Irish Supreme Court confirms limits on dawn raid powers

The Irish Supreme Court ruled on 29 May that seizure of the email account of a director of the construction company CRH by Ireland’s competition law enforcer, the Competition and Consumer Protection Commission (“the CCPC”), was unlawful. This judgment provides clarity as to the legality of the CCPC's practice following unannounced inspections (known as dawn raids) of the bulk seizure of electronic data for subsequent off-site review without a prior assessment of relevance. It affirmed the previous decision of the High Court that the CCPC had seized materials which were outside the scope of the search warrant, and thus prevented the CCPC from accessing such materials. 

Background

In May 2015, the CCPC dawn raided Irish Cement Limited’s headquarters (a subsidiary of the construction giant CRH) as part of an investigation into allegations of anti-competitive behaviour in the Irish construction industry. During the raid, it seized a vast amount of electronic documents. The plaintiffs, ICL,CRH and Seamus Lynch, the former managing director of ICL, claimed that over 380,000 computer files (approx. 96 gigabytes of data) were seized, colourfully describing it as equivalent to  "bottom trawling” (a process used in deep-sea fishing where giant trawl nets are dragged along the seabed, capturing all available marine life).

Of particular relevance to the case was the seizure of the entirety of Mr Lynch’s email account. The plaintiffs claimed that a significant proportion of the emails seized were outside the scope of the search warrant. This was due to the fact that they were related to the CRH company, rather than ICL which was the subject of the search warrant.

CRH sought an injunction prohibiting the CCPC from accessing, reviewing or using any seized documents that were unrelated to ICL’s commercial activity. CRH further argued that the CCPC, by its actions, had breached its right to privacy under the Constitution and International Treaties. 

The CCPC acted beyond its powers

CRH argued that the CCPC had acted outside the legal scope of its search warrant in seizing the entirety of Mr Lynch’s emails. This was contrary to its investigation powers under Section 37 of the Competition and Consumer Protection Act 2014, and the constitutional right to privacy. The Court noted that although Section 37 is drafted allowing for a broad interpretation of the investigative powers, CCPC officials conducting a dawn raid must act proportionately and with regard to the constitutional right to privacy. 

During proceedings, the CCPC accepted that there was a high probability that irrelevant data and material was seized. Notably, they took no steps either prior or during the dawn raid to reduce this risk. The Court took the view that proportionality was essential in this case. As Section 37 is broadly drafted giving the CCPC wide-ranging investigative powers, it would be almost tantamount to a power of “general search” if no proportionality requirement was imposed on it. 

The Court ruled that the CCPC's procedure of search, seizure and retention was disproportionate and the CCPC was never entitled to have the vast amount of extraneous material in its possession. Despite the relatively specific nature of the background material available to the CCPC, the search warrant lacked specificity and was apparently unlimited in nature. This was sufficient for the Court to find that the procedure of the CCPC lacked proportionality. It held that the search warrant and all subsequent actions were ultra vires (went beyond the scope of) Section 37.

What is the scope of the CCPC's powers now?

The Court noted that the CCPC's procedure would not have been unlawful had the principle of proportionality been observed. This could have been achieved, for example, if the CCPC had enacted a focused pre-search procedure or an effective post-search procedure which permitted an affected party to make observations.

Following the raid, ICL’s solicitors proposed methods of reviewing the legally privileged material to the CCPC as well as suggesting a process of review, whereby all the seized documents would be subjected to review by an independent third party solicitor. Despite these proposals, the CCPC maintained their entitlement to review all of the materials seized from ICL’s headquarters. 

This judgment is in line with previous case law of the European Courts such as Nexans and Deutsche Bahn which have provided guidance and limits on the scope of the Commission’s power in conducting dawn raids. It is likely that the CCPC will implement dawn raid guidelines which mirror the Guidelines at EU level, particularly as the Court here suggested that the CCPC might consider implementing a code of practice for future investigations.

For further information on this judgement, or for general advice in relation to competition law, contact the ByrneWallace EU Competition and Regulated Markets team.