Do you know what to do during a surprise inspection by the FCCA? If not, you could face significant fines!
For the first time, the Finnish Competition and Consumer Authority (FCCA) is proposing a penalty for obstructing a surprise inspection. According to the FCCA, the company subject to the surprise inspection obstructed the inspection when one of its employees deleted data, such as WhatsApp messages, from their phone after the inspection had started. According to the FCCA, the company's "conduct was likely to prevent, obstruct and delay the inspection". The FCCA is proposing a fine of up to €4.4 million for the company.
The amount of the fine is always based on an overall assessment, which takes account of (1) the nature and (2) the extent of the infringement and (3) the degree of gravity. In assessing the amount of the fine in the present case, the FCCA has considered, inter alia, that:
The infringement was of a serious nature: "the deletion of information during the inspection shows a significant disregard for the rules of the Competition Act on inspections, which underlines the reprehensible nature of the procedure".
The number of messages deleted was significant. These were business-related data and messages which were the subject of the FCCA’s inspection. The deletion of the messages was likely to jeopardize the purpose and execution of the inspection.
The deletion of the information during the inspection showed significant disregard for the rules of the Competition Act on inspections and highlights the reprehensible nature of the procedure. On the other hand, the company's cooperation in restoring the messages was taken into account as a mitigating circumstance.
According to the Competition Act, the effectiveness and deterrence of the penalty must also be taken into account when assessing the amount of the penalty. In practice, this means that any penalties imposed on companies during surprise inspections must also be significant, so as not to create an incentive for companies to remove material relating to the subject of the investigation and thus avoid a fine for a specific infringement.
The FCCA may carry out unannounced inspections of undertakings as part of its antitrust enforcement activities. Undertakings are obliged to allow the competition authority to inspect documents relating to their business activities, including communications between their employees. Undertakings are also obliged to contribute to the inspection, which means, for example, that they must ensure that their employees do not obstruct the inspection.
A company can be fined if it deliberately or negligently obstructs a surprise inspection by the FCCA. Obstructing an inspection is defined as any action by a company to prevent, hamper or slow down the activities of the persons carrying out the inspection.
In order to comply with the Competition Act, it is important that the company's staff are aware of the possibility of unannounced inspections by the FCCA and, in particular, of how to act during the inspection. The best way to ensure this is to create and update the company's own manual on surprise inspections and to train company staff in the correct procedures. A properly drafted manual will ensure that staff are aware not only of their obligations but also of the company's rights during an inspection.
The recent proposal by the FCCA highlights the need for up-to-date guidance on unannounced inspections of companies.
If you do not have the guidelines or if some time has already passed since the training, please contact Fondia's Competition Law team!