Deutsche Bahn AG, Holcim Ltd., Cemex SAB and six other companies filed challenges to evidence gathered in European Union antitrust probes as more firms turn to the courts to rein in the power of the region’s competition watchdog.
Deutsche Bahn, the German railway company, filed a lawsuit at the EU’s Court of Justice in Luxembourg over what it called an unjustified “fishing expedition” by investigators who raided its offices in March seeking evidence of antitrust infractions.
The complainants follow Intel Corp. in demanding a fairer treatment from the Brussels-based European Commission, which has the power to fine companies as much as 10 percent of yearly sales for carving up markets or abusing market dominance. The commission has suffered recent defeats in court appeals over antitrust penalties, with Edison SpA and Unipetrol AS having fines totaling 75.6 million euros ($109 million) tossed out.
The backlash shows “a general unease of the business community with the wide-ranging powers of the commission,” which is ‘both the judge and the investigator at the same time,” said Simon Hirsbrunner, a lawyer in the Brussels office of law firm Heuking Kuehn Lueer Wojtek.
Holcim, the world’s second-largest cement-maker, Cemex, HeidelbergCement AG, Schwenk Zement, Italmobiliare SpA and Buzzi Unicem SpA have also called on the court to rule that regulators asked for too much data in an investigation into an alleged cartel between cement producers, according to recent court filings posted on the EU’s Official Journal.
Getting regulators to return documents may not aid a company’s defense if officials have already seen them “even if they cannot be used in evidence,” said Suzanne Rab, a lawyer at King & Spalding LLP in London.
‘Misinterpreted and Ignored’
Cristina Arigho, a spokeswoman for the commission, declined to comment on the court challenges because the cases are ongoing.
Intel, the world’s largest maker of computer chips, argued in 2009 that regulators “misinterpreted and ignored evidence” in its court appeal against a 1.06-billion euro fine, the biggest ever issued by European regulators. The EU’s General Court hasn’t scheduled a date to hear that case brought by the Santa Clara, California-based company.
The commission’s powers contrast with its counterparts in the U.S., where a court decides antitrust penalties. The situation has sparked calls for more checks and balances during probes as well as a faster appeals process in the EU courts.
Companies under investigation aren’t required to answer questions that would force them to admit to a violation of EU law, EU Competition Commissioner Joaquin Almunia said in May. They are “obliged to provide other factual information and pre-existing documents.”
While EU law gives regulators “draconian and intrusive powers” to request information and make unannounced inspections to company offices, “such powers are not without legal limits,” said Rab.
Deutsche Bahn and some of its units were raided by EU regulators on March 29. The antitrust agency said it was checking on allegations that Deutsche Bahn Energie was favoring the group’s rail freight arm over others.
The Berlin-based rail operator said the commission went far beyond its authority with a “disproportionately wide” inspection. It is asking the court to order regulators to return copies of documents they made during the raid.
Nexans SA and Prysmian SpA, two companies investigated for a suspected power cable cartel, are challenging the EU for copying executives’ computer hard drives during raids in 2009. No court date has yet been set for the case and the filings didn’t prevent regulators sending formal antitrust complaints to the companies last month.
Hirsbrunner said it’s “not clear” that regulators have the right to make copies of entire drives during raids. An official would previously make copies of files containing a keyword in the presence of a company representative.
Holcim faced “an exorbitant cost in terms of staff and time” to respond to regulators’ “disproportionate” request for “a vast amount of detailed information on 15 group companies,” the company said in a filing made in June and published in the Official Journal last week.
The EU sought information on transactions, imports and exports, production and market shares for a 10-year period and refused to extend a 12-week limit to comply with the order, Holcim said.
“It becomes a commercial issue,” said Hirsbrunner at Heuking Kuehn Lueer Wojtek. “You cannot dedicate part of your business units just to reply to requests for information.”
‘Excessive and Disproportionate’
Cemex complained that the EU request for it to process millions of items of data was “excessive and disproportionate,” the company said in its court filing. HeidelbergCement said the EU exceeded its powers by requiring the company “to analyze and evaluate the requested information.”
Italmobiliare, which owns part of Italcementi SpA, Buzzi Unicem, Schwenk Zement and Cementos Portland Valderrivas SA also complained about the EU request. The companies, along with Holcim and Cemex, are being probed by regulators for possible antitrust violations including price fixing and import limits.
Lafarge SA, the world’s largest cement maker, is also involved in the probe and hasn’t appealed against the EU information request that it answered earlier this year, spokeswoman Claire Mathieu said in a telephone interview.
Independent Hearing Officer
Regulators are planning to allow an independent hearing officer to rule on some defense rights at an earlier state in investigations under reforms to be drafted this year “to fully ensure the fair treatment of companies,” Almunia said in May.
HeidelbergCement, Buzzi Unicem, Schwenk Zement, Italmobiliare, Italcementi, Intel, and Prysmian didn’t respond to e-mails seeking comment. Nexans and Cemex declined to comment on the cases, while Holcim declined to immediately comment. Deutsche Bahn declined to comment beyond referring to the court filing.
The cases are Deutsche Bahn T-289/11 and T-290/11, Cemex T-292/11, Holcim T-293/11 Italmobiliare T-305/11 Buzzi Unicem T-297/11, Schwenk Zement T-306/11, HeidelbergCement T-302/11, Cementos Portland Valderrivas T-296/11, Nexans T-135/09, Prysmian T-140/09 and Intel T-286/09.