The EU Court of Justice annuls the inspection decisions of the European Commission in the French supermarkets case

In its judgments of March 9, 2023 the Court of Justice of the EU (CJEU) annulled the General Court's (GC) judgment that had partly upheld the European Commission's (EC) inspection decision, and ruled that the EC had failed to fulfil its obligation to properly record the interviews it conducted with suppliers to collect information relating to its investigation. In the absence of valid evidence justifying the inspection, the CJEU ruled that the inspections were illegal, and annulled the EC's decisions in their entirety.¹

While the CJUE rejects the appellants' argument that Regulation 1/2003 did not provide sufficient remedies to appeal the conduct of a dawn raid, the CJEU establishes that, a company subject to a dawn raid has an immediate right of appeal against any measure taken by the EC that substantially affects their interest.

White & Case represented Intermarché Casino Achats in Case C-693/20 P.

Key points of the judgment

• The EC has an obligation to record interviews conducted in order to collect information related to the subject matter of an investigation, even before the formal opening of the investigation. The EC must also confirm the content of the interview with the interviewees.
• Considering that the EC failed to confirm the content of the interviews with the suppliers, the CJEU found that the information derived from these interviews was inadmissible. As this information constituted the bulk of the evidence on which the EC's inspection decisions were based, the CJEU considered that the EC did not possess sufficiently serious evidence to take the inspection decisions.
• The CJEU confirmed that to determine whether the conditions of the right to an effective remedy are met, all the remedies available to an applicant must be considered as a whole. In doing so, the CJEU recognized that companies targeted by an inspection have the right to appeal any measure adopted during the raid that substantially affects their interest. This new development, which aligns the case law of the CJEU to that of the European Court of Human Rights (ECtHR) potentially opens new judicial avenues for companies targeted by a raid.

Background

In February 2017, on suspicion of unlawful information exchanges, the EC conducted a series of dawn raids at the premises of Casino, Intermarché (ITM), as well as their joint purchasing venture, Intermarché Casino Achats (INCAA). According to the inspection decisions, the EC suspected that the companies had participated in two infringements of Article 101 TFEU by sharing sensitive and confidential business information on:

1. discounts negotiated with suppliers in the context of international buying alliances for certain everyday consumer products, and the prices on the upstream market for the sale of services to manufacturers of branded products (First Suspected Infringement); and
2. future commercial strategies, in particular in terms of assortment, shop development, e-commerce and promotional policy, on the markets for supply and sale to consumers of daily consumer goods in France (Second Suspected Infringement).

The three companies brought an action to seek an annulment of the decisions, arguing inter alia that the EC did not have sufficiently strong evidence to suspect these infringements, and that the EU inspection regime set in Regulation 1/2003 was incompatible with the right to an effective remedy as recognized by the ECtHR (the plea of illegality).

During the proceedings, the GC asked the EC to produce the evidence at its disposal to justify the inspection covering the two infringements mentioned in the decisions. Finding that the EC did not have sufficiently strong evidence in relation to the Second Suspected Infringement, the GC partially annulled the inspection decisions.² In contrast, it upheld the decisions in relation to the First Suspected Infringement, and rejected the plea of illegality in its entirely.

The EC did not appeal the judgements, but the three companies brought an appeal before the CJEU.

The CJEU's ruling

Interviews conducted by the EC to collect information linked to the subject matter of an investigation must be recorded regardless of when they take place

In the footsteps of Intel,³ the CJEU recalled that when the EC conducts interviews to collect information relating to the subject matter of an investigation, under Article 19 of Regulation 1/2003, it must record a meeting's content in a form of its choosing, including oral.

Thus, contrary to the GC, which had found that the EC had no obligation to record interviews conducted before the opening of an investigation, the CJEU ruled that the legal requirement to record interviews applies to all interviews aimed at collecting information relating to an investigation, regardless of when they take place (e.g., before an investigation is open).

The CJEU rejected the arguments put forward by the EC according to which such an obligation would seriously jeopardize the EC's ability to detect anticompetitive practices and would have chilling effects on potential witnesses. The CJEU found inter alia that the EC had the possibility to record interviews orally and to protect the identity of the witnesses.

The CJEU also rejected the EC's argument that the obligation to record interviews only applies to the collection of evidence, and not indicia. According to the CJEU, the obligation under Article 19 applies to interviews to collect any information relating to an investigation.

In light of this, the CJEU found that the GC erred in law in finding that the EC did not have an obligation to record the interviews conducted with the suppliers of the three companies on the grounds that the investigation had not been formally opened beforehand. In addition, the CJEU stated that, in order to determine whether those interviews had to be recorded, the GC should have examined whether they aimed at collecting information relating to the subject matter of the investigation, taking into account their content and context.

In the present case, noting that the purpose of the interviews with the suppliers was defined in advance and clearly aimed at gathering information relating to potential infringements, the CJEU concluded that the EC was exercising its power to take statements under Article 19, and was obliged to record the interviews, contrary to what the GC found.

Final judgment of the CJEU

After having annulled the GC judgment, the CJEU gave its final ruling on the dispute. It considered that the internal notes taken by the EC of the meetings with suppliers, which had been written by the EC's own staff, could not be considered as fulfilling the legal requirements of Article 3(3) of Regulation 773/2004, which applies to interviews that fall within the scope of Article 19 of Regulation 1/2003.

Indeed, in application of this article, the EC must not only record the interviews but also provide a copy of the recording to the interviewees for approval. In the present case, although the EC took notes of the interviews, it did not ask the interviewees to review and confirm the content of the recordings. As a result, the CJEU found that the internal notes were inadmissible.

Given that the internal notes constituted the bulk of the evidence on which the EC's inspection decisions were based, the CJEU concluded that the EC did not possess, at the date of adoption of the inspection decisions, sufficiently serious evidence of the remaining infringement, and annulled the inspection decisions in their entirety.

Remedies available under EU law are compatible with fundamental rights

Before the GC, the three companies argued that Regulation 1/2003 did not provide for an effective judicial remedy against the actions taken by the EC during an inspection, contrary to the requirements of the ECHR (in particular, in Canal Plus⁴ and Delta Pekárny⁵). In particular, Regulation 1/2003 did not provide an immediate remedy against the conduct of the EC, which, under the case law, could only be applied at the same time as a final EC decision (potentially years after the inspection). 

The GC rejected this plea and considered that the remedies available under EU law altogether comply with the requirements set by the ECHR case law. The GC, in particular, relied on all the remedies available to an undertaking looking to challenge any actions taken by the EC during an inspection:

• Appeal against the inspection decision;
• Appeal against the final decision closing the procedure under Article 101 TFEU;
• Appeal against any "reviewable act" (within the meaning of the case law) adopted by the EC in the course of the inspections), for example, a decision to seize legally privileged documents or an act in breach of the right to privacy of any of an employee;
• The GC added that the above actions could be accompanied by requests for interim measures – including emergency requests asking for immediate and ex parte interim measures.
• Action for non-contractual liability, in the event that the inspection caused damages to the undertakings inspected.

CJEU confirmed the GC's global analysis, and rejected the companies' appeal on that point.

What is particularly noteworthy in the judgment is the confirmation that companies subject to an inspection can appeal, pursuant to Article 263 TFEU, "any measures [taken during the inspection] which produce binding legal effects such as to affect the interests of an applicant by bringing about a distinct change in his legal position" (para. 52). While such a possibility exists in relation to the copying by the EC of legally privileged documents (T‑125/03 and T‑253/03, Akzo Nobel Chemicals and Akcros Chemicals/Commission EU:T:2007:287), it is now clear that it is not limited to LPP issues. It appears that any breach of a company's rights during an inspection may be immediately challenged before the GC, for example, a violation of the right to privacy or of the protection against self-incrimination. It is unclear, however, if such an immediate right of appeal extends to the copying by the EC of documents that are outside the scope of the investigation. It is also unclear whether, in the event of multiple violations, the companies under inspection will have to lodge multiple appeals. Whether this evolution of the case law will have practical consequences remains to be seen. 

_{1 Cases C-693/-20P, Intermarché Casino Achats v Commission, EU:C:2023:172 ; C-690/20P, Casino, Guichard-Perrachon and Achats Marchandises Casino v Commission, EU:C:2023:171 ; and C-682-20P, Les Mousquetaires and ITM Entreprises v Commission, EU:C:2023:170.
2 Cases T-249/17, Casino, Guichard-Perrachon and Achats Marchandises Casino SAS (AMC)/Commission, EU:T:2020:458; T-254/17, Intermarché Casino Achats/Commission, EU:T:2020:459; and T-255/17, Les Mousquetaires and ITM Enterprises/Commission, EU:T:2020:460.
3 Case C 413/14 P, Intel/Commission, EU:C:2017:632.
4 Case Canal Plus/France, CE:ECHR:2010:1221JUD 002940808.
5 Case Delta Pekárny a.s./Czech Republic, CE:ECHR:2014:1002JUD 000009711.}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2023 White & Case LLP}