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Competition Law

Analysis - debate - current awareness

07 JUN 2013

Breaching the seal

By John Cassels

In order to facilitate effective enforcement of the competition rules, the European Commission is empowered to impose a financial penalty of up to 1% of turnover on companies that obstruct its investigations.  

As part of its energy sector investigation, the Commission carried out unannounced inspections at the premises of E.ON Energie in Munich. The inspection began at 15.00 and documents found that day were stored, without having been copied or completely catalogued, in a room made available by E.ON. At the end of the day, the room was locked and secured against unauthorised access by means of an official seal. The record of sealing was signed by a representative of E.ON who was informed of the significance of the seal and the consequences of breaking it. 

When the inspection team returned to E.ON's premises the following day, the seal was attached to the door and door frame but a 'VOID' message was evident over its entire surface and the seal had been displaced by about 2mm. 

As possible explanations for the change in the condition of the seal, E.ON suggested:

  • vibrations in the office wall and shaking the locked door;
  • displacement of the seal by the cleaner as she had wiped the seal with a damp cloth and the effect of cleaning product; or
  • partial loosening of the seal because of poor fixing and poor adhesion to the seal surface.

Whilst the Commission accepted that the duty lay with it to prove the breach of the seal, it concluded that the very fact that the seal showed all the elements which were typical for a breach of a seal was itself sufficient evidence that a breach had occurred. Absent a force of nature (presumably an earthquake or some equally momentous event), it could be assumed that a seal will only be removed by deliberate action. A fine of €38m was imposed on E.ON in respect of the broken seal.

It is possible to foresee situations in which employees who have been involved in competition law breaches seek to protect themselves by breaking seals and removing documents, even against direct instruction, and thereby render their employer liable to penalty. Where a company has issued instructions to all persons who might be able to access a seal that they must not touch it, would any breach of the seal still be negligent? The only sure way to deal with that risk would be CCTV monitoring or permanent security guard stationing outside the sealed room.

The fact that it could not be established whether the door had actually been opened or documents removed was not a mitigating circumstance. 

If you would like to discuss these issues, please do not hesitate to contact John Cassels at john.cassels@ffw.com.

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