Questions and answers on the Commission's decision to fine IFF for obstructing an EU antitrust inspection *

On  24 June 2024, the European Commission has fined International Flavors & Fragrances Inc. and International Flavors & Fragrances IFF France SAS (together ‘IFF') €15.9 million for obstructing a Commission inspection in 2023. During the inspection, a senior employee of IFF intentionally deleted WhatsApp messages exchanged with a competitor.  

  1. What is the infringement?

Article 20(4) of Regulation No 1/2003 requires companies to submit to inspections ordered by decision of the Commission. This imposes a duty of active cooperation on these companies, obliging them to make available to the Commission all information relating to the subject-matter of the investigation.

Article 23(1)(c) of Regulation No 1/2003 allows the Commission to impose a fine up to 1% of the total turnover of a company when it, intentionally or negligently, produces the required books or other records related to the business in incomplete form during an inspection. As from the notification of an inspection decision, companies shall act with particular diligence and take all appropriate measures in order to preserve the evidence available to them.

In this case, the Commission carried out inspections at the premises of IFF. The Commission inspectors asked to review the mobile telephones of some of IFF's employees and detected that a senior employee had deleted WhatsApp messages exchanged with a competitor. The deleted messages contained business-related information, and the deletion took place after the employee had been informed about the Commission's inspection.

Thus, IFF obstructed the Commission inspection by producing the required business records for examination in incomplete form.

Any subsequent restoration of the data cannot undo the fact that the submission was incomplete.

  1. What are the Commission's powers during an antitrust investigation?

Regulation No 1/2003 empowers the Commission to conduct inspections at the premises of companies suspected of breaching EU competition rules. Inspectors are empowered to examine and take copies of books and records related to the business, irrespective of the medium on which they are stored. This means that they can also examine data on corporate mobile phones as well as private mobile phones when they are used (also) for professional purposes. This includes messages exchanged via social media apps such as WhatsApp.

Commission inspections are carried out in compliance with the Data Protection Regulation(s). Further details on the Commission's powers during inspections can be found in the Inspections Explanatory Note.

  1. How did the Commission detect the deletion of information?

The Commission inspection team includes Forensic IT experts that use cutting-edge Forensic tools to detect any deletion or manipulation of electronic information during inspections. These Forensic tools allow the Commission to inspect the company's IT systems and search for the relevant data, including deleted data, whilst respecting the integrity of the company's systems and data.

In this case, the Commission inspection team found evidence that, after the notification of the inspection decision, data had been deleted from one of the phones that it was examining on the spot. The inspection team could recover the deleted data.

The Commission is continuously investing in its forensic capabilities, including up-to-date software and hardware, to detect the deletion or tampering of information during inspections.

  1. How was the fine set?

Regulation No 1/2003 allows the Commission to impose a fine of up to 1% of the total turnover of a company that, intentionally or negligently, produces the required books or other records related to the business in incomplete form during inspections.

The exact percentage of the total turnover is set in function of the gravity and the duration of the conduct taking into account the specific circumstances of the case.

In assessing the gravity of the infringement, the Commission has regard to a number of factors, such as the nature of the infringement, the intentionality of the conduct, the type of information deleted, and the position held by the employee who committed the deletion. It must be also borne in mind that the fine must have a deterrent effect.

Inspections enable the Commission to gather material information concerning suspected infringements. The power to carry out inspections is one of the most important powers of investigation at the disposal of the Commission to detect infringements of Articles 101 and 102 of the Treaty on the Functioning of the European Union.

When the Commission requests access to data during an inspection, it is indispensable that the Commission must be able to examine the entirety of such data. Therefore, the data must be produced in complete form and must not be tampered with or deleted during the inspection. It follows that the production of the required business records in incomplete or tampered form by the inspected company is considered a very serious infringement by nature.

The special nature of electronic records makes the risk of manipulation particularly high. The Commission considers that any fine for tampering with business-related records should be sufficiently deterrent to ensure that it does not pay off for companies to take the risk of a procedural fine to avoid potentially high fines for breaches of substantial law. The fine should also be sufficiently deterrent for dissuading other companies from attempting to tamper with business records during a Commission inspection.

The infringement in this case was committed intentionally, and it was committed by a senior employee of the inspected company who was a target person of the Commission investigation.

The Commission was not informed of the data deletion. Instead, its inspectors had to detect the deletion themselves after the mobile phone was submitted for review. On this basis, the Commission has concluded that an overall fine amounting to 0.3% of IFF's total turnover would be both proportionate and deterrent. At the same time, the Commission has decided to reward IFF for its proactive cooperation during and after the inspection. The Commission has therefore decided to reduce such fine amount by 50% and to impose a fine of €15.9 million, which represents 0.15% of IFF's total turnover.

  1. How did IFF manage to get a 50% reduction of the fine?

After the Commission detected that an employee of IFF had deleted business-related data during the inspection, IFF immediately admitted the deletion on the spot and helped the Commission to restore the data to its fullest ability on the same day. Subsequently, IFF engaged in a cooperation procedure where it acknowledged liability for the infringement and accepted a maximum fine to be imposed by the Commission.

The Commission has rewarded the very proactive cooperative conduct of IFF during and after the inspection by granting it a 50% reduction, thereby significantly reducing the amount of the fine imposed on it.

The cooperation procedure is inspired by the well-established cartel settlements procedure and can be used in other situations where companies are willing to acknowledge their liability for an infringement of the EU competition rules (including the facts and legal qualification). The cooperation framework allows the Commission to apply a simpler and faster procedure and the cooperating companies to obtain a reduction in fines. The Commission assesses on a case-by-case basis whether a case would be suitable for cooperation, taking into account the probability of reaching a common understanding with the company within a reasonable timeframe. There is neither a right nor an obligation for companies to pursue the cooperation path.

This is the first time that the cooperation procedure is followed in a procedural infringement case.

  1. Has the Commission fined other companies for obstructing inspections?

This is the first time that the Commission imposes a fine for the deletion during an inspection of messages exchanged via social media apps on a mobile telephone.

In the past, the Commission has imposed fines for breaching seals during inspection. For instance, E.On received a fine of €38 million in 2008 (corresponding to 0.14% of the total turnover) and Suez Environnement and Lyonnaise des Eaux received a fine of €8 million in 2011 (corresponding to 0.065% of the total turnover). The Commission has also fined Czech energy companies Energetický a průmyslový holding and EP Investment Advisors €2.5 million (corresponding to 0.25% of the total turnover) for accessing a blocked email account and diverting incoming emails during an inspection.

In other cases, the obstruction during an inspection was considered as an aggravating circumstance and triggered an increase of the fine imposed for the anticompetitive conduct (see for example cases  AT.38354 - Industrial Bags,  AT.38456 - Bitumen and AT.38432 - Professional Videotapes).


* Updated on 25 June 2024 at 11:30 CEST.