Dawn Raids: European Court of Justice clarifies limits to the Commission’s investigative powers

The ECJ partially annulled a General Court decision and found that the Commission’s investigative powers are limited to the scope defined in the inspection decision.

The Judgment of 18 June 2015 concerned three separate inspections (“dawn raids”) carried out by the European Commission. Deutsche Bahn, the company under investigation, was first inspected between 29 March - 31 March 2011 with regard to allegations of unjustified preferential treatment granted by DB Energy GmbH to other subsidiaries of Deutsche Bahn. On 30 March 2011, during the first inspection, the Commission adopted its second inspection decision in which it decided to inspect allegations of discrimination by DUSS, a different subsidiary of Deutsche Bahn, recognised as one of the world’s leading passenger and logistics companies. This inspection was carried out on 30 March and 1 April 2011. The last inspection was also based on allegations against DUSS and was carried out on 26 July 2011.

Commission officials carrying out the first inspection were informed about allegations also against DUSS even though the first inspection decision did not bear any relation to DUSS.

The Court of Justice recognized that it is necessary for an effective investigation that the agents responsible for an inspection are provided with all information that is useful for understanding the nature and scope of the possible infringement. However, that information – as well as the subsequent search –need to be limited to the subject-matter of the inspection decision. Providing information about other allegations infringes the rights of defence of the undertaking under investigation. The Court therefore set aside the second and third inspection decisions.

The judgement demonstrates that the Commission needs to carefully justify each inspection and cannot use on-going inspections for other cases or even “fishing expeditions”. Companies under investigation should carefully compare the inspection decision’s allegations with the way the inspection is actually carried out for example by monitoring the search terms and the questions from officials. This important judgment, thus requires the inspection team to be able to explain how the respective investigative measure relates to the allegation described in the inspection decision This ensures that the inspection only relates to the conduct foreseen in the decision and prevents “fishing expeditions”.