In the Land of (Para)Criminality the European Court of Human Rights confirms the Criminal Nature of a Fine for Obstruction of a Dawn Raid Conducted by a Competition Authority

The Pro Plus v. Slovenia Case

The facts of the Pro Plus v. Slovenia¹ case concern a dawn raid held on the morning of 11 August 2011 by the Slovenian competition authority at the premises of Pro Plus, the owner of the main Slovenian television station, following complaints from two competing stations on suspicion of abuse of dominant position.

The Pro Plus staff who received the authority officials refused to be served of the inspection decision and did not allow the proceedings to begin without instructions from the company’s management (who was absent), which led inspectors to leave the premises, returning afterwards accompanied by the police. Almost two hours following the initial entry of the inspectors, the inspection finally began after the company director arrived and affirmed its full cooperation with the authority. In February 2012, a fine of EUR 105 000 was imposed on Pro Plus for obstructing the investigative activity of the authority.

On appeal, Slovenia’s Supreme Court rejected Pro Plus’s request for an oral hearing and for witness testimony. The company therefore made a complaint to the European Court of Human Rights (ECHR) on the grounds of a breach of Article 6 of the European Convention on Human Rights (Convention), which enshrines the right to a fair trial in criminal proceedings.

While the penalties laid down in Slovenian competition law are formally administrative (and not criminal) sanctions, and are enforced by an administrative authority, the ECHR established the application of Article 6 of the Convention to the case.

According to the case-law of the ECHR, the legal classification of a measure under national law is only one of three factors used to determine the existence of a “criminal charge” in the light of Article 6. The Court also needs to consider “the very nature of the measure and the nature and degree of severity of the ‘penalty’”. In this case, the ECHR considered, first, that the rule aimed at ensuring the effective exercise of public authority powers, in the general interest of society, which was also protected by the criminal code in Slovenia. In addition, the Court also noted that both the amount of the fine imposed and the maximum fine the applicant risked incurring in (EUR 500 000) were significant and the imposition of the penalty more than six months after the inspection had occurred confirmed its punitive and dissuasive purpose.

For these reasons, the Court held that Article 6 of the Convention was applicable, which required a full judicial control of the authority’s decision, including an examination of the facts (and not just the applicable law). As the Slovene Supreme Court, the only court to intervene in the case, had refused to review the facts submitted by the company and to hear the witnesses relevant for establishing the relevant evidence, the ECHR declared that the fundamental right to a fair and equitable process had been infringed and condemned the Slovenian State to the payment of a compensation and expenses to Pro Plus of EUR 62 500.

Comment

The Pro Plus v. Slovenia case brings a renewed contribute by alerting lawmakers and national courts to the irrelevance of the formal qualification of penalties for anti-competitive conduct, when they are potentially high and have an essentially punitive intent – which is the case in Portugal as in most other EU Member States.

The ECHR had already confirmed in 2011, in the Menarini judgment,² that a fine of EUR 6 million for breaching the Italian competition law substantive rules on cartels constituted a criminal penalty for the purposes of Article 6 of the Convention, notwithstanding its being characterized by national law as having an administrative nature. With the Pro Plus ruling this case-law becomes applicable to virtually any penalty imposed by an administrative authority for competition law violations, even when only procedural rules are at stake (such as those requiring full cooperation during dawn raids) and the fines imposed are relatively limited (in the case of Pro Plus, “only” EUR 105 000).

This means that, irrespective of the characterization of penalties as administrative, compliance with Article 6 of the Convention makes fully applicable to proceedings before administrative authorities — such as the Competition Authority in Portugal — a set of essential principles, including the rights of defense, but, above all, the right to a judicial appeal by an independent court exercising full control, including the review of the facts and evidence, without any limitation.

The Pro Plus decision is also an important reminder for companies to consider the convenience of implementing, notably in their compliance programs, internal dawn-raids procedures, including the clear assignment of responsibilities to all relevant employees (in particular those at the reception or front office), in order to exclude the risk of possible obstruction charges as well fines that, both for the European Commission and the Competition Authority, may reach 1% of the annual turnover of the company concerned.

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