European General Court Shuts Down Fishing Expedition In Competition Investigation

The European General Court has ruled that the European Commission overstepped its authority by conducting a broad reaching competition investigation in electric cable markets that amounted to a “fishing expedition.”

The General Court annulled much of a European Commission decision that ordered an inspection of Nexans SA and its wholly-owned subsidiary Nexans France SAS – two French companies active in the electric cable sector.

According to the Judgment of the General Court, the Commission began collecting evidence in January 2009 to determine whether or not Paris-based Nexans SA and its subsidiary acted in concert with other companies to control what the Commission broadly defined as “the supply of electric cables and material associated with such supply.”

However, the Nexans companies argued that the Commission did not have enough evidence to cast such a wide net because first the investigators asked only to speak with employees working on high voltage underwater cables.

Moreover, a February 2009 press release  also announced that the Commission was investigating companies making “high voltage undersea cables” rather than companies making electric cables in general terms.

The Court’s opinion noted that before beginning the Nexans investigation, the Commission had previously concluded low, medium, and high voltage cables warranted separate product markets.

“A distinction between low and medium voltage on the one hand and the higher voltage ranges high and extra-high voltage on the other hand is required due to the different competitive conditions governing the supply and demand of these products,” the Commission stated in a July 2000 merger decision.

Finding the scope of the investigation far broader than the grounds justifying the investigation, the Court overturned any part of the Nexans investigation that did not specifically pertain to high voltage underwater and underground electric cables.

Despite keeping a significant part of the investigation intact, the Court’s opinion warns the Commission to be more careful to respect individual rights in future investigations.

“Although the Commission is not required to communicate to the recipient of an inspection decision all the information at its disposal concerning the presumed infringements, or to make a precise legal analysis of those infringements, it must none the less clearly indicate the presumed facts which it intends to investigate,” the Judgment stated.

Tagged in: Antitrust Enforcement, International Competition Issues,