The unwelcome knock on the door: When companies complain about dawn raids

When antitrust authorities are unexpectedly knocking on a company´s door, it is usually because of a dawn raid. Ideally, the employees paid attention in their last antitrust training, have the internal dawn raid guidance at hand, and know how to deal with the dawn raid. Most companies are aware that the first hours are of utmost importance and any mistake can be very expensive. But what if the authorities overstep their bounds? Time to look at the consequences of dawn raids from a different angle.

Companies are doing a lot to prepare for dawn raids and to avoid any accidents during a dawn raid. Guidelines are written, employees trained and sometimes even a mock raid is conducted. So, you cannot blame them if they expect good preparation and correct behavior from the authorities too. Regarding a recent dawn raid, Austrian energy drink producer Red Bull does not seem happy with the regulator’s behavior, as the company is now seeking compensation from the European Commission before the European General Court (GC).

The Red Bull case

We already blogged about the case shortly after the dawn raid was conducted and summarized the most important take aways at the time (read about it here). Usually in these cases, the actual facts and circumstances come to light later (if at all), often after the end of the investigation and when the Commission published its decision. However, in this case Red Bull took action shortly after the inspection of the Commission in March 2023 and asked the Commission for compensation for an alleged lengthy inspection due to the regulator seizing a disproportionate amount of company data. As the Commission denied the request, Red Bull has now taken the case to the GC.

The action was brought on 30 December 2024 and was recently published in the Official Journal of the European Union. It is based on four arguments:

• Unlawful refusal to reimburse additional costs, which arose solely on account of a disproportionately lengthy and far-reaching continued inspection;
• Insufficient statement of reasons for the decision on costs and lack of clarity regarding the alternative scenarios;
• Incorrect legal assessment on the basis of misinterpretation of the Nexans case-law; and
• Infringement of the material rights of the defence.

Looking at the past

Even though cases like this are not a regular occurrence, Red Bull is not the first company to claim that an authority violated their rights during a dawn raid:

The French company Nexans complained to the GC, which ruled that the Commission indeed had not described the product in question precisely enough and partially annulled the Commission´s decision justifying the dawn raid in 2009. The European Court of Justice confirmed the decision of the GC in 2014, however stating that although the Commission has to specify the object and purpose of an inspection, it is not obliged to disclose all information relevant to the infringement, confirming the Commission ´s discretion regarding dawn raids.

Another case in which a company won against the Commission was decided by the European Court of Justice in 2015 and concerned the German Deutsche Bahn. The company was raided in 2011 not only based on one, but three inspection decisions issued in close proximity by the Commission.

The first inspection aimed to investigate potential preferential rebates for the supply of electric traction energy to Deutsche Bahn subsidiaries. However, even before this first inspection started, the Commission became aware of another potential antitrust conduct by a Deutsche Bahn subsidiary. This possible infringement was not covered by the first inspection decision, but the Commission nevertheless searched for – and found – potential evidence for the second infringement.

The next day, while the first inspection was still ongoing, the Commission issued a second inspection decision for the newly discovered antitrust violation. A few months later, the EC issued a third inspection decision also regarding the same potential antitrust violation.

Deutsche Bahn first appealed to the GC, which dismissed the action. The European Court of Justice, however, saw things differently and annulled the last two inspection decisions due to being based on improperly obtained evidence. It stated that generally the investigative powers of the Commission are limited to the scope defined in the inspection decision. Given the Commission ´s prior knowledge about the second alleged infringement, the evidence found were also not a fortuitous discovery.

Outlook and a bit of advice

Red Bull is currently not the only company unhappy with the Commission ´s dawn raid practice, as just last week Michelin urged the GC to annul a dawn raid the Commission conducted last year and to return all seized evidence.

History shows that such claims about allegedly unlawful raids can be successful, and companies are not without defence against over-enthusiastic antitrust regulators. In order to challenge a dawn raid in court, objections should be raised as specific as possible during the inspection. Either way, this does not mean that companies should prepare any less diligently for potential dawn raids. Proper preparation includes understanding how to behave to maintain the option to take a regulator to court. Mistakes, like deleting evidence during the inspection (read about such a case here) tend to be very expensive.

Photo by Peter Herrmann on Unsplash