In light of some recent proceedings of the Bulgarian competition authority (Commission on Protection of Competition/CPC), for the investigation of potential infringements of Art. 15 and Art. 21 of the Protection of Competition Act (PCA) and/or Art. 101 and Art. 102 of the Treaty on the Functioning of the European Union (TFEU), attention should be paid to the limits of CPC’s powers when it comes to dawn raids.
Dawn raids are an extremely effective means of gathering evidence by competition authorities when investigating alleged infringements related to prohibited agreements, decisions, concerted practices and abuse of monopolistic/dominant positions on the market. Designed as secret, surprising inspections, when carefully planned on the territory of one or more undertakings at the same time, dawn raids can provide diverse evidentiary material for the establishment of the alleged infringement (or its absence). During the inspections, CPC officials have wide powers for investigation, and the inspected entities are obliged to provide full assistance.
Dawn raids are performed by CPC officials after receipt of a court permission from the Administrative Court, Sofia City. The permission is requested by the Chairperson of the CPC and should contain the following:
○ The purpose of the inspection and the name of the undertaking or association of undertakings, for whose inspection the permission is requested;
○ The nature of the alleged infringement, described in general, as at this stage of the proceedings the investigation is usually based on suspicions and allegations of an infringement;
○ Justification of the reasons, for which such inspection is needed - the CPC should present arguments as to why it is necessary to apply this means of gathering evidence.
The Administrative Court, Sofia City rules on the request by permitting or refusing the dawn raid. The ruling may be appealed before a three-member panel of the Supreme Administrative Court within three days from notification. Regardless of whether the inspected undertaking decides to appeal the permission of the administrative court, this does not suspend the inspection.
Under Article 50(2) of the PCA, dawn raids are carried out by officials appointed with an order of the Chairperson of the CPC. Usually, these officials are part of the work team on the case file, but it is possible for other employees to be included for the purposes of the respective inspection. It is necessary for the appointed officials to identify themselves with a valid service card, certifying their name and position, which should correspond to those specified in the order of Chairperson of the CPC.
The police authorities provide assistance to the CPC officials in carrying out dawn raids in accordance with their powers under the Ministry of Interior Act (MIA). In the course of conducting joint actions, the employees of the Ministry of Interior should take the necessary measures against actions that may impede the conduct of the inspection. During the raid the police officials do not have the powers that the CPC officials do.
It should be noted that the inspection could be carried out in the offices of the undertaking(s), or associations of undertakings, even in the absence of their management (the executive director or the manager) and legal counsels. The presence of an employee or other person, who has the right to be there or has been found on the premises during the dawn raid, is sufficient.
When carrying out dawn raids the officials of the CPC can:
○ enter the premises, the vehicles and other facilities used by the undertakings or associations of undertakings;
○ review all documents and records related to the activities of the undertakings or the associations of undertakings, regardless of the carriers, on which they are recorded;
○ seize or obtain, whether in hard copy, or on a digital or electronic storage device, all kinds of copies or transcripts of documents and records, regardless of the carriers, on which they are recorded, and in case that is impossible, seize the originals as well as other material evidence;
○ seize or obtain electronic, digital and forensic evidence, as well as data about the traffic from all kinds of data storage devices, computer systems and other media, as well as to seize means for information transfer;
○ gain access to all kinds of information storage devices, including servers, which may be accessed through computer systems or other facilities located on the inspected premises;
○ seal for a determined time premises, vehicles and other facilities, used by the inspected undertakings or associations of undertakings, as well as commercial papers or books of accounts or other information storage devices;
○ obtain oral explanations from any representative or member of the managing bodies or staff of the undertakings or associations of undertakings about circumstances related to the subject and purpose of the inspection
Firstly, it should be specified that dawn raids are not carried out in case of an alleged violation under Chapter 7 (Unfair competition) and Chapter 7a (Abuse of stronger bargaining position) of the CPA and this circumstance must be established by the court at the stage of permitting the dawn raid.(1)
The European case law has established the following three key limitations to the investigatory powers of the competition authority:
○ Relevance: As a rule, the CPC officials do not have the right to arbitrarily check any information (so-called "fishing expedition"). The inspected undertaking must provide full access to its business documents and correspondence, but officials of the CPC should not review and collect information that is clearly not related to the scope of the inspection, nor communication that is purely personal and not related to the business activity of the undertaking.
○ Documents and communication covered by legal professional privilege (LPP): Communication, documents and advice provided to the investigated undertaking by an external lawyer are covered by LPP and cannot be used as evidence in the case file. Correspondence with an in-house legal counsel is not covered by legal privilege and can be gathered by the inspecting authority.
○Self-incriminating information: In principle, the competition authority must prove the alleged prohibited agreements, resolutions or concerted practices or abuse of monopolistic/dominant position. Accordingly, the obligation to assist in an inspection does not mean that the inspected undertaking must explicitly point out and hand over documents and carriers, containing incriminating information. It is up to the CPC officials to find, gather and evaluate such data.
In all of the above cases, when the inspected undertaking does not agree with the collection and use of certain evidence, the legal remedy is to appeal in court the act of the CPC, which establishes the alleged infringement and imposes a sanction.
(1) Proceedings under these chapters are usually initiated by competitors of the undertaking (for unfair competition) or its suppliers / customers (abuse of dominant position when contracting), where sufficient evidence can be provided by the claimant or required from the undertaking, which is alleged to have committed an infringement.
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