Companies face severe fines when obstructing dawn raids of competition authorities
Earlier this year, International Flavors & Fragrances (“IFF”) was fined €15.9 million for obstructing an unannounced inspection (commonly known as “dawn raid”) carried out by the European Commission through the deletion of Whatsapp messages exchanged with a competitor. This underlines the importance of cooperation during on-site inspections conducted by the Commission or a national competition authority (“NCA”).
Background
Both the Commission and the NCAs are empowered to conduct inspections at the premises of companies suspected of breaching the competition rules. The aim of dawn raids is to secure evidence for the suspected antitrust infringements. Investigated companies are required to actively cooperate with the competition authorities and must not obstruct the inspection. Officials are empowered to examine and take copies of business-related information irrespective of the medium on which it is stored. The inspectors can examine data on corporate mobile phones as well as private mobile phones when used for both private and professional purposes. Using IT forensic tools, inspectors can detect both deletion and manipulation of electronic information during inspections.
If the Commission finds that a company is obstructing a dawn raid, it may impose a fine of up to 1% of the total turnover of the company group concerned. Following the adoption of an EU Directive on the harmonisation of enforcement powers, all NCAs now have powers mirroring those of the Commission.
Enforcement on dawn raid obstructions
In June 2024, the Commission fined IFF for having obstructed a dawn raid in March 2023. The obstruction involved a senior employee intentionally deleting WhatsApp messages exchanged with a competitor, after being informed of the Commission inspection. The fine was set to an amount of €15.9 million (the fine was originally twice as big, but the Commission reduced the fine by 50% taking into account IFF’s proactive cooperation during and after the inspection).
A similar situation recently occurred in Finland. In July 2024, the Finnish Competition Authority (the “FCA”) filed a lawsuit against Attendo, a Swedish-based private care company, for obstructing a dawn raid carried out at the company’s premises in 2023. According to the FCA, an Attendo employee deleted work-related WhatsApp conversations and a call log from his/her phone during the inspection. The FCA has proposed that the Finnish Market Court shall impose a fine of €4.4 million.
In the past, the Commission has imposed even larger fines for dawn raid obstructions. E.On, had to pay a fine of €38 million in 2008 for breaching seals during a dawn raid where parts of the premises had been sealed overnight. The Commission has also fined companies for accessing a blocked email account and diverting incoming emails during an inspection. The IFF fine is however the first fine for the deletion of messages exchanged via social media apps on a mobile phone.
The Swedish Competition Authority has not yet imposed any fines for obstruction of dawn raids since such powers were introduced in 2021, but companies should be aware that such powers exist. Fines may also be imposed in a case of misleading or incomplete answers to written requests for information.
Concluding remarks
The recent enforcement of dawn raid obstructions does not only underline the importance of active cooperation, but also shows that it is necessary for employees to understand their obligations during dawn raids. Otherwise, companies risk having to pay severe fines for obstructing dawn raids. Delphi’s EU & Competition practice has extensive experience in dawn raids carried out by both the Commission and the Swedish Competition Authority as well as subsequent investigations. We regularly assist companies during dawn raids and train employees in order to hopefully avoid being subject to a dawn raid. In addition, we assist during the authority’s investigation and internal investigations.