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The General Court (GC) issued judgment on June 20 on the appeals that the Czech national rail operator, České dráhy, filed against two European Commission (EC) decisions authorizing inspections of its headquarters as part of an investigation into alleged abuse of dominant position.

Just as the Czech anti-trust authority had done previously, the EC was investigated alleged breaches of article 102 of the Treaty on the Functioning of the European Union (TFEU), in which České dráhy is suspected of predatory price fixing to retain its dominant position in the Czech Republic’s services markets for passenger transport and railway infrastructure management.

Case T-352/16

In its initial judgment, the GC partially overruled one of the EC’s decisions, considering that the authority lacked sufficient evidence of the conduct under investigation to justify an inspection of České dráhy’s headquarters. The GC stated that to justify an inspection, the information possessed by the EC does not need to prove “beyond a reasonable doubt” that the breach stated in its decision actually occurred. The authority must have “circumstantial evidence” to support its suspicion of a breach.

A decision to conduct an inspection cannot therefore contain formulations that exceed the scope of investigation “beyond what is proven in the sufficient supporting evidence” that the EC possesses when it makes the decision.

The GC analyzed each conduct included in the EC’s decision, and ultimately found that, regarding the alleged breach of charging predatory prices on the Prague-Ostrava line since 2011, the information the EC possessed before it made its decision (information it received from the company reporting the conduct, from publicly available sources, or from the information in the Czech anti-trust commission’s file) was sufficient.

However, the court ruled that the EC did not have sufficient supporting evidence to allow it to suspect a breach of article 102 TFEU consisting of alleged application of predatory prices or regarding routes other than the Prague-Ostrava line.

Therefore, it decided to (i) partially invalidate the decision insofar as it referred to other types of breaches of article 102 TFEU and to other routes, as there was not sufficient proof of this; and (ii) deny the appellant’s other motions.

Case T-621/16

Based on certain documents discovered in the first inspection, the EC made a second decision and carried out another inspection at the company’s headquarters. The Czech operator also decided to appeal this decision with the GC.

After assessing the documents, the GC ruled that the documents seized during the first inspection had been obtained legally because the inspection did not exceed the scope of a breach for which there was sufficient supporting evidence. Therefore, as the first decision was only invalidated partially, the GC denied the appeal.

The two judgments mentioned above add to the extensive body of case law on inspections, affirming decisions by the Court of Justice of the European Union in cases such as Nexans and Orange, regarding the requirement for protection against arbitrary and disproportionate interventions by public authorities as a general principle of EU law. For this principle to be upheld, inspection decisions must focus on obtaining documents that would be necessary for confirming situations for which the EC already has sufficient supporting evidence to suspect the existence of a breach.

Therefore, the relevance of these latest judgments is related to the fundamental rights in play in the context of anti-trust inspections, and with the extreme powers authorities have in this regard. This means that controlling their actions is essential for preventing them from taking actions that are arbitrary and disproportionate.

 

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maria.lopezridruejo@cuatrecasas.com

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marta.simon@cuatrecasas.com