Procedural issues in investigations by competition authorities: practical application by the Belgian Competition Authority in its Caudalie decision
On 6 May 2021, the Belgian Competition Authority (“BCA”) issued its decision against Caudalie and fined it for imposing resale prices upon and limiting the active and passive sales of its distributors. Next to the decision’s substantial assessment of the competition law infringements, the BCA also addressed two procedural issues raised concerning the BCA Prosecutor office’s investigation. These procedural issues concern the admissibility and the BCA’s use of a particular type of evidence, and the methods that the BCA used to compose the investigation file.
The BCA’s decision in the Caudalie case casts some light on procedural issues that may more generally arise during a competition authority’s investigation of a potential infringement and the setting up of the investigative file.
Admissibility and use of recordings of electronic communications
The first issue concerns the admissibility and the BCA’s use of two recordings of electronic communications between Caudalie and Newpharma.
Caudalie argued that the use of these recordings violated its right to a fair trial as enshrined in Article 6 of the European Convention on Human Rights (“ECHR”) as these documents were obtained illegally and in violation of its right to respect for private life, enshrined in particular in Article 8 ECHR. In this respect, Caudalie considered that the recordings were made with the clear aim of framing Caudalie and that this evidence was therefore obtained in violation of the obligation of the principle of good faith in the search for and administration of evidence. Caudalie therefore concluded that these serious infringements completely vitiated the proceedings and justified the termination of the procedure.
Caudalie also pointed out that Article 124 of the Belgian law of 13 June 2005 on electronic communications prohibits someone from intentionally becoming aware of the existence of information of any kind transmitted by electronic communication and which is not intended for that person personally, to store this data and to make any use of it, unless the consent of “all persons directly or indirectly concerned” is obtained and that, if an exception exists for acts carried out by agents authorised by the minister responsible for the economy, this does not concern the listening to communications. In Caudalie’s opinion, allowing the use of telephone recordings communicated by Newpharma would allow the BCA to circumvent the application of Article 124 of the law of 13 June 2005.
First, the BCA’s Competition College recalled that in accordance with the Belgian Supreme Court’s case law, an irregularly obtained piece of evidence cannot be taken into consideration if the use of such an irregularly obtained piece of evidence is contrary to the right to a fair trial.
The Competition College further referred to European and Belgian case law to confirm that, despite the protection of private communications provided for in treaty provisions, the mere fact of recording such a conversation in which one participates is not unlawful even if the recording is made without the other participant’s knowledge. Moreover, not the recordings themselves, but only transcripts of the recordings were submitted to the BCA.
Furthermore, the Competition College noted that the BCA had obtained this evidence lawfully in accordance with Article IV.41, §3 paragraph 3 CEL, which applied at the time of the facts and provides that the BCA’s staff members “shall gather all information, receive all statements or written or oral testimony, obtain, from whomever they may have it, all documents or items of information that they deem necessary for the accomplishment of their mission and of which they may take copies, and carry out the necessary observations on the spot.” As the evidence in question was provided by the complainant in accordance with that article, the College found that the Prosecutor’s office had exercised its investigative power within the limits set by the provisions of mandatory law.
Finally, the Competition College stated that the use of these electronic communications could not violate Article 8 ECHR since the content of the conversations at hand were of a strictly professional nature.
The evidence at hand could therefore not have infringed Caudalie’s right to a fair trial, because it was obtained legally, and used in compliance with Article 8 ECHR.
Composition of the investigation file
The second procedural issue concerned the BCA’s composition of the investigation file following the French Competition Authority’s dawn raids at Caudalie’s premises in France.
Caudalie pointed out that not all the items seized during the dawn raids at Caudalie SAS’s premises in France were included in the investigation file attached to the Statement of Objections drawn up by the BCA and that the computer seizures appearing in the investigation file constituted only a fraction of the items seized in France (only 107 items out of the 50,000 items seized were added to the file).
Caudalie contested the legality of the sorting carried out by the BCA on items seized in France, arguing that it could not have been present at the sorting by the BCA’s Prosecutor and therefore could not have verified which documents seized in France the BCA had sorted, nor could it verify that there were no other exculpatory documents. Caudalie contested the fact that the documents that the BCA had not retained were not in the investigation file and that Caudalie was only informed of the sorting of the documents seized during the search in France, without being able to give its opinion on the selection of the documents in due time.
The Competition College replied that following the dawn raids, both in France and in Belgium, Caudalie received a copy and/or a list of all the documents seized, including the documents that were not included in the investigation file. Caudalie had known the result of the sorting out of the documents seized during the search in France since receiving the Statement of Objections on 29 May 2020. Caudalie was therefore in a position to request that documents be added to the file in time to prepare its replies to the Statement of Objections and the Proposed Decision. Moreover, the Prosecutor’s team carried out a computerised sorting of the documents using the same keywords and software as the ones used during the search of Caudalie’s premises in Belgium, which, according to the Competition College, is a good investigative practice. The Competition College did not consider it credible that among the documents seized in France but not appearing in the procedural file, there could have been exculpatory elements contradicting the documents seized in Belgium with arguments that Caudalie could not have developed based on the documents used by the BCA’s Prosecutor.
For these reasons, the Competition College decided that the sorting of the documents received after the dawn raids in France did not infringe Caudalie’s right to a fair trial or its rights of defence.
Confidentiality issues, access to the investigation file by the parties under investigation, and more generally the principle of respect for a party’s rights of defence, are topics that are important to the parties and that have been decisive for the outcome of a number of cases in the past.
For example, after a legal battle lasting for more than 10 years and that went up to the Belgian Supreme Court, the BCA’s dawn raids in the Stevedores case were declared illegal and the case was terminated without any infringement decision.
Also, in the context of the investigation of the alleged concerted practices in the retail sector dating back to 2007-2008, the Prosecutor decided to split the case into two separate cases, one relating to coordinated price increases on chocolate products and another on DPH (drugstore, perfume and hygienic) products. Some of the parties in the “chocolate” case had requested access to the “DPH” file, but this access was denied. As the two cases had a common origin and joint investigation measures had been taken, and the parties had not been granted access to certain documents, which were the result of this joint investigation, the Competition Council decided that not granting access to the “DPH” file would prejudice the parties’ rights of defence. The Competition Council decided that it could not examine on the merits the Statement of Objections submitted by the Prosecutor in the “chocolate” case.
In the meantime, some procedural issues have been clarified in the amended Belgian Competition Act. The BCA also adopted guidelines on specific topics and so has provided details to companies in the market as to how it will apply or interpret certain legal provisions, including in the context of dawn raids carried out in Belgium. These guidelines contain specific rules regarding electronic searches, which the Competition College explicitly took into consideration and referred to in its decision against Caudalie when assessing Caudalie’s procedural claims regarding the composition of the investigation file. The BCA’s decision in the Caudalie case, has been appealed by Caudalie before the Market Court. On 30 June 2021, the Market Court temporarily suspended the implementation of the commitments imposed on Caudalie pending its decision on the merits in the appeal proceedings.
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