On 30 September 2009, in an unprecedented ruling, the Spanish Court of Appeals1 declared that the Spanish Competition Authority (“SCA”) infringed the fundamental rights of an association of undertakings when, during the course of an inspection at their premises, it obtained a considerable amount of documents that were unrelated to the purpose of the inspection.
The facts of the case date back to June 2008, when officials of the SCA entered into the domiciles of a certain association in Madrid and Barcelona, to look for evidence related to an alleged exchange of information amongst a number of manufacturers of professional hairdressing products. The officials of the SCA were duly empowered by a written authorisation in which it specified the subject matter and purpose of the investigation, and for one of the premises they had even managed to previously obtain a search warrant, which restricted the scope of the inspection along the same lines. Nevertheless, the SCA officials did not restrict their search to only documents of the association related to their activities within the professional hairdressing market. Instead, they copied a large amount of documents from the hard disks of the association’s computers, without distinguishing between documents directly related to the purpose of the investigation and those that were not. As a result, the SCA officials obtained a large number of completely irrelevant documents given that the association is active in a wide range of markets. Even legally privileged documents and private documents of the employees of the association were copied by the SCA. Surprising as it may seem, this way of carrying out an unannounced inspection has become rather commonplace.
The association initiated a twofold line of action: firstly, it brought an administrative appeal against the inspection before the decisional body of the SCA on the basis that the dawn raid caused irreparable damage to the right of defence of the association, and to the fundamental rights of privacy and secrecy of communications of the employees. In the context of the appeal, the association requested the adoption of interim measures to prevent the documents seized by the SCA officials from being accessed. Secondly, as soon as the preliminary measures requested were dismissed, the association sought judicial protection and initiated an ad hoc claim for the protection of fundamental rights before the Court of Appeals. At a later stage, the claim was extended to the administrative decision dismissing the administrative appeal.
In its ruling, the Court of Appeals has set a precedent by declaring that the SCA infringed the fundamental right to the inviolability of the home insofar as, in the context of an inspection, it obtained documents that were unrelated to the subject matter and purpose of the investigation. The rationale of the Court is based on the fact that inspections constitute a limitation to such a fundamental right and accordingly, the scope of the investigation becomes the criteria by which to measure the lawfulness of the inspection and the performance of the SCA officials.
However, after finding that the SCA infringed a fundamental right, the Court did not annul the inspections but decided that only the documents that were not strictly related to the scope of the investigation had to be handed over to the association. In practice, the association, whose fundamental right was infringed, continues to be investigated, and the SCA is not paying any appreciable price for the infringement.
On a separate note, the Court did not find any infringement of the rights of defence. Although it admitted that the SCA officials seized legally privileged documents (some of which analysed, from a competition law perspective, the alleged exchange of information which was being investigated) and that the confidentiality of communications between lawyer and client is part of the right of defence, it concluded that an infringement to the right of defence only occurs when the content of the privileged documents is used against the party. In other words, the Court does not prevent the SCA from seizing a legally privileged document as long as it does not use it. This line of reasoning is incompatible with European Court of Justice case law as set out in the Akzo Nobel v Commission case2. This opens up the question of whether national authorities may apply a different standard of protection than that of the European Commission when applying EC law together with domestic legislation on competition, as was the case in this situation.
The ruling has left a bittersweet feeling within the legal community: although it is encouraging to see that the Court has imposed limitations on the broad powers of inspection of the SCA for the first time, it has missed the opportunity to provide legal certainty on a highly controversial topic. In this context, the ruling raises more questions than it solves.
1 Audiencia Nacional, Sección Sexta, Recurso: 3/2008.
2 Joined Cases T-125/03 and T-253/03.