(Un)constitutionality of dawn raids in the competition law investigations in Serbia and Montenegro

The Montenegrin Agency for Protection of Competition announced on 22 March 2017 that it had carried out a dawn raid at the premises of a transport company in Cetinje. The Agency did not specify in its announcement which competition infringement is being investigated in this case, but it confirmed that “the party to the proceedings had shown a high degree of co-operation”. It remains unclear whether the party had consented to the search of its premises and documents.

This event prompts us to consider whether the competition authorities in Serbia and Montenegro are entitled to carry out dawn raids without a court warrant in the absence of the consent of the possessor of the premises.

The Montenegrin Competition Act empowers the Agency’s director to issue a decision on collection of evidence via on-site inspection of the business premises of the party under investigation, as well as a third party suspected of being in possession of evidence. As part of on-site inspection, the authority’s investigators are entitled to search the business premises and inspect, scan and copy, and even temporarily seize, “financial records and other documents”, i.e. “business documents”. The statute does not mention that a court warrant is required for any of these actions. It does not explicitly give power to the Agency to carry out an inspection without the consent of the possessor of the premises, although the provisions regulating police assistance and procedural penalties imply that the Agency does have this power.

A search of private premises without a court warrant is not in accordance with the Montenegrin Constitution. Pursuant to Article 41 of the Montenegrin Constitution:

“No one shall enter the dwelling place or other premises against the will of the possessor thereof and search them without a court warrant.

The search of premises shall be conducted in the presence of two witnesses.

An official may enter another’s dwelling place or other premises without a court warrant and conduct a search without the presence of witnesses if this is necessary to prevent commission of a crime, immediately apprehend a perpetrator or rescue people and property.”

A suspected infringement of competition cannot be subsumed under any of the three exception from the constitutional requirement of a court warrant. Accordingly, under the reasonable assumption that Article 41 of the Constitution also protects business premises of legal entities, the Montenegrin Constitution does not support the Agency’s power to search those premises without a court warrant. It is unrealistic that the Agency will be obtaining court warrants, as the present law does not regulate which court is competent to issue such warrant.

Moreover, during a search of the premises, the Agency is not allowed to inspect e-mails and other communication without the consent of the possessor of the premises. Namely, Article 42 of the Constitution stipulates:

“Confidentiality of letters, telephone conversations and other means of communication is inviolable.

The principle of inviolability of confidentiality of letters, telephone calls and other means of communication may be derogated from only on the basis of a court decision, if so required for the purpose of conducting criminal proceedings or for the reasons of security of Montenegro.”

It is questionable whether a court warrant for inspection of letters, e-mails and other means of communication may be obtained at all in the context of the proceedings conducted by the Agency, as neither these are criminal proceedings nor do they involve the issues affecting the security of Montenegro. The Montenegrin court has not so far extended the expression “criminal proceedings”, as used in Article 42 of the Montenegrin Constitution, to other proceedings that lead to sanctions of penal character. The issue gets even more complicated given the fact that the Montenegrin Agency does not have the power to order penalties – the penalties can be ordered only by a misdemeanour court in separate misdemeanour proceedings, based on the Agency’s decision establishing an infringement. As a result, the distinct question of whether a court warrant allowing for search of the business premises can be interpreted to extend to e-mails and other electronic documents which may be accessed from the computers located on the premises covered by the court warrant, also remains unanswered.

The provisions of the Serbian Constitution on inviolability of business premises and communication are almost identical to the provisions of the Montenegrin Constitutions discussed above. The constitutional guarantees of inviolability of premises and communication bring into question the provisions of the Serbian Competition Act which empower the Commission for Protection of Competition to conduct dawn raids on business premises and “information, documentation and belongings on the location”, without a court warrant (a court warrant is required only for search of dwellings). Pursuant to the Serbian law governing the procedure before the Constitutional Court, a statute is applicable until the decision on its unconstitutionality is published. Accordingly, the authority is likely to continue to exercise its power to perform dawn raids on business premises, granted to it by the Competition Act, without first securing a court warrant. Whether this statutory power can be read to include the power to search e-mails and other electronic documents which may be accessed through computers located on the premises, depends on whether such documents can be considered to be located “on the site”. The Serbian competition authority has so far used its dawn raid power to search electronic documentation, but the court verification of this authority is lacking.

As a reminder, the Slovenian Constitution contains provisions on inviolability of premises and letters similar to those found in the Montenegrin Constitution and the Serbian Constitution. The Constitutional Court of Slovenia in 2013 declared the provisions of the Slovenian competition act which allowed the search of business premises and communication without a court warrant to be unconstitutional.

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