In three related judgments of October 5, 2020 (T-249/17, T-254/17 and T-255/17) the General Court (the “GC”) partially annulled European Commission inspection decisions which were the basis for dawn raids on several French retailers. The judgments further develop the position adopted in Czech Railway and Nexans where the GC confirmed that, to launch an inspection (also more commonly referred to as a “dawn raid”), the European Commission (the “EC”) needs to have “reasonable grounds” for suspecting an infringement.

The EC suspected a number of French retailers of having exchanged information on (i) discounts obtained on the supply markets of consumer products and prices on the market for the sale of services to suppliers of branded products, and (ii) the future commercial strategies of the retailers. Consequently, it adopted inspection decisions against multiple retailers in February 2017 on the basis of Article 20 of Regulation 1/2003. Intermarché and Casino (the “Applicants”), subsequently brought actions seeking annulment of the inspection decisions and raised, inter alia, a plea of illegality against Article 20 of Regulation 1/2003 and a violation of the obligation to state reasons.

The GC generally reaffirmed the principles underlying the use of inspections.

First, the GC rejected the plea of illegality raised against Article 20(4) of Regulation 1/2003 which requires the inspected entities to submit to EC inspections when ordered to do so by a decision. Upholding this plea would have significantly undermined the EC’s powers of inspection.

More specifically, the Applicants argued that Article 20(4) does not provide for an effective remedy as judicial review of inspections can only be carried out in the context of actions for annulment against the EC’s final sanction decision, against a decision sanctioning obstruction of the inspection or against an individual decision in the course of or following the inspection. However, such remedies are, according to the applicants, not available within a reasonable time, nor would they allow for an effective and efficient control of the inspection. Therefore they would not constitute an “appropriate remedy” to companies subject to inspections.

The GC recalled that an effective remedy requires (i) the existence of an effective judicial review of the facts and of points of law, (ii) the possibility for an individual to obtain an appropriate remedy where an unlawful act has taken place, (iii) the certainty of access to proceedings and (iv) judicial review within a reasonable time. Inspection decisions may be challenged and reviewed through a European control system providing for judicial review through various remedies that all fulfil the aforementioned requirements, namely through:

  • annulment actions against the final decision adopted, against inspection decisions, against acts capable of being challenged and against decisions sanctioning obstruction;
  • proceedings for interim relief; and
  • actions to establish non-contractual liability.

Second, the GC  dismissed the Applicants’ claim that the EC failed to state reasons in line with Article 20(4) of Regulation 1/2003 which requires inspection decisions to specify the subject matter and purpose of the inspection. The GC recalled that inspection decisions must state the presumed facts that the EC intends to investigate, including:

  • a description of the features of the suspected infringement;
  • the market thought to be affected;
  • the nature of the suspected restrictions of competition;
  • the sectors covered by the alleged infringement; and
  • the supposed degree of involvement of the undertaking concerned.

However, the EC is not required to communicate all the information at its disposal concerning the alleged infringement, a precise legal qualification of the alleged infringement, a precise delimitation of the market in question, or the period during which the presumed infringement took place.

The GC then turned to the heart of the case: Did the EC have sufficiently reasonably grounds to launch a dawn raid? By the adoption of a measure of organizational procedure, the GC requested the EC to send to it the evidence justifying the inspections.

After having reviewed the evidence, the GC reached the following conclusions:

Regarding the suspected exchange of information on discounts and prices, the GC concluded that the EC did indeed have sufficiently strong evidence to suspect a concerted practice. The gathered evidence did show that a majority of suppliers had received identical or very similar discount requests from the Applicants. This evidence was further corroborated by statements of suppliers who suspected that the retail alliances were potential sources for exchanges of information. Both Casino and Intermarché would have had knowledge of the discounts obtained from their respective suppliers through their joint retail alliance INCA.

However, with regard to a suspected exchange of information on future commercial strategies, the GC concluded that the EC had merely based its grounds on public information – and annulled that part of the inspection decision.

Indeed, the EC had based its grounds on the proceedings of a congress held publicly by Intermarché in September 2016 where it presented its commercial ambitions and priorities to its main suppliers and which was also attended by a representative holding a director position within the Casino group. The GC highlighted that the representative was attending as the co-manager of joint subsidiary INCA, whose presence was justified by the fact that INCA negotiated the terms and conditions of supply on behalf of Intermarché from its major suppliers.

Moreover, the information related to general commercial policy and was far from being secretly communicated. The EC Guidelines on horizontal cooperation define “genuinely public information” as information that is generally equally accessible (in terms of costs of access) to all competitors and customers. The congress was attended by more than 400 suppliers as well as by journalists which published the information in the specialized press only a few days after the congress. Consequently, the information communicated by Intermarché was made available not only to the director of competing Casino group, but also – at the same time – to all other Intermarché competitors and the broader market.

The annulment of an inspection decision implies that the EC is prevented from using any documents or evidence which it has obtained in the course of the inspection. In addition, such annulment necessarily also entails the annulment of any new inspection decision which would have been adopted exclusively on the basis of the documents seized during the first irregular inspection.

The judgments show that the GC is becoming increasingly strict in its review of EC inspection decisions and that it is carefully reviewing the underlying evidence. It remains to be seen what the impact of this judgment will be on the outcome of new inspections carried out by the EC at the Casino and Intermarché premises in May 2019 and the subsequent formal antitrust proceedings initiated in November 2019.