Dawn Raid Update: Antitrust fines for deleting WhatsApp messages during inspection

On 24 June 2024, the European Commission (“Commission”) imposed a fine of nearly EUR 16 million on International Flavors & Fragrances Inc. and International Flavors & Fragrances IFF France SAS (together “IFF”) for obstruction of a Commission inspection in 2023.

Obstruction of inspection

In March 2023, the Commission carried out inspections at the premises of companies in the consumer fragrance industry including the review of data on mobile phones of some IFF employees. During its review, the Commission’s forensic IT experts found that a senior employee – who had already been informed about the inspection – intentionally deleted relevant WhatsApp correspondence with a competitor.

The Commission’s investigation into the fragrance industry is still ongoing (AT.40826).

According to Article 20 Regulation No 1/2003, the Commission may conduct inspections at the premises of companies suspected of breaching EU antitrust law. It can examine and take copies of records related to the business, irrespective of the medium on which they are stored. This also includes data stored on corporate as well as private mobile phones as long as they are used for professional purposes (“Bring your own device”). For example, messages containing business-related information exchanged with competitors via social media apps. Companies are required to submit to inspections ordered by decision of the Commission. They have a duty of active cooperation and shall act with particular diligence and take all appropriate measures in order to preserve the evidence available to them.

Fine risk

The Commission imposes strict sanctions for obstruction as it may jeopardize the effectiveness of its investigations.

According to Article 23 Regulation No 1/2003, the Commission may impose fines of up to 1% of the total annual turnover of companies which intentionally or negligently obstruct an antitrust investigation, e.g. by producing incomplete records during an inspection.

In setting the fine, the Commission takes the gravity and duration of the infringement into account along with the specific circumstances of the case. The fine amount should ensure that it does not pay off for companies to risk a procedural fine.

The Commission found the infringement by IFF to be of a very serious nature, considering that the infringement was intentionally committed by an employee in a senior position who was a target person of the investigation. Additionally, the Commission was not proactively informed of the deletion, but had to detect it in its review of the mobile phone. It thus considered a fine amounting to 0.3% of IFF’s total annual group turnover to be proportionate and deterrent.

However, since IFF immediately acknowledged the facts and cooperated by helping recover the deleted data, the Commission reduced the fine amount by 50%, resulting in a fine of EUR 15.9 million corresponding to 0.15% of IFF’s total turnover.

The Commission has previously imposed fines in a range between 0.065% and 0.25% of the companies’ total annual group turnover for breaching seals (AT.39326 – E.On and AT.39796 – Suez Environnement) and for accessing and diverting incoming emails from a blocked email account during inspections (AT.39793 – EPH and others). In other cases, it has considered obstructions during an inspection as an aggravating circumstance, increasing the ultimate fine imposed for the anticompetitive conduct (see for example cases AT.38354 - Industrial Bags, AT.38456 - Bitumen and AT.38432 - Professional Videotapes). This is the first case in which it imposes a fine for the deletion of messages exchanged via social media apps on a mobile phone during an inspection.

To preserve the effectiveness of its investigations, the Commission strictly scrutinizes any kind of obstruction. This also applies to the area of merger control: in early May it issued a Statement of Objection against Kingspan for providing incorrect, incomplete and misleading information which may ultimately result in severe fines (see Noerr News article).

Practical implications

Considering the significance of antitrust fines also for procedural missteps, dawn raid compliance is of utmost importance. Proper and regular trainings of employees can help to mitigate the risk associated with evidence manipulation for companies.

This case illustrates that trainings should explain the broad scope of searches in particular regarding the IT-environment and that such searches may not only encompass cloud services, desktops or laptops, but often also focus on tablets and other mobile devices. Importantly, private devices and media that are used for professional reasons can be the target of an investigation as well.

The Commission is continuously investing in its forensic capabilities, including up-to-date software and hardware, to detect deleted information. It also does not shy back from conducting dawn raids at employees’ private homes as a result of the increased working from home.

Please contact us if you have any questions regarding appropriate risk mitigation strategies.