Slovak Republic: Unlawful cartel inspections

Author: | Published: 11 Jul 2016
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Daniel-Futej
Daniel Futej Daniel Grigel

The Slovak Republic Antimonopoly Office (AO) sometimes conducts spot inspections to secure evidence of a possible unlawful cartel agreement between business operators. These inspections represent a substantial intrusion by state powers into the privacy of any firm. It is therefore a positive sign that the Slovak Supreme Court (the court) has set out specific conditions and parameters for these inspections. One example is the court's recent decision on the unlawfulness of a cartel inspection conducted at an IT company.

During this inspection, the AO secured extensive email communications of the business operator's employees, along with trade and contractual documentation. This was secured as part an investigation into a possible cartel agreement between several business operators that had been supplying hardware and software for various state- and self-governing institutions under the operational programme known as Information Society (OPIS) since 2007.

Written authorisations

In its examination of the inspection's lawfulness, the court firstly dealt with the written authorisations for conducting the inspection issued by the chief of the AO for specific inspectors. The inspectors identified themselves to the business operator with these authorisations when they conducted the inspection. It was the court's opinion that for an inspection to be more than merely a so-called fishing expedition (a visit to a business operator to randomly collect information and documents), the authorisations must contain a sufficiently concrete substantiation for conducting the inspection. In the court's opinion, this substantiation should: describe the basic characteristics of the offence under investigation; indicate the affected market; and, provide explanations that give rise to serious evidence leading to the AO's suspicions regarding the business operator.

The court stated that, although the substantiations of the authorisations were relatively extensive, they were written in general terms without sufficiently describing the evidence the inspectors were supposed to be looking for. In particular, it was the court's opinion that although the AO partially substantiated its suspicions regarding possible cartels in public procurement for IT services for self-governing regions, the authorisations did not indicate any similar, concrete substantiations of the suspicions relating to other projects that were carried out under OPIS.

In the court's opinion, the inspectors could, at most, look for information related to supplies of IT services for the self-governing regions. Because the inspectors searched for information about other projects carried out under OPIS, they exceeded the authority conferred on them, and thereby acted unlawfully and unconstitutionally.

As to the actions of the AO, the court stated that it followed from the wording of the authorisations that the AO wanted to ensure that the inspectors could look through anything concerning OPIS since 2007, even though the AO had only substantiated suspicions of possible cartel agreements in the supplies of IT services for self-governing regions, and those services comprised only one of the projects carried out under OPIS.

Inspectors' procedures

The court also pointed out flaws concerning the inspectors' procedures. Firstly, the court criticised the AO inspectors for collecting all the information on the business premises in just one day without any effort to select, directly on the premises, only the information and documents relevant to the investigation. This was despite the fact that the authorisations gave them five business days to conduct the inspection. The court rejected the AO's argument that the inspectors intended to perform a detailed selection process at a later time at the AO when they examined the secured evidence.

The court also analysed the key words that the inspectors used to search for potentially important emails and documents they later took back to the AO. The court stated that some of the key words were not chosen correctly, as they were words commonly used by employees in an IT company in regular email communications. The court rejected the AO's argument that if the key words even generally came under the subject matter of the inspection, then all the search results on those key words automatically amount to information the AO can secure as part of the inspection.

After considering all of these flaws in the inspection, the court prohibited the AO from examining or using in their investigation any content on any of the information storage and retrieval devices and documents secured on the business operator's premises. The court further ordered the AO to destroy all secured documentation and information storage and retrieval devices, irretrievably and on official record, in the presence of the business operator's legal counsel.

Daniel Futej and Daniel Grigel