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13 June 2013
The Constitutional Court recently declared that the dawn raid regime introduced by the Competition Protection Agency is not in line with the Constitution. The court has granted Parliament one year in which to change the Prevention of Restriction of Competition Act in this respect.
The existing regime sets out that the agency may carry out inspections of undertakings subject to agency proceedings (ie, dawn raids), based on an order for inspection issued by the agency.
Inspections are the agency's main tool for acquiring evidence and may be conducted against the will of the undertaking concerned. The agency has full investigative powers and may access all business premises and inspect all data carriers.
There is no hierarchy between the agency's different investigative prerogatives and it does not need to specify in the inspection order the exact business premises that it will search or the documents that it will deem of relevance. No judicial protection is allowed against an agency inspection order - parties may question its lawfulness only during the final decision on the infringement before the Supreme Court.
The Supreme Court has challenged this regime, arguing that it violates at least three basic human rights guaranteed by the Constitution:
The first two of these concerns were assessed by the Constitutional Court.
The Constitution guarantees the equivalent constitutional protection to legal persons as that granted to natural persons only with respect to some human rights; for the others, the level of legal protection either is lower or cannot be guaranteed.
However, the existence of a legal person, as well as the way in which it normally functions, is dependent on the fact that certain parts of the business should remain protected against intrusions of an external nature, including arbitrary interventions of the state. Legal persons should also therefore be entitled (to a certain extent) to the right to privacy.
Privacy of business premises
However, as the operations of legal persons are subject to certain constitutional limitations (including rules on the protection of competition), the state must be able to monitor their compliance with such limitations. The state is therefore entitled to have an insight in the workings of such persons without infringing the privacy privilege - for example, an inspector is permitted to enter business premises and undertake a visual inspection, even where such premises are not open to the public.
At the same time, the court acknowledged that the state's ability to inspect hidden parts of the premises with a view to seizing information on business operations (regardless of its carrier) goes beyond the bounds of what is reasonable. The privacy of legal persons in relation to internal matters must be protected as a constitutional right.
Privacy of communications
With regard to the right to privacy of communications, the court stated that there should be no distinction between individuals and legal persons - this constitutional right pertains to both. The Constitution states that the privacy of correspondence and other means of communication must be guaranteed; legal persons should therefore also be entitled to expect that the privacy of their communications is ensured when they do not wish to disclose the contents therein.
Inspections carried out by the agency under the existing regime are of a broad nature and represent an invasive intervention into undertakings' privacy, in relation to both business premises and communications, despite guarantees to the contrary set forth by the Constitution.
The Constitutional Court has recommended that a request for an advanced court order should therefore apply to inspections carried out by the agency under the act, and the agency itself should not be entitled to issue decisions on inspection (as is provided for by the act at present).
Parliament has one year in which to remedy the situation and enact a regime that conforms to the constitutional requirements outlined by the court. These privileges must be weighed carefully against other constitutional requirements, especially Article 74 of the Constitution (which states that commercial activities must not be pursued in a manner that is contrary to the public interest and prohibits practices that restrict competition).
The new regime must be drawn up within the recommendations laid down by the Constitutional Court. Therefore, although the standards for the protection of the right to privacy for legal persons may be set lower in comparison with the standards for natural persons, the legislature must not omit the requirement for an ex ante court order for situations in which the privacy of business premises and/or communications is impaired against the will of a legal person.
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