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Competition Law, Cartels and Compliance with Hein Hobbelen

Posted by on 06 December 2016
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In your presentation at our Competition Law Summer School you referred to recent European Commission cartel decisions. Which one have you watched with the most interest recently?

For any respectable competition lawyer, it’s not possible to ignore the latest Commission decision from 19th July 2016, which was a decision surrounding truck production.

In that case, truck producers had – according to the Commission – colluded for fourteen years from 1997-2011 on truck pricing and on passing on the cost of stricter emission rules. Most companies acknowledged their involvement and they agreed to settle the case.

Now, if you’d asked me ‘what are the key takeaways of this case?’ I would say that the first thing is that the sheer size of the fine is enormous. The European Commission imposed a fine of €2.9 billion, which is more than twice the previous EU record. Moreover, what is interesting here is that the case is about passing on the costs of regulation. The case started in 1997 when stricter emission rules were contemplated by the European Commission and this case is an example where companies – according to the Commission – colluded on the consequences increased costs of the stricter emission rules.

You have presented about recent trends in Commission dawn raids. What are the three key trends in your view?

Dawn raids are always an event that people are very interested in.

I’ve attended a couple of recent dawn raids, and I think that key observations I made in these recent Commission inspections are as follows:

First, regarding the inspection start and the length, I think what we have seen recently is that the Commission tends to stay longer and longer at our clients’ sites. We have seen recent raids where the raid itself started on the Monday morning and only ended on Friday evening.

Moreover, we’ve seen the Commission come in with very large teams at multiple sites. At one of our client’s sites, the Commission – at a certain moment in time – had twenty two officials present.

Furthermore, we’ve seen the intense use of sealing during these raids. The Commission, every evening, put seals on the door of the office where they had installed themselves with all their IT materials.

In terms of the presence of external counsel, we have seen that the Commission strictly follows guidance from the General Court’s KWS judgment. That’s an interesting case, where a Dutch secretary refused the Commission entrance to the premises of that company when the Commission arrived there for a dawn raid. The police were called and forced entry, which cost it dearly. The Commission imposed a significant additional fine for the obstruction of a raid. This went all up to Luxembourg, and in the judgment of the Court, the Court made a distinction between the Commission being able to enter the premises, handing over the inspection mandate, and taking ownership of IT systems and phones, and – on the other hand – the actual search at the premises starting. So the delay for the Commission to really start the inspection without presence of external counsel must, according to the Court, be strictly limited. But it all, the Court says, depends on the circumstances. So you will always have to make a specific analysis of the specific circumstances to see how you’ll react when the Commission wants to start a raid without an external counsel being present.

I think that for companies, the key takeaways on this subject are:

Is your dawn raid guidance up to speed? So, does the legal department know what to do in terms of getting external counsel present at raids?

And it’s also I think important that security procedures are carefully checked so that the company is ready for seal protection during raids.

Another issue that we have encountered in recent raids is we’ve seen that the European Commission are consistently targeted in-house legal team members, so a key takeaway for in-house counsel: you may be the next target.

What we’ve also seen in IT searches is that the Commission – on some occasions – was willing to accept what I will refer to as a ‘privilege filter’. What does it mean? The Commission was willing to put the names of regular external counsel of our particular client into the search terms and, by doing that, filtering out a lot of privileged material upfront. This also means that the importance of using appropriate privilege wording in internal and external communications cannot be underestimated.

Finally, we saw that the advice of external counsel being passed on internally may lead to quite some discussions. Under EU law, advice of external counsel passed on internally is covered by legal-professional privilege. However, we have seen occasions where (for example) a summary of advice from external counsel was incorporated in a very long presentation, and only two slides of that presentation contained the summary of the advice of external counsel. Ultimately, this led to a lot of discussions with the Commission, which finally accepted privilege. But this does show that companies must be very careful in summarising advice of external counsel and how they communicate that internally.

Finally, what we’ve seen – and that is not entirely new, obviously – is that although paper searches are certainly not necessarily a thing of the past yet, IT is key. The Commission has installed itself in an IT war-room and from there, with its IT personnel, it carried out the IT search onsite.

I think a key thing that we have observed is that the Commission has been very keen to finalise the IT search at the premises of our clients, and we have understood from the Commission that this is something as a matter of policy they try to achieve now. So rather than collecting IT material and continuing to search off-site at the Commission’s premises, the Commission is very keen to finalise the IT search on-site at the client’s premises.

So what does that mean? It’s very important that IT personnel of the client receive training. Companies would be wise to consider including some IT personnel in compliance programmes.

Finally, we have seen in recent raids that private devices of employees (to the extent that they are used for business purposes) are certainly not immune for searches, as has been explained by the Commission in its Guidance documents. We’ve seen many occasions where such mobile devices have been checked because the Commission suspected the existence of potentially damaging material on such devices.

I think that’s quite a lot of key trends from raids. It always remains a very contentious subject and I thought I’d just give you these key trends in a nutshell.

What’s been your favourite thing about attending the Summer School?

I think there are many nice things at the Summer School! I think, first of all, the audience is very international and very diverse which always brings about a lot of interesting discussion. There are people here from private practice, from in-house legal departments, and all from many countries across the globe, so I think that’s a very particular interesting aspect of this Summer School.

Secondly, I think the surroundings here in Cambridge are very inspiring, so I would certainly recommend people to come here next year and join this great Summer School.


Hein Hobbelen

Hein Hobbelen is a Counsel in Freshfields Bruckhaus Deringer’s antitrust, competition and trade (ACT) group, based in the Brussels office. A Dutch qualified lawyer, Hein is a member of the Amsterdam and Brussels bars. Prior to joining the firm, Hein worked as an assistant to an MEP at the European Parliament and as a private practitioner at the law firm Stibbe. Hein’s practice focuses on European and Dutch competition law as well as communications, media and technology regulation. He has experience across a diverse range of industry sectors including communications, media, glass, technology, gases and chemicals, construction materials, healthcare and financial services.

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