Dawn raids bounce back, international cooperation flourishes

Of the 31 jurisdictions surveyed, 24 (77%) confirmed that the regulator had carried out dawn raids during the course of 2023, conducting in total more than 165 raids.

Within Europe, the European Commission (EC) carried out unannounced inspections in several Member States at the premises of companies active in a number of different sectors, including energy drinks, fashion, synthetic turf, cardiovascular medical devices and online food delivery. The inspections were conducted in conjunction with national antitrust authorities. In addition, the EC carried out coordinated dawn raids of fragrance manufacturers in March 2023 in cooperation with the UK, U.S. and Swiss competition authorities, and dawn raids of construction chemicals companies in October 2023 in cooperation with the UK, U.S. and Turkish competition authorities; evidence that cross-border enforcement is very much alive. 

A significant development in 2022 was the extension of inspections to employees’ domestic premises, prompted by the shift to home and hybrid working arrangements. In October, however, the UK Competition Appeal Tribunal (CAT) denied a Competition and Markets Authority (CMA) request for a warrant to inspect a domestic premises in connection with its construction chemicals dawn raids. The CAT stressed that private home searches constitute considerable intrusions into private life and the exercise of these powers must, in all cases, be closely justified. It remains to be seen whether this will dampen future CMA home raids efforts.

2023 also saw corporate challenges against authorities’ dawn raid powers. In March, the European Court of Justice annulled in full the EC’s decisions to conduct dawn raids on two French supermarkets in 2017. The EC had failed to comply with its obligations to properly record third-party interviews relied upon as evidence, as the statements had not been provided to the interviewees for approval. This, in turn, led to the annulment of subsequent investigation measures and to the closure of the case. Since the ruling was issued, two further appeals have been lodged at the General Court challenging the existence of sufficient grounds to order ex-officio inspections in the EC’s fragrances and energy drinks investigations.

Experiences in Central and Eastern Europe, however, serve as a reminder to companies of the importance of complying with authorities during inspections. In May, the Romanian competition authority fined three dairy producers USD3.1 million for obstructing antitrust dawn raids by refusing to provide full access to its employees’ email accounts. In September, the Polish competition authority fined a coffee machine company and one of its retailers USD2.6m after employees deleted WhatsApp messages from their work phones once they became aware that the dawn raids were happening. In November, the Czech competition authority fined a household appliances manufacturer USD0.6m for preventing investigators from inspecting and making copies of its business records and for refusing to comply with an order to freeze email accounts.

CMA’s extraterritorial investigatory powers confirmed by UK court

In January 2024, the UK Court of Appeal confirmed that the CMA has the power to require overseas companies to produce documents and information when it is investigating suspected anti-competitive conduct.

The CMA can send an information notice to any entity, whether located inside or outside the UK, and the whole undertaking to which that entity belongs must comply with the request. Otherwise, reasoned the Court of Appeal, the CMA’s ability to conduct antitrust investigations would be “badly compromised” and conspirators may be incentivised to move offshore to organise cartels directed at harming the UK market.

Draft legislation – expected to come into force in October 2024 – is set to amend the UK competition rules to explicitly enable the CMA to issue information notices to overseas companies if (i) they are being investigated for breach of the UK antitrust prohibitions or (ii) they have a UK connection.

International cooperation initiatives deepen inter-agency relationships

Cooperation between antitrust authorities is not a new concept, and 2023 saw the establishment of additional initiatives for interaction between antitrust enforcement officials.

In Central and Eastern Europe, the heads of ten antitrust authorities (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and two EU candidate Member States: Moldova and Ukraine) signed an agreement on regional cooperation, with the aim of coordinating efforts on policy and enforcement and sharing experiences and best practices through working groups, training and shadowing. South American authorities have reached similar arrangements, with Brazilian and Paraguayan agencies, and those in Argentina and Chile, entering into two separate cooperation agreements. In APAC, the Australian Competition and Consumer Commission and authorities from across the Pacific Islands formed a new international network, PINCCER, which aims to promote competitive markets through sharing information, investigative techniques and best practices.

Initiatives to collaborate on particular issues/sectors also continued. At the end of March 2023, for example, the U.S. antitrust agencies and the EC held their third Joint Technology Competition Policy Dialogue, where the authorities announced that each U.S. agency would send an official to assist the EC with the implementation of the Digital Markets Act, once in force. In November, antitrust authorities and policymakers from the G7 nations met in Japan to discuss digital competition, following which they released a “communiqué” focusing on possible antitrust issues in the AI sector, and in particular generative AI.

The EC already cooperates and coordinates certain investigative activities with other antitrust authorities, including the Swiss and Australian authorities in its recent N-butylbromide scopolamine/hyoscine (SNBB) cartel investigation. European competition agencies also regularly share information with other antitrust authorities. For example, a recent investigation by the Spanish National Markets and Competition Commission (CNMC) into Apple and Amazon was initiated after the CNMC became aware of the conduct through the European Competition Network. The CNMC ultimately imposed fines of EUR194.2m for unreasonably restricting the number of resellers of Apple products on Amazon’s website in Spain and agreeing to limit advertising space and targeted marketing campaigns for competing products from other brands.  Apple and Amazon have appealed the CNMC’s fining decision in the Spanish courts.