The European Union’s top court on Thursday annulled a request for information the European Commission had made to several cement makers in a cartel probe, a judgment that could curtail the competition watchdog’s investigative powers.
The commission in 2010 opened an investigation into several cement makers—including Heidelberg Cement, Holcim and Lafarge—saying it suspected the companies of possibly restricting imports into the EU, divvying up markets and coordinating prices.
A year later, the commission sent lengthy questionnaires to the companies, requesting information on their business practices. The probe into the cement makers was closed last year, but the companies have been challenging the commission’s rights to demand such vast amounts of information.
On Thursday, the European Court of Justice, the EU’s highest court, sided with the companies, saying the commission’s requests went beyond its rights under EU law.
“The questions sent by the commission to the companies are extremely numerous and cover very different types of information,” the court said. “However, the commission’s decisions don’t disclose, clearly and unequivocally, the suspicions of infringement which justify their adoption and don’t make it possible to determine whether the requested information is necessary for the purposes of the investigation.”
The ruling overturns a 2014 decision by the EU’s General Court, which said that the commission questionnaires were justified.
At the time, the commission said that the decision was an important confirmation of its rights to investigate suspected anticompetitive behavior.
“The court confirmed that it is for the commission to decide what information it considers necessary to request from companies when investigating potential anticompetitive practices, as long as the commission can reasonably expect that the information would help it to determine whether the alleged infringement took place,” it had said. “In addition, the court held that the commission is entitled to request undertakings to submit the requested information in a specific format.”
On Wednesday, however, the commission played down the impact of the new ruling. “The implications of the judgments are likely to be confined to the present case, as the ECJ pronounced itself only on the issue of reasoning,” it said.
David Anderson, antitrust partner in the Brussels office of Berwin Leighton Paisner LLP, said the ruling will deter the commission from undertaking “fishing expeditions” in future cartel investigations, but added that its impact may be limited in practice.
In most cartel investigations, the commission doesn’t need to shoot in the dark as it did in this case, because it usually starts an investigation armed with evidence supplied by a whistleblower seeking leniency, he said.
“Today’s decision by the court will be welcome by those who feel the commission at times overreaches and overplays its hand in exercising its already very extensive investigatory powers in the cartel space,” said Mr. Anderson.
Wall Street Journal