The dawn raids last week on 21st Century Fox’s London Headquarters, owned by Rupert Murdoch, are a clear demonstration of the EU Commission chomping at the bit to exercise unrestrained power – with minimal oversight.
The powers are set out in Regulation 1/2003, and are permitted by Articles 101 and 102 of the Lisbon Treaty – which address unfair business practices and cartels. However, the provisions of this piece of legislation are shrouded in obscurity and legal murkiness, and serious questions need to be asked as to whether it imbues excessive competences onto the Commission – a group of individuals over which we have no democratic control.
Under this piece of regulation, Commission inspectors have the right to force their way into a company’s property to seize documents and computers. Not only this, but they are also able to carry out raids on the homes of employees. Section 26 of the regulation points out officials are “empowered to enter any premises where business records may be kept, including private homes”!
Clearly, given the extensive powers remote bureaucrats are able to wield, one would expect the process to be subject to intense oversight, complemented by sufficient provisions to restrain misuse. However, the opposite is true. This process allows the Commission to act as inspector, prosecutor, and then judge in any case against any organisation.
On top of this, the decision to carry out an investigation is not enacted by an independent tribunal of experts, which has monitored the business practices of a certain company, and come to a conclusion based upon extensive analysis of the law. No, instead it is performed by the Council of Commissioners themselves. This is a group of 28 grey Eurocrats who will possess no specific knowledge of the case when making their decision, and which means, as a result, an investigation can often be launched on a whim – without any real justification for it.
Previous cases have shown this trigger-happy nature of the European Commission when performing such raids. In 2015, officials carried out a dawn raid on Deutsche Bahn, in Germany, which was later proven to have been excessive and illegitimate.
As these investigations are carried it in public, they can be hugely damaging for the company’s interests. Even if no wrongdoing is detected, the news of a dawn raid, coupled with hyperbolic headlines, and public condemnation, can attach a level of stigma to the organisation which can be difficult to shake off. Indeed, the fact Fox’s share prices plummeted last week is testament to this.
When we consider the fact the UK’s own regulatory authority was already monitoring Fox’s takeover of Sky, the decision by European officials to raid Mr Murdoch’s 21st Century Fox offices, smacks of an organisation desperate to flex its muscles. Unwilling to wait for the domestic Competition and Markets Authority (CMA) to perform an investigation, Eurocrats have superseded the existing procedures and taken matters into their own hand. This undermines the UK’s CMA because its procedures now face the constant risk of being trampled on by overzealous European officials. It has also sought to artificially project the EU as some faux-guarantor of a free market, taking matters into its own hand when in deems domestic governments are proving to be too ineffectual.
Fully aware of the negative publicity, and potential consequences it could have for Murdoch’s business interests, many have rightly queried whether this action was one driven by political reasoning.
A further problem with this derives from the ferocious penalties issued if anticompetitive practices are found to have been taking place. This leads many academics to argue EU competition law is actually ‘criminal’ in nature, rather than ‘administrative’, a point supported by former ECJ judge Bo Vesterdorf. The huge fines issued (10% of annual turnover) seek not just to punish those found breaking the rules, but deter others from following suit, and suggests the law’s character goes beyond a simple administrative procedure.
This means, pursuant to Articles 47 and 52 of the Charter of Fundamental Rights (CFR), the burden of proof must be far greater than what is currently required before a fine can be issued. It also necessitates a free and fair trial take place to determine whether the company is in fact ‘guilty’. However, under the current process, both these criteria are conveniently ignored, allowing the Commission to act with impunity.
Given the CFR is a key part of EU law, this in effect means the Commission, by failing to provide companies with a right to defend themselves, and issuing damaging fines even with a negligible amount of evidence, is in breach of EU law itself.
The contradictory, confused and often vindictive nature of EU competition law is further evidence of why we are right to Get Britain Out of the EU. Unrestrained powers have been bestowed upon an institution with no accountability, and no democratic mechanisms, allowing it to act in a dangerously unrestrained and reckless manner.
Robert Bates is a Research Executive at cross-party grassroots campaign Get Britain Out