In a rare intervention, the Czech Constitutional Court has overturned previous court decisions on the permissibility of a dawn raid conducted by the Office for the Protection of Competition (“Office”). The Constitutional Court ruled that the dawn raid against a suspected betting company cartel was conducted unlawfully, as the Office had not sufficiently verified the complaints which served as grounds for the dawn raid. 

Supreme Administrative Court backed dawn raid as justified

In 2019, the Office carried out a dawn raid against several betting companies whom it suspected of forming a cartel and committing further breaches of competition law. The Office based its suspicion on four sources of information: an anonymous complaint, a complaint from a rival betting company, and two articles discovered online.

Three of the affected companies filed a lawsuit alleging that the dawn raid was conducted without sufficient legal basis, as the Office was obliged to closely verify and evaluate the credibility of the received complaints. The Regional Court in Brno initially ruled that the dawn raid was unlawful. However, this was then overturned by the Supreme Administrative Court. They determined that the dawn raid had sufficient grounds and that the fact that a complaint was made by a direct competitor does not diminish its credibility.

Unverified and insufficient – Constitutional Court unconvinced by indications

After a constitutional complaint was filed, the Constitutional Court nullified the decisions of the previous courts. It concluded that the dawn raid in its entirety infringed the affected companies’ constitutionally protected rights. 

The Court found that the Office had based its case solely on unsubstantiated complaints from competitors alongside just two news articles, which only pertained to one of the five suspects. The Office failed to properly verify these sources of information, conducting either no verification at all or following procedures that were inadequate, making its approach unreviewable. The Court found it clear that the Office did not have sufficient indications to justify conducting a dawn raid and therefore infringed the betting companies’ constitutional rights by doing so.

The Office has subsequently published a statement acknowledging the Constitutional Court’s decision. It notes that the dawn raid took place six years ago and that the Office’s practice has significantly changed since, and that its suspicion-building process is carefully and duly documented. It nevertheless also comments that case law on dawn raids is not entirely consistent and is difficult to apply, stressing the importance of dawn raids as a tool for combatting anticompetitive conduct. 

The case illustrates the attention that dawn raids are currently receiving both from the Office, and from the courts. Continued judicial scrutiny can hopefully contribute to improving dawn raids as an effective but proportionate measure in ensuring antitrust compliance.

The Constitutional Court decision can be found here and the Office’s press statement here (both in Czech only).

If you need more information or further guidance in this area, please contact Vojtěch Chloupek and Martin Taimr.