On October 5, 2020, the General Court partially annulled three European Commission decisions ordering French supermarket groups Casino and Intermarché to submit to unannounced inspections.1[1]The General Court found that the Commission did not have sufficiently strong evidence to suspect one of the alleged infringements and had therefore breached the dawn raided companies’ right to the inviolability of the home.

Factual background

In February 2017, after receiving information concerning potential exchanges of information between companies active in the retail distribution sector, the European Commission (the “Commission”) issued several decisions authorizing its officials to carry out dawn raids on the premises of French supermarket groups Casino and Intermarché, as well as at their joint purchasing subsidiary Intermarché Casino Achats (“INCA”). The Commission suspected the dawn raided companies of exchanging information on (i) rebates obtained on the supply markets for certain everyday consumer goods (such as food, home care and personal care products) and the prices on the market for the sale of services to manufacturers of branded products; and (ii) their future commercial strategies on the supply markets for everyday consumer goods and on the market for the sale of everyday consumer goods.

The dawn raids were carried out on February 20, 2017. In April 2017, Casino, Intermarché and INCA (the “Applicants”) lodged an appeal against the Commission’s decisions authorizing the dawn raids.

The Applicants’ arguments regarding the illegality of the dawn raids

The Applicants appealed the Commission’s decisions on three grounds: (i) the illegality of the provisions of Regulation 1/2003 empowering the Commission to conduct inspections; (ii) the violation of the Commission’s duty to state reasons; and (iii) the violation of the right to the inviolability of the home.

The first two pleas were rejected by the General Court.

According to the Applicants, Article 20 of Regulation 1/2003, which notably provides that, “in order to carry out the duties assigned to it by this Regulation, the Commission may conduct all necessary inspections of undertakings and associations of undertakings”, breached dawn raided companies’ right to an effective remedy. But the General Court rejected this claim – despite the fact that dawn raided companies may only challenge the conduct of a dawn raid itself in the context of an appeal against the final decision on the substance issued by the Commission (should it issue one) or through an action for damages against the Commission. In addition, the Court rejected the claim that Article 20 breaches the companies’ rights of defense and the principle of equality of arms, as it held – in accordance with settled case law – that the Commission cannot be required to provide the underlying evidence justifying the conduct of dawn raids at the preliminary investigation stage without compromising the effectiveness of said investigation.

The General Court also summarily dismissed the Applicants’ plea regarding the Commission’s failure to state reasons.

However, the General Court carefully assessed whether the Commission did, in fact, have sufficient evidence to justify its decision to authorize dawn raids with respect to both sets of suspected anticompetitive practices, and therefore to justify its interference with the Applicants’ right to the inviolability of the home.

The General Court’s assessment

The General Court concluded that the Commission had sufficient evidence to suspect a concerted practice relating to the exchange of information on (i) discounts obtained on the supply markets for certain everyday consumer products and (ii) prices for the sale of services to manufacturers of branded products. By contrast, the Court found that the Commission had insufficient evidence to justify inspections on alleged exchanges of information concerning the future commercial strategies of the dawn raided companies. In this respect, the Commission’s suspicions mainly stemmed from the fact that in 2016, a director of the Casino group had attended a meeting organized by Intermarché during which the latter presented its commercial priorities. However, as the General Court noted, the Casino director had attended the meeting in question as part of his functions within INCA, and not as a representative of Casino, meaning that it could not be established that Casino had “accepted” the disclosure of confidential information by Intermarché. Moreover, the information discussed during the meeting was general in nature and was “genuinely public” within the meaning of the Commission’s guidelines on horizontal cooperation agreements, as the attendees included over 400 suppliers, as well as journalists, and received coverage in specialized newspapers. The General Court thus concluded that the Commission could not validly form a suspicion of anticompetitive information exchange based on such information.

The General Court therefore upheld the claim on the violation of the right to the inviolability of the home as regards the second suspected infringement and annulled the inspection decisions relating to this part. This could, in turn, impact the pending appeals filed by Casino and Intermarché against another Commission investigation regarding alleged information exchanges, which was initiated following the challenged 2017 dawn raids.

Interestingly, these partial annulment decisions arise in the context of increased scrutiny from French Courts on the legality of decisions authorizing competition authorities to carry out dawn raids. In two judgements issued on July 8, 2020 and October 7, 2020, respectively, the Paris Court of Appeals (i) annulled a 2014 search warrant authorizing the conduct of dawn raid on Whirlpool France’s premises, both due to a breach of the company’s right to an effective remedy and because the search warrant was largely based on illegally collected evidence,[2] and (ii) annulled a 2019 search warrant issued against Swarovski, ruling in particular that the evidence presented by the French Competition Authority (“FCA”) was weak and could not support sufficient presumptions of anticompetitive practices.[3]

[1]              Casino, Guichard-Perrachon and AMC v Commission (Cases T-249/17,) EU:T:2020:458; Intermarché Casino Achats v Commission (T-254/17), EU:T:2020:459; and Les Mousquetaires and ITM Entreprises v Commission (French retailers purchasing alliance) (T- 255/17), EU:T:2020:460.

[2]              Paris Court of Appeals, ruling of July 8, 2020, no. 19/16854.

[3]              Paris Court of Appeals, ruling of October 7, 2020, no. 19/12686.