision as an opportunity to remind themselves of the importance of regular and thorough “dawn raid preparation” and training for their employees.