The European Court of Human Rights ("ECHR") recently
acknowledged a complaint by Delta Bakery (the "judgment")
and confirmed that the Czech Competition Authority
(Úřad pro ochranu hospodářské
soutě~e, "CCA") violated Article 8 of the European
Convention on Human Rights ("Convention") when entering
the Delta Bakery premises without first obtaining a warrant.
The legality of the dawn raid, i.e. an unannounced inspection by
the CCA of the business premises of Delta Bakery held on 19
November 2003, was the subject of a long-running dispute. The CCA
performed the dawn raid within administrative proceedings initiated
for alleged violations of competition rules by Delta Bakery and
other bakeries. During the dawn raid, Delta Bakery refused to
cooperate and was penalised with a procedural fine (the
"procedural decision").
At the end of the administrative proceedings, all parties to the
proceedings were fined (the "core decision"). Delta
Bakery appealed against the core decision to the Chairman of the
CCA, who upheld the core decision. Subsequent appeals of Delta
Bakery to the Regional Court and Supreme Administrative Court were
also dismissed. Even the Czech Constitutional Court confirmed the
right of the CCA to enter business premises without obtaining a
prior judicial warrant, i.e. only on legal authorisation.
However, the ECHR considered this approach as illegal in the sense
of the Convention. The judgment questioned either already past or
future dawn raids either in the Czech Republic or elsewhere in the
EU, performed either by competition authorities or any other
administrative bodies acting solely on the basis of relevant
law.
Even if not the first of its kind, the judgment was surprising for
the Czech Republic. Until this judgment came into force, CCA
inspectors could enter the business premises of a company
undergoing inspection simply on the basis of their empowerment to
do so set by the Czech Act for the Protection of Competition
("Act"). A warrant, i.e. precedent judicial permission
for a dawn raid to be performed, has never been required for a dawn
raid on a business premises throughout the entire period during
which the CCA has been legally empowered to conduct such raids A
warrant is explicitly required by the Act only for an inspection of
private premises.
The ECHR had already found in other cases that dawn raids without a
warrant issued by the relevant competition authority were illegal
(Deutsche Bahn, Colas). However, the EU General Court did not
accept such a one-sided approach. In relation to the dawn raids
conducted by the European Commission ("EC"), which also
performs its dawn raids without prior judicial approval, the EU
General Court held in the case of Deutsche Bahn that the mere lack
of such a prior judicial authorisation would not necessarily result
in the unlawfulness of an inspection. With reference to the case
law of the ECHR, the EU General Court pointed out that the absence
of prior judicial authorisation is counterbalanced by subsequent
judicial review.
In the Czech Republic, we currently lack a sufficient and immediate
instrument of judicial review of an intervention by an
administrative body, such as a dawn raid performed by the CCA or
any other administrative body. First, the CCA does not perform dawn
raids on the basis of an administrative decision. Consequently,
there is no legal possibility to challenge such a step by the CCA.
Secondly, supported by the latest case law, in an action against
the decision of an administrative body on an infringement (core
decision) and an action against an unlawful action of an
administration body, the former prevails. This means that parties
to the proceedings currently only have an opportunity to challenge
a dawn raid in their appeal against the core decision. Such defence
is not sufficient from the point of the ECHR.
In the case at hand, Delta Bakery obviously was in a different
situation. At the time of that particular dawn raid, Delta Bakery
had an opportunity to appeal to the Court on the basis of an action
according to Section 82 of the Czech Administrative Code. Such
possibility was confirmed by the Supreme Administrative Court when
deciding on the procedural decision. However, Delta Bakery did not
pursue this legal instrument.
Therefore, the judgment shall be definitely challenged before the
Committee of the ECRH, as the decision is not definite. Both
parties are entitled to appeal against the judgment to the
Committee within a three-month period.
Nevertheless, the issue of insufficient subsequent judicial review
in the Czech Republic will require either a change in the
applicable laws, a different interpretation of recent legal
instruments or another solution. However, one thing is clear:
obtaining prior warrants is both the most complicated and slowest
approach.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.