The competition rules on dawn raids under constitutional scrutiny

Granting inspections in accordance with the Law on competition

The inspections or dawn raids conducted within the premises of undertakings by the Competition Council under article 56 (1) and (2) of the Moldovan Law on Competition are allowed without any ex-ante judicial control. Dawn raids are authorised by a duly reasoned order issued by the President of the Competition Council. This provides the Competition Council with the necessary procedural autonomy and at the same time leaves scope for arbitrariness. On the other hand, dawn raids at non-business premises belonging to individuals may be conducted without the consent of the latter only on the basis of a judicial warrant. These two contrasts have been long under fire and sparked many debates on the overall consistency with the fundamental rights.

Referral to the Constitutional Court

In a recent case concerning the judicial review of the legality of an inspection conducted by the Competition Council the Chisinau Court upheld the claimant’s  request and referred the case to the Constitutional Court. In essence the Claimant argued that the lack of a meaningful judicial ex-ante review violates fundamental constitutional rights: right to property, correspondence, private life and freedom to trade. In addition, the claimant’s lawyer contended that this status quo was contrary to the principle of legal certainty and that an effective judicial control would guarantee that the Competition Council acts in a proportional and adequate manner. It is pointed out that Germany, Austria, Romania, France, Hungary, Lithuania, Poland and Sweden have in place judicially approved dawn raids rules. Furthermore, the scope for arbitrariness is heightened by the lack of a detailed regulation on dawn raids. Lastly, the question was raised as to why searches in criminal investigation need judicial approval and antitrust dawn raids don’t, particularly bearing in mind the fact that their scope and objectives are similar.

Comments

The outcome of this case was predictable due to the fact that ex-ante judicial approval of dawn raids is not a mandatory requirement under the European Convention on Human Rights, provided that other procedural guarantees are in place, i.e. a clear legal framework with very strict limits on such powers.¹Harju v Finland, judgment of 15 February 2011, Application no. 56716/09, para 39, Varga v. Romania, judgment of 1 April 2008, para 70; Gutsanovi v. Bulgaria, judgment of 15 October 2013, para 220. The absence of a search warrant may be outweighed by a post factum judicial review of the legality and necessity of this measure, provided that this control is effective.²Delta Pekárny A.S. v. Czech Republic, judgment of 2 October 2014, paras 92, 93; Stoyanov et al. V. Bulgaria, judgment of 31 March 2016, para 128. The same approach is mirrored in the Moldovan Constitution (article 29). Moreover, the Moldovan Constitutional Court has had the occasion to examine the lack of ex-ante judicial control concerning bailiffs’ right to enter premises (can be accessed here). In the latter case the Court underlined that as long as this measure can be effectively challenged ex-post to court the legal framework is in line with the Constitution.

The current wording of article 56 (1) of the Law on Competition requires the order on approving inspections to set out the purpose and subject-matter of the inspection in order to ensure that the inspection is well-founded. Are these enough procedural guarantees? Hardly, if we take into account the poor reasoning of these orders and that the ex-post judicial review is slow-paced and sometimes interminable.

On the other hand, introducing ex-ante judicial approval will not bring immediate procedural guarantees. The statistics on the approval of search warrants in criminal cases shows that prosecutors’ motions are hardly ever rejected by judges and there is no reason to believe that in antitrust cases things will be different. And although the business community would favour ex-ante judicial control, the experience with search warrants shows that, in the short-run, it may not bring the sought ‘meaningful judicial review’. 

In our view, the current state of affairs offer at least in theory the required procedural guarantees, with minor legislative gaps that can be mended by courts. The problem resides in the manner in which these provisions are enforced by the Competition Council and then reviewed by courts.³Moldovan Law on competition is silent as to the obligation to return seized documents during an inspection in cases when the court declares the dawn-raid as being unlawful. Logically this should trigger the obligation to take these documents from the case file Striking a balance between effective competition policy enforcement and proper protection of human rights are the conundrum of this type of cases. 

As predicted, the Constitutional Court did not depart from the bailiffs case mentioned supra and declared the application inadmissible (here), reconfirming that ex-ante judicial control of inspections is not mandatory under the Moldovan Constitution.