Legality of dawn raids based on the statements of other competitors
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Czech Republic
I enjoy working with innovative, creative and technology-rich businesses. Having joined our firm in 2009, I head up our Intellectual Property and Tech & Comms Groups in the Czech Republic and Slovakia.
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The Czech Office for the Protection of Competition (“Office”) won the dispute with FORTUNA GAME a.s., TIPSPORT a. s. and CHANCE a.s. before the Supreme Administrative Court over legality of the Office’s investigation which was based on other competitors’ statements and publicly available articles. The reason for the investigation was the suspected existence of a cartel agreement between the named gambling operators.
The matter at dispute was whether during a dawn raid carried out in 2019 at FORTUNA’s premises, the Office had clear, specific and sufficient indications of a reasonable suspicion of distortion of competition and whether this anti-competitive conduct was sufficiently described in the authorization to conduct the local investigation. The first-instance court concluded that this was not the case because the Office had no real indication that the companies had coordinated odds betting and that the relatively broad local investigation shows signs of a fishing expedition.
The Supreme Administrative Court, however, concluded that the Office’s activities prior to the commencement of the administrative proceedings themselves are not intended to determine the anti-competitive conduct and its precise legal classification. The requirement to conduct an extensive investigation and gather evidence before the dawn raid itself would make the dawn raid essentially redundant. Furthermore, the investigated entity could warn potential participants of an anti-competitive conduct or destroy relevant evidence.
In this particular case, the Office had available a detailed statement of another Czech gambling company and one anonymous statement of a foreign company (both competitors of FORTUNA). The statement of the Czech company was extended upon the Office’s request and contained valuable, precise and well-evidenced information. There were also published articles supporting these statements that were available to the Office.
The Supreme Administrative Court concluded that the credibility of the source cannot be diminished by the fact that it was made by a direct competitor and that their statements should not be assessed as a priori unreliable and subjective. The reason is that, in some cases, only direct competitors have the necessary “inside” information about anti-competitive behaviour of other competitors.
Following this decision, the Office announced that it plans to use dawn raids more often. Therefore, it will be interesting to follow further developments of the Office’s exercise of investigative powers which, in addition, are to be further strengthened by the currently discussed bill. The decisions of the Supreme Administrative Court are available in Czech here and here.
For more information contact Vojtěch Chloupek and Jiří Švejda.
