On October 17, 2019, the Court of Justice upheld the General Court’s judgment of April 10, 2018, dismissing ethanol producer Alcogroup’s appeal against a Commission decision to carry out a dawn raid during which the Commission allegedly read potentially legally privileged documents.[1] According to the Court of Justice, irregularities during a dawn raid may only result in the annulment of subsequent Commission decisions and not the prior decision authorizing the dawn raid in question. This judgment highlights the need for legal counsel to closely monitor dawn raids, to ensure that Commission officials do not read or seize legally privileged documents.
Factual background: tagging legally privileged documents for export to the Commission’s case file
In March 2015, Commission officials inspected Alcogroup’s premises, as part of an investigation into the bioethanol sector, following a prior inspection in October 2014. In the course of this second inspection, and at the premises of Alcogroup, the Commission used a forensic evidence software called Nuix, which enables searching and indexing of electronic devices, such as computers, by specific keywords, to copy selected documents temporarily onto the Commission’s laptops.
After the inspection, Commission officials began individually examining the documents that were saved temporarily on the Commission’s laptops, and saved 59 series of documents, which were tagged for export to the Commission’s case file, onto a USB-stick. Upon review of the list of documents selected, Alcogroup’s lawyers objected to the review of five emails, including their attachments, which were labelled “legally privileged.”
The Commission accepted that these five emails were potentially subject to EU outside counsel legal professional privilege (“LPP”), and therefore did not include them in the Commission’s file. It appears from the judgment that the Commission had access to these potentially legally privileged documents for a period of less than 24 hours.
Initial challenge and appeal
On April 21, 2015, Alcogroup requested that the Commission immediately suspend the second investigation on the grounds that following the second dawn raid, the Commission allegedly inspected a significant amount of legally privileged documents (the emails, plus their attachments), which were prepared for Alcogroup’s defense after the first dawn raid.
The Commission dismissed Alcogroup’s request for suspension in a letter (“the Commission’s letter”). It noted that the mere tagging of documents via Nuix does not by default mean that they were read by investigators. Subsequently, Alcogroup appealed against the Commission’s decision to carry out the second dawn raid (“the Commission’s second decision”) and the Commission’s letter, both grounded in the Commission’s alleged violation of the company’s right to a fair trial, in particular its rights of defense, to good administration and an impartial investigation,[2] as well as the inviolability of the home.[3]
Dismissal rationale
First, the Court of Justice upheld the General Court’s dismissal of Alcogroup’s appeal against the Commission’s decision on the principle that irregularities during a dawn raid may only result in the annulment of subsequent Commission decisions, which were based on unlawfully-seized documents during that dawn raid.[4] In other words, acts subsequent to a Commission decision, such as the authorization of a dawn raid, cannot impact that decision’s validity.
Second, the Court of Justice agreed with the General Court’s ruling that the Commission did not have an obligation to take additional “precautionary measures” during a second dawn raid due to the higher risk that Commission officials may find legally privileged documents prepared following a previous dawn raid. According to the Court of Justice, the Commission is generally obliged to respect legally privileged documents as part of a party’s defense rights, including before a dawn raid takes place, and irrespective of whether it is the first or a subsequent dawn raid, and irrespective of the scope of an investigation.
Third, the Court of Justice noted that the Commission’s letter did not explicitly deny reading or taking a cursory glance at the potentially privileged emails in question. However, as the Commission’s letter did not explicitly state otherwise, the Court of Justice agreed with the General Court that it could reasonably be inferred that the Commission had not read the potentially legally privileged documents.
Practical implications
Alcogroup stresses the role of the presence of legal counsel during dawn raids to diligently ensure that Commission officials do not seize, read, or take merely a cursory look at documents that are legally privileged.[5] The case demonstrates that a subsequent appeal against the seizure of potentially legally privileged documents may be difficult to substantiate, and in any event, may not remedy the breach of confidentiality of legally privileged documents. This challenge is certainly exacerbated in an increasingly digital environment characterized by the proliferation of written (electronic) communications channels.
[1] Alcogroup and Alcodis v. Commission (Case T-274/15) EU:T:2018:179, upheld on appeal in Alcogroup and Alcodis v. Commission (Case C-403/18 P) EU:C:2019:870. Under Regulation 1/2003, the Commission may carry out unannounced inspections at companies’ premises (also called “dawn raids”). See Council Regulation (EC) No. 1/2003 of the Council of December 16, 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ 2003 L 1/1.
[2] See Article 47 of the Charter of Fundamental Rights of the European Union and Article 6 of the European Convention on Human Rights.
[3] See Article 7 of the Charter of Fundamental Rights of the European Union and Article 8 of the European Convention on Human Rights.
[4] Deutsche Bahn and others v. Commission (Case C-585/13 P) EU:C:2015:404.
[5] The General Court confirmed in Akzo that an undertaking under investigation “is entitled to refuse to allow the Commission officials to take even a cursory look at one or more specific documents which it claims to be covered by LPP, provided that the undertaking considers that such a cursory look is impossible without revealing the content of those documents and that it gives the Commission officials appropriate reasons for its view.” See Akzo Nobel Chemicals and Akcros Chemicals v. Commission (Joined Cases T-125/03 and T-253/03) [2007] ECR 11-3523, para. 82.