Dawn Raid Analysis Quarterly

Key Q1 2025 legal developments

Below is a selection of key developments in Q1 2025:

• Human rights challenge of dawn raids in Romania
• New AI detection tool in Spain
• Czech Supreme Administrative Court rules against seizure of documents based on generic keywords

Human rights challenge of dawn raids in Romania

On 18 March 2025, the European Court of Human Rights (ECHR) delivered a judgment concerning a challenge of two dawn raids by the Romanian authorities. The first concerned a dawn raid of the business premises of a bank by the Romanian Competition Council. The second concerned a subsequent dawn raid at the bank's business premises conducted in the context of a criminal investigation of several employees (alleged fraud and money laundering). The bank alleged an infringement of Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (right to private life, home and correspondence).

With respect to the dawn raid by the Romanian Competition Council, the ECHR ruled that the impugned interference with the bank's rights was proportionate to the aim pursued. The ECHR noted the following factors as contributing to the proportionality of the dawn raids.

• The dawn raid had been directed at a legal person which gave it a wider margin of appreciation than would have been the case had it concerned an individual.
• Only a limited number of documents (32 emails) were taken, rather than a download of all existing documents on the server. The raid did not involve a "massive and indiscriminate" taking of documents.
• The bank's representatives had the right to submit requests and make comments but signed without any objections the inspection report in which all the documents viewed and taken by the inspectors were listed.  
• The dawn raid had its basis upon a decision approved by the plenary of the Romanian Competition Council.
• Representatives of the bank were given copies of the two decisions on which the inspection was based (albeit the decisions mentioned only briefly the suspected breaches)
• The inspection did not start until a legal representative of the bank was present
• The inspectors orally informed the bank representatives about the scope and extent of the inspection.
• The inspectors carried out their inspection only in the presence of representatives of the bank and drew up a detailed inspection report that mentioned all the offices and documents accessed and included a full list of the documents taken.
• The domestic legal framework offered the possibility of requesting that documents taken by the competition inspectors be kept confidential or be returned if they were not necessary for the investigation

The ECHR noted that the inspection had taken place without any prior warrant of a judge, but solely on the basis of an administrative decision of the Romanian Competition Council. Following its case law, the ECHR stated that the absence of a prior judicial warrant could be counterbalanced by the availability of an ex post facto judicial review that is effective in the particular circumstances of the case. Whilst the ECHR observed that the domestic legal framework did not provide for a specific avenue to complain in respect of the conduct of inspections, it highlighted that the Romanian Competition Act provided for the possibility of complaining about decisions of the Council at the end of the investigation, and that the general administrative proceedings law provides for the possibility of contesting before the courts either administrative decisions or a failure to resolve a petition by a public authority. The ECHR highlighted the fact that the bank had initiated proceedings immediately after the inspection based on general administrative proceedings law concerning the two administrative decisions adopted in the case, where the bank raised complaints concerning the conduct of the inspection. In this context, the ECHR considered that the High Court of Cassation and Justice had reviewed the scope and proportionality of the inspection, and that the necessity and proportionality of the dawn raid had been subject to adequate ex post review.

The ECHR took a different approach to the criminal inspection, holding that the circumstances failed to ensure effective protection of the bank's right to respect for its home and correspondence. The ECHR held that there had been a violation of Article 8 of the Convention, and awarded the bank non-pecuniary damages of EUR 2,600 and legal costs of EUR 10,000. 

The ECHR highlighted the following circumstances:

• The seizure of the two computers belonging to the bank was carried out following a decision of the prosecutor that was not subjected to judicial review in that specific phase of the proceedings (no judicial warrant)
• The bank raised a number of complaints as regards the lack of reasoning, justification and lawfulness of the seizure of the computers in question as objections to the seizure report as well as in the form of a complaint before the superior prosecutor. However, the hierarchical superior prosecutor only examined the general compliance of the prosecutor's order with the relevant legal provisions, without replying to the bank's specific complaints.
• The bank had not been able to benefit from an ex post facto judicial review, as the criminal investigation was still pending.
• The prosecutor's decision had been adopted and carried out within the scope of a former legal framework. Under the legal framework in force at the time, the bank could not contest the measures in question before the courts.

New AI detection tool in Spain

The Spanish competition authority Comisión Nacional de los Mercados y la Competencia (CNMC) has been particularly active in trying to detect collusive bids in public procurement processes. Thanks to various regulatory changes in Spain, the CNMC now enjoys access to data from the public procurement and commercial registry databases, which are key to ex-officio detection. The CNMC's access to data on unsuccessful bids (losing bids) has paved the way for the development and implementation of the BRAVA system (Bid Rigging Algorithm for Vigilance in Antitrust).

CNMC's Economic Intelligence Unit has been working on BRAVA since 2021. The tool which has been operative since 2023 is a classification tool based on supervised machine learning that uses different AI models to flag potential bid-rigging activities and classify the different bids submitted to a tender as likely to be collusive or competitive. The data from the collusive bids are labelled, as well as the contrasting competitive ones, and they are then divided into a training set and a test set to further advance the supervised machine learning process through different iterations.

Although bid rigging detection is BRAVA's main task, the CNMC reports that it can be used also regarding other horizontal agreements between companies, as well as for the analysis of markets reported by whistle-blowers or informants. It can also assist in the identification of anticompetitive agreements in markets already under investigation or where competition is a concern, especially in markets suspected of harboring stable cartels.

Although it is too early to measure the precise impact of BRAVA, it is expected to play an important role resulting in increased detection and fines for anticompetitive behavior. The CNMC also expects that the mere existence of the tool will discourage the creation of cartels and encourage the use of the leniency program. Considering that public tenders in Spain represent around 20% of GDP, the CNMC has made it a priority to make sure that bids are competitive and considers BRAVA to be a pioneering tool worldwide among competition authorities.

Czech Supreme Administrative Court rules against seizure of documents based on generic keywords

The judgment of the Supreme Administrative Court (SAC), handed down in December 2024, clarifies avenues to challenge dawn raids in the Czech Republic on the basis that generic keywords have been used that are unrelated to the subject matter of the investigation. The judgment relates to a dawn raid carried out by the Czech Competition Authority (CCA) in June 2023 on the business premises of electronics retailer company HP Tronic Zlín in relation to alleged prohibited resale price maintenance (RPM) practices. The retailer challenged the legality of the dawn raid before the local court.

The SAC appellate judgment concerns one particular email that the CCA located during the inspection using a generic keyword which may be loosely translated as "settle" (in Czech: "narovn"). The CCA had given no justification in the inspection protocol for the use of this particular keyword. The SAC distilled the grounds of the appeal into two main questions: (i) whether there was an apparent link between the keyword and the subject matter of the investigation and, if there was no such apparent link, (ii) whether the CCA could cure this deficiency by explaining its reasons for using the keyword.

The SAC found that the keyword was too general and lacked any apparent link to the subject matter. Furthermore, despite objections raised by the company during the inspection, the CCA did not provide any justification of its choice of the keyword in the inspection protocol. In fact, the authority did so for the first time only in the appellate proceedings before the SAC. There, the CCA was claiming that to "settle" in Czech is often used in the RPM context where its meaning would be to fix (i.e., to "align") prices of the reseller and that it was therefore legitimate to use it in this context. However, the CCA gave its explanation too late.

The SCA's judgment underlines that where the CCA ventures on a "fishing expedition" during a dawn raid and seizes electronic evidence located by using generic keywords that are apparently unrelated to the conduct being investigated without further explanation, the affected business will likely succeed if it brings a dawn raid challenge. While the use of one or more general keywords on its own will not lead to the entire investigation of the CCA being declared excessive, it would make the use of documents discovered as a result of them inadmissible. The relevant court will evaluate all available keywords comprehensively, taking into account all relevant factors, including the number of documents found using the keyword in question and the effort of the CCA to comply with the scope of the investigation.