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Relaxing whilst doing Competition Law is not an Oxymoron

Spanish Court of Appeal strikes down CNC’s Inspection Practices

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Home-Inspection

The Audiencia Nacional (‘AN’) – i.e. the Spanish Court in charge of the review of acts and decisions adopted by the Spanish National Competition Commission (‘CNC’) – recently delivered an important judgment quashing some of the CNC’s investigatory practices, which had elicited a great deal of controversy over the past few months.

Background: In a raft of recent cases, the CNC investigatory branch made use of the new investigatory powers provided for under Competition Act 15/2007.  Those cases triggered a stern opposition from the legal community, which voiced that the CNC’s inspections might have deviated (i) from the standards set out by the ECJ in relation to inspections under  EC competition rules, as well as (ii) from the limitations imposed by Spanish Courts with regards to police/and or administrative inspections, thereby breaching the rights of defense of the inspected undertakings. Disregarding the criticism, the CNC’s Council nonetheless adopted a number of decisions supporting the interpretation of the CNC’s Investigation Directorate.

The judgment: the AN’s Judgment originates in an appeal against one of those decisions. In essence, it can be summarised as follows:

1) The Court observes that many of the documents obtained -collected pursuant to the copying of computer hard drives- are unrelated to the sector under investigation as identified in the mandate as well as in the judicial authorization granted to the CNC, and therefore cannot be deemed to be covered by them. Consequently, the Judgment declares that there was a breach of the right to inviolability of the domicile of the undertaking inspected.

2) As to the consequences of the said breach, the Court rejects the claim that the whole inspection should be declared void. Instead, it holds that the documents related to the subject matter of the investigation did fall within the scope of the mandate and of the judicial authorization and were thus lawfully collected, and orders the CNC to return all other documents.

3) The Judgment affirms the rights of firms subject to an inspection to have access to the search criteria used to retrieve information stored in hard drives (allegedly no search criteria had been used in the inspection at stake).

4) The AN dismisses the claims related to the alleged violation of legal privilege arguing that the CNC has merely collected possibly privileged documents but has not made use of them.

5) The arguments related to a possible breach of the rights to privacy of correspondence of the undertaking’s employees are also dismissed on the basis that the inspection was not aimed at collecting such documents. Accordingly, the Court holds that any extra-limitation with regards to employee’s private documents stored in computers located at the undertaking’s premises must be subsumed within the breach of the rights of the undertaking inspected.

In my view, this is a most welcome judgment if only because it narrows the gap between the standards applied by the CNC and those of the European Commission.

However, the non-conformist lawyer that sleeps inside me has a couple of comments:

– First: the AN’s argument that there cannot be a breach of the rights of defense unless privileged documents are effectively used as evidence seems to be at odds with the ECJ’s ruling in Akzo with regards to the ‘cursory glance’ practice.

– Second: in this case, unlike in a number of other recent ‘dawn raids’ in Spain, the subject matter of the investigation had been clearly defined in the mandate as well as in the judicial authorization. Both identified the specific conduct under investigation, the product and geographic market affected, as well as the years during which the agreement was thought to have been implemented. Nevertheless, for the purpose of determining which documents can be deemed to be comprised within the scope of the mandate, the Judgment prescinds of those and merely takes into consideration whether it is related or not to the sector under investigation without any further qualifications, which is arguably still a wide criterion.

See below for link to the judgment.

SAN Stanpa

(Image possibly subject to copyright. Source)

Written by Alfonso Lamadrid

27 October 2009 at 7:43 pm

One Response

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  1. About time somebody tells them to stop fishing expeditions. Either the know what they are looking for or they have to investigate better their case. Dawn raid powers do not allow authorities to search for anything, anywhere, anyway.

    Curro Farlopez

    27 October 2009 at 7:54 pm


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