Defence rights during dawn raids: the General Court attempts to put principles into practice

Competition authorities have broad powers of investigation during unannounced inspections of companies’ premises ("dawn raids"). In its judgment in Deutsche Bahn, the General Court ("GC") elaborated on what the practical limits are to the Commission’s right of inspections. The GC fully reviewed the Commission inspection decisions and the way these decisions were implemented in practice.

The GC ruled that there is no per se obligation for authorities to have prior authorization from a court before being allowed to inspect business premises, provided that adequate safeguards are in place. The following safeguards should protect companies against discriminatory and disproportionate inspections:

The dawn raid decision: should state (i) the subject and purpose of the inspection; (ii) the starting date of the inspection; (iii) the risk of sanctions in case of non-cooperation; (iv) the possibilities of appeal against the dawn raid decision; (v) the hypotheses and suspicions underlying the inspection that the Commission intends to verify; and (vi) characteristics of the suspected infringement, including the relevant market, the nature of the suspected infringement, business segments that would be involved, how the company would be involved and elements targeted by the inspection.

The limits on the Commission during an inspection: (i) non-business and legally privileged documents should be excluded from the investigation domain of the Commission; (ii) the company has the right to be assisted by an attorney; and (iii) the undertaking has the right to remain silent with regard to statements in which it would have to admit its guilt.

The assistance of national authorities: when an undertaking objects to an investigation, national authorities can assist by checking whether the measures taken by the Commission are not arbitrary or disproportional considering the subject of the inspection.

Ex post assessment by the EU court: in which a full assessment has to take place of all the factual and legal aspects. If the court would conclude that a dawn raid decision has to be annulled, the Commission will not be able to use the gathered evidence.

Regarding the specific inspections at the Deutsche Bahn’s offices, the GC found that all the safeguards were in place. The GC ruled that the dawn raid decision contained all the information required and there was no evidence of a targeted search by the Commission outside the scope of the dawn raid decision. An important aspect in the GC's assessment was that Deutsche Bahn did not formally object against the actions of the Commission officials during the dawn raid and did not request the Commission to note its objections in its official report. Furthermore, the allegations in the appeal were not supported by the reports from attorneys present during the dawn raid and there was no other evidence of a targeted search outside the scope of the dawn raid decision.

The judgment confirms that the GC will review Commission inspection measures fully and in detail. If a company has objections it is therefore crucial to document these objections and to request the Commission to make note of these objections.