European Commission fines IF&F for obstructing inspection

The European Commission (EC) imposed a €15.9 million fine on International Flavors & Fragrances Inc. and International Flavors & Fragrances IFF France SAS (IF&F) for obstructing an on-the-spot inspection as part of the investigation into the consumer fragrance sector (case AT.40826).

Obstruction of inspection

In March 2023, the EC carried out simultaneous unannounced inspections at the premises of several companies as part of the abovementioned investigation (see press release here).

The inspection team at IF&F asked to review the mobile devices of some employees. The EC detected that one employee had deleted WhatsApp messages exchanged with a competitor after being informed of the inspection. Using computer forensic tools, the inspection team was able to recover the deleted messages and found that they contained business-related information relevant to the investigation.

IF&F immediately acknowledged the facts and proactively cooperated with the Commission during and after the inspection, helping to recover the deleted data. Subsequently, when the Commission opened proceedings against IF&F for obstructing its investigation, IF&F acknowledged its liability and accepted the amount of the fine that the EC intended to impose.

The fine

Under Regulation (EC) No 1/2003, the EC can impose fines of up to 1% of the total turnover of the infringing company for obstructing inspections.

According to the EC, IF&F committed a very serious infringement, given that the employee intentionally deleted the messages after being informed and aware of the inspection. Moreover, IF&F did not inform the EC about the deletion by its own initiative; it was the EC itself that detected it.

On this basis, the EC concluded that a fine amounting to 0.3% of IF&F’s total turnover would be both proportionate and deterrent. However, the EC also took into consideration IF&F’s proactive cooperation during and after the inspection and reduced the fine by 50%—which represents 0.15% of its total turnover.

Comments

This is not the first time the EC imposes a fine on a company for obstructing an inspection. Nor is it the largest. Among others, in 2008 the EC imposed a €38 million fine on E.On for breaking a seal during an inspection; in 2012, it fined Energetický a Prumyslový and EP Investment Advisor €2.5 million for accessing a blocked email account and diverting incoming emails during an inspection.

However, this is the first time the EC imposes a fine for deleting messages in an instant messaging application on a mobile device. It is also the first time the EC applies the cooperation procedure to a procedural infringement.

The EC and national competition authorities have broad powers of investigation during unannounced inspections at companies’ premises—including technical means and computer forensic tools to detect the deletion or tampering of electronic information or documentation.

This case illustrates and emphasizes the importance of adequate preparation and training to help companies deal with inspections, and in particular to avoid any action that could be construed as obstruction. For more information, see our section on unannounced inspections by competition authorities.