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Landmark Judgment Limits Dawn Raid Powers Of CCPC

AUTHOR(S): Helen Kelly
PRACTICE AREA GROUP: EU, Competition and Regulatory
DATE: 08.04.2016

High Court Issues Landmark Judgment Limiting The Dawn Raid Powers Of The Irish Competition Law Regulator

On 6 April 2016, Judge Barrett of the Irish High Court ruled that the Competition and Consumer Protection Commission (CCPC) unlawfully seized entire email accounts during a 2015 dawn raid.  This ruling was on a challenge by the raided company of the seizure of the entire email account of an employee who it argued was not involved, at the relevant times, in the company under investigation by the CCPC.  At present, there is no Irish statutory mechanism or regulatory guidance on the handling of records seized at a dawn raid.

The Court agreed with the raided company that irrelevant records were likely seized and that this was not permitted by the warrant authorising the raid or the CCPC’s statutory powers. The statutory power of seizure is very broadly drafted, in that its only express limitation is that seizure must be “necessary for the performance by the Authority of any of its functions”.  In interpreting this limitation, Judge Barrett held that the CCPC was obliged to exclude irrelevant documents from its seizure and failed to take steps do so.  In addition, Judge Barrett identified a potential breach by the CCPC of the right of privacy under the Irish Constitution and the European Convention on Human Rights (ECHR). In this respect, this ruling is at odds with recent EU Court of Justice decisions such as Deutsche Bahn which rejected arguments that dawn raid powers of the EU Commission conflict with the ECHR. 

By way of relief, Judge Barrett granted an injunction restraining the CCPC from accessing seized records pending an agreement between the parties on what records were irrelevant.  

Comment

No one expects the CCPC to arrive at a dawn raid with a precise wish list, or to idly accept the raided company's view on what is relevant to a case that the CCPC is developing piece-by-piece. This implies that some post-raid "sifting" is unavoidable, at least for so long as the CCPC has insufficient resources to conduct multi-day raids where records are "sifted" on-site, as the EU Commission does. Thus, the key question is whether Judge Barrett has rightly struck the balance in favour of privacy, or unduly blunted the powers of a regulator that already faces huge challenges in prosecuting cartellists?  

We fully expect this ruling to be appealed, and to be fiercely debated pending a final appellate court decision which could be three years or more from now.

Pending any appeal, a cloud of uncertainty has been cast over the powers of the CCPC and other regulators with the same powers, such as ComReg. This may have ramifications for companies operating in Ireland.

First, the ruling shows that the Irish courts may constrain what could be interpreted as a broad statutory power to “seize now and sift later”.  This gives the CCPC cause to reconsider its approach of seizing entire files or IT devices and then ‘sifting’ out irrelevant records as it sees fit and without supervision.

Second, it paves the way for further developments in Irish law and practice on dawn raids.  For example, the CCPC might seek to achieve legal certainty by issuing guidance based on EU practice that has been approved by the EU Court of Justice.  In particular, one option would be to adopt the EU practice of “sealing” records that have been seized without their relevance having been confirmed and searching them subsequently in the presence of the raided company using agreed search terms.   

Third, it leaves open some interesting questions about the admissibility of evidence.  The ruling did not have to consider how an Irish court should treat evidence retrieved from a dawn raid that has exceeded its permissible scope in future infringement proceedings.

Fourth, the ruling might be seen as proof that raided companies can hamper the progress of a CCPC investigation by taking Irish court proceedings.  This interpretation is possible because the waiting period for the ruling was nearly a year and the future practical impact of the ruling is that the CCPC will remain subject to an injunction until the raided company reaches an agreement with it.

Finally, the ruling might prompt the legislature to re-consider the legality of broadly drafted investigative powers in other pieces of Irish corporate crime legislation, such as the Criminal Justice (Theft and Fraud Offences) Act, 2001.      

Matheson will be holding a breakfast seminar on competition compliance and dawn raids in the coming weeks, during which we will explore this interesting ruling further. 

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