EU dawn raids at French supermarkets ruled illegal
In a groundbreaking judgment, the European General Court has ruled that a dawn raid carried out by the European Commission (Commission) at several French supermarket distributors was partially unlawful. The Commission did not have sufficient evidence to carry out all of its inspections.
On 5 October 2020, the EU General Court (Court) issued three judgments declaring that dawn raids conducted by the Commission in 2017 at the premises of French retail groups and their purchasing alliance had partially been conducted on illegal grounds.
The inspected companies were Casino, Intermarché (and its parent Les Mousquetaires) and Intermarché Casino Achats (INCA) a joint purchasing vehicle of these two supermarket chains. In November 2014, Casino and Intermarché had set up INCA as a joint venture for the joint procurement of their branded products. The Commission is investigating whether through INCA, Casino and Intermarché coordinated their activities concerning the development of their retail networks and their pricing policy towards consumers. In the context of this investigation, the Commission had carried out its inspections, during which it had visited the premises of the companies where copies of the content of computer equipment were seized.
The companies brought forward a large number of arguments in support of their position that the Commission’s inspections were illegal, most of which were rejected by the Court.
The Court did however partially agree with the companies that the Commission had insufficient evidence of a competition law infringement at the time it carried out the inspections. The Court found more in particular that the Commission did have sufficiently strong evidence to suspect a concerted practice relating to the exchange of information on discounts obtained on the supply markets of certain everyday consumer products and the prices on the market for the sale of services to manufactures of branded products. On the other hand, the Court ruled that the Commission had failed to demonstrate that it had sufficiently strong evidence to suspect exchanges of information concerning the future commercial strategies of the two supermarket chains. The Court therefore annulled this part of the Commission’s dawn raid decision, which constituted the legal basis for the inspections.
This judgment is quite remarkable, since it is extremely rare that courts – be it at the EU level or at the national level – find that inspections carried out by competition authorities are illegal. In many cases, the authority is given the benefit of doubt and the inspection is deemed legitimate. This judgment however demonstrates that competition authorities may not expect limitless leniency from courts and can be called back in case they exceed their powers.
In the meantime, it is unclear whether the Commission intends to appeal the judgments and what their contents mean for the Commission’s possibilities to use the data seized during the inspections, as well as for its investigation at large.
Do you have any queries on the potential implications of the judgments for your company? The competition specialists of Loyens & Loeff Food & Beverages Team have the expertise to work with you on all competition law and/or food-related regulatory, legal, and tax issues, ensuring you always keep sight of your broader business objectives as you undertake your day-to-day food and beverage activities. Our unique multi-disciplined and dedicated approach offers you a genuine partnership for all activities: strategic advice, drafting contracts, handling transactions, or representing clients before administrative authorities, including competition authorities.
In case your organisation is or may become the subject of a dawn raid, immediately contacting Loyens & Loeff’s dawn raid specialists will ensure you receive advice and support during the whole process. We have extensive experience in assisting with dawn raids. The team possesses first rate expertise in dawn raid procedures and will work with you to protect your rights throughout.