Safe-raids? Meaningful judicial review of dawn raids on business premises

By Annabel, Cédric & Jorge

Dawn raids are praised as effective investigative tools since they provide direct and clear access to information that would otherwise be safe-locked in companies’ premises. They are seen as part of the “go-to tools” for national competition authorities (“NCAs”) and the European Commission to gather evidence in their investigation. The increasing number of cases and the frequent use of dawn raids, has led to various law firms developing their own “dawn raid survival kits and apps”.

This high profile-status does not mean that it is a flawless mechanism. Last year, there have been several cases of disproportionate dawn raids: in Belgium, the court held that dawn raids in the travel sector had been conducted illegally. The protection offered by the Belgian Constitution was considered wider than the protection under Article 8 of the European Convention on Human Rights. Meanwhile in the Netherlands, there has been a case which focused primarily on the legitimacy of a dawn raid.

Overall, it is of crucial importance that domestic legal orders provide for effective judicial review to control such intrusive powers. In cases where it is established that an inspection was argued not proportional or necessary, it is vital that the persons concerned must be able to obtain meaningful redress. The question arises as to whether this ex post judicial review of a (disproportionate) dawn raid is meaningful.

This blog will begin by addressing the definition of ‘meaningful’, a brief evaluation of the dawn raid regulation at the EU and national levels, the assessment of the judicial review as a ‘meaningful’ measure, and final recommendations to improve judicial review in this regard.

“Meaningful”?!

For the purposes of this blog, ‘meaningful’ is defined as the degree of:
1.) sufficient judicial review as an adequate redress for firms affected by dawn raids (i.e. stopping the abuse and resorting to the previous situation); and
2.) orienting NCAs in the execution of their inspection powers (i.e. avoiding potential abuses during dawn raids).

Are there any safeguards?

From a comparative perspective, it is interesting to examine how European countries designed their dawn raid legislation. The following table provides the dawn raid procedures of the Commission and 9 Member States along with their prior safeguards (the countries were selected based on the language proficiency of the authors):

As one can see, there are discrepancies in the dawn raid designs between Member States: the majority (6) require a prior warrant before conducting a dawn raid, whilst some do not (3).

The cases for (dis)proportionate dawn raids also differ among the Member States and do not necessarily relate to the level of restrictions. Moreover, the differences in dawn raid frameworks are not based on the legal tradition of the countries involved (i.e. the level of restrictions is not determined by whether is a civil or common law tradition).

Qualification as ‘meaningful’

Judicial review might suffice for obtaining an adequate solution (e.g. when the information obtained is not considered confidential). There are, however, three obstacles in the judicial reviews of dawn raids:
1.) The measure subject to review must produce legally binding effects. These effects should be capable of diminishing the applicant’s legal position (a threshold that is hard to reach);
2.) If the threshold is not reached, the affected party has to wait until the NCA issues a final decision. Only then the undertaking could file for appeal (which could take years);
3.) Finally, even when the dawn raid is declared illegal or disproportionate, there are no mechanisms to order the NCA to return or destroy the materials they have collected.

On the other hand, it is not clear whether the courts can shape the behaviour of the NCAs by means of the decisions reached through judicial review. This would, moreover, be contrary to the division of powers between the judiciary and executive offices. A hint of failure may stem from the fact that there have been recent cases in which the courts have declared the illegality of the raids (Belgium and the Netherlands – as seen in the introduction – as well as Spain).

Therefore, judicial review of dawn raids is not a ‘meaningful’ measure in favour of undertakings.

What could be the improvements?

A solution could be to implement a uniform system in which a full prior judicial review of an NCA dawn raid decision is required. This will, however, undermine the efficacy of dawn raids as effective investigative tools. Additionally, this would not ensure that the dawn raid will be legally conducted (in the Belgium case, whilst prior authorization was required, the raid was declared invalid in the end). Furthermore, this requirement would also undermine the ‘procedural autonomy’ of the NCAs (i.e. the right for Member States to freely determine national administrative procedures).

Currently, two type of measures could be used to achieve more ‘meaningful’ results:
1.) uniforming the application of the procedural rules on dawn raids through an EU Directive; or
2.) implement accountability measures. These could hold the authority’s officials responsible for an illegal exercise of its inspection powers. For instance, by measures such as bad performance reports or economic fines could be imposed to the officials responsible.

The first alternative could be favoured. It is less intrusive and would not undermine the officials’ willingness to act. Moreover, choosing a Directive instead of a Regulation would not threaten the national autonomy for Member States. There are no real indicators that legal tradition plays a role in the regulation of dawn raids, but there may be policy choices that flow from these traditions. These traditions should be preserved. Uniformity could be used to lay down some rules or principles oriented to the protection of the undertakings’ rights. It could also ‘lower’ the criteria required for admitting this judicial review actions; or even include the possibility to return or destroy documents after a raid is declared illegal.

The Commission had the perfect opportunity to implement these measures under Directive 2019/1. It was, however, only focused on giving a minimum set of investigative, decision-making and sanctioning powers; as well as structural measures that would ensure the independence of the NCAs. No regard was given to the protection of rights besides mere declarations of compliance with the principles of EU law and the Charter.