In the first half of 2023, the PCC issued two major rulings declaring that searches and seizures of emails by the PCA based on a warrant issued by the public prosecutor (rather than by a criminal judge) violates the Portuguese Constitution. These rulings were also followed in PCC’s Summary Decision from April 2024.
Referring to the two PCC rulings, the Portuguese Supreme Court also ruled, at the end of June 2024, in a judgment with binding force, that the seizure of emails in antitrust cases must be conducted in terms of a warrant issued by a criminal judge. This decision put an end to years of contradictory rulings, mainly by the Portuguese Competition Court and by the Lisbon Court of Appeal, as to the authority competent to issue a warrant for such searches and seizures to be conducted.
The full consequences of the PCC rulings remain to be seen and are currently being debated in the lower courts and within the PCA. They are of great significance to Portuguese competition law policy and enforcement, particularly considering that more than 20 antitrust cases have been established with extensive reliance having been placed on emails seized pursuant to warrants issued by the public prosecutor, with almost 1.1 billion euros in fines having been imposed on the parties in these instances.
The legal dispute
Evidence is an important element of the enforcement of competition policy. Therefore, to pursue their enforcement mandate, competition authorities are granted significant powers and are expected to gather and evaluate evidence from several sources.
Under Portuguese competition law, the PCA is empowered to conduct “unannounced inspections and to carry out searches, examinations, and the collection and seizure of writing extracts or other documents, irrespective of the devices where they are stored or saved” (following the transposition of the ECN+ Directive in 2022, the wording of the law changed slightly, but not materially for present purposes). The law was (and still is) silent on the legal validity of searching and seizing correspondence.
The Portuguese Constitution enshrines the principle of the inviolability of correspondence, meaning that the intrusion by “public authorities into correspondence, telecommunications and other means of communication is prohibited, except in the cases provided for by law in criminal proceedings” (Article 34(4) of the Portuguese Constitution).
Since antitrust infringements are considered misdemeanours, they are not subject to criminal procedures.
Consequently, the search and seizure of electronic correspondence in the context of antitrust investigations has raised two questions regarding the compatibility of such enforcement activities with the abovementioned constitutional principle and safeguards: namely, (a) whether emails marked as opened (or stored elsewhere) are considered correspondence or mere documents; and (b) whether the fundamental right to the inviolability of correspondence may be limited in non-criminal proceedings.
In short, the PCC has held that emails constitute correspondence under the Portuguese Constitution and, therefore, benefit from the principle of inviolability laid down in Article 34. As such, the PCC has rejected the PCA’s argument that opened emails would not be classified as correspondence but, rather, mere documents.
As the PCC articulated, “the labelling of a certain message as opened constitutes an event that cannot be used to determine the end of its nature as a communication – and, consequently, the paralysis of the protection specially granted by Article 34 of the Constitution – and it must be understood that the constitutional guarantee of inviolability of communications covers email messages as long as they remain in the (virtual) email box, regardless of the contingent and random circumstance of the message’s ‘opened’ or ‘closed’ status.” The second PCC ruling does not even discuss the relevance of the fact that emails are (or are not) marked as ‘opened’ for the purposes of their classification as documents or correspondence.
This understanding is grounded, inter alia, on the fact that the digital and physical worlds are not entirely analogous: opening an email is different from opening a letter. The argument sustained by the PCA (and accepted by the Portuguese Competition Court and the Lisbon Court of Appeal) rests on the differences in the underlying reality. Emails that are opened can easily be marked as unread, just as they may be marked as read unintentionally (for example, by mistakenly pressing a delivery notification on a mobile device). Therefore, the criteria of “opened/closed” emails is inadequate for purposes of defining the difference between correspondence and a mere document.
On the second question, the PCC ruled, for the first time, that the exception to the inviolability of correspondence provided for in criminal proceedings could be applied to non-criminal infringement proceedings such as antitrust contraventions, to the extent that the protected values at stake are equivalent to those protected by criminal law. A different approach could risk the criminalisation of certain conduct for the wrong reasons – in casu, the need to ensure access to certain evidence rather than the need for criminal punishment of the relevant conduct.
It should nevertheless be noted that this was not a unanimous decision. The dissenting opinion of Constitutional Court Judge Afonso Patrão is compelling, and highlights the challenging complexity of the issue raised:
“I strongly disagree with the conclusion that the Constitution allows intrusion into communications in administrative offence proceedings. On the contrary, Article 34(4) of the Constitution only allows it in criminal proceedings. (…) To conclude, as the majority did, that the Constitution consents to interference in communications for the purpose of investigating conduct that could be punished as a crime (even if it is not) because it is aimed at protecting legal values with criminal dignity, does not constitute an adequate delimitation of the absolute reserve of criminal proceedings.
(…) In the abstract, wiretaps are permitted for the investigation of road traffic offences (which aim to protect people’s lives and physical integrity) or administrative offences involving the deposit and abandonment of waste (which aim to protect the environment).
On the other hand, the ‘reserve of criminal proceedings’ has been replaced by the criterion of ‘putative criminalisation’. This creates intolerable legal uncertainty as to whether a certain offence would be worthy of hypothetical criminal punishment, should the need arise.
The reasoning behind this ruling not only materialises a reversal of this Court’s jurisprudence on the inviolability of communications, but also, in my opinion, violates one of the most important express decisions of the constitutional legislator: to reserve the feasibility of interfering in communications between people for criminal proceedings”
This dissenting opinion reveals that the Constitutional Court Judge views any interpretation of Portuguese Competition Law allowing the search and seizure of email correspondence as unconstitutional, as such measures are reserved exclusively for criminal proceedings. This will not be an isolated stance within the Constitutional Court.
By accepting the possibility of email searches and seizures in the context of misdemeanour proceedings (to which the ECN+ Directive, its aims and limited transposition into national law have probably contributed), the PCC had then to decide on the third fundamental issue regarding the relevant authority competent to issue the warrant necessary to carry out the search and seizure of emails.
As noted above, in most antitrust cases, dawn raids and email seizures have been conducted based on warrants issued by a public prosecutor, save for exceptions involving companies bound by professional secrecy (e.g., banking or medical confidentiality).
In both its rulings, the PCC clearly maintained that email searches and seizures by the PCA demand appropriate safeguards and thus require a warrant issued by a criminal judge. Considering the distinct roles of a judge and the public prosecutor, the PCC considered that “it seems unavoidable to recognise that judicial intervention constitutes an additional guarantee for weighing up the rights and freedoms affected in the course of a criminal investigation.”
Thus far, the status of the PCC rulings regarding the unconstitutional nature of the searches and seizures of emails in antitrust cases is, therefore, reflected in the two abovementioned rulings (adopted in two different chambers), and in the PCC’s Summary Decision from April 2024 (which followed the PCC’s rulings).
However, there are still pending cases before the PCC, and their rulings are eagerly awaited, as the relevant issues may not yet be completely resolved. The Constitutional Court comprises thirteen judges, organized into three chambers, each consisting of five judges. Judges in each chamber must reach a majority on whether a legal provision is unconstitutional, as well as on the grounds for the provision being unconstitutional, to be able to declare the provision unconstitutional (as there are no positive judgments of constitutionality, only positive and negative judgments of unconstitutionality). General binding force of the PCCs rulings of unconstitutionality can be requested with three consistent rulings in different cases.
Finally, yet equally important, following the first PCC ruling, the Portuguese Competition Court suspended three cases in which the validity of evidence/emails seized based on warrants issued by a public prosecutor was also being discussed. The national court requested a preliminary ruling from the European Court of Justice, seeking guidance on whether such dawn raids and related warrants were compatible with Article 7 of the Charter of Fundamental Rights of the European Union, which protects the right to private and family life, home, and communications.
Advocate General Medina issued her opinion on June 20, 2024 and considered, inter alia, that while Member States have the competence to establish and apply rules for obtaining and using evidence, they must do so in accordance with EU law, particularly the principle of effectiveness. They cannot make the implementation of EU law (in particular, articles 101 and 102 of the Treaty on the Functioning of the EU) impossible or excessively difficult.
While this is consistent with EU principles, it is questionable whether the solutions provided in the Advocate General’s opinion are reasonable, to the extent that it is suggested that the Portuguese Competition Court “when assessing the consequences to be drawn from PCC ruling, (…)take account of the need to ensure the effective application of the EU’s rules on competition and so to have recourse to all of the possibilities offered by national law, including, where appropriate, the possibility of redressing, in circumstances such as those of the disputes in the main proceedings, the lack of prior judicial authorisation by means of a posteriori judicial review, in order to ensure that the non-observance of the European Union’s rules on competition is penalised.” The Advocate General also suggests limits to the application of the PCC rulings: “the Portuguese courts might find it advisable to disapply a national rule that would allow the interpretation adopted in the [PCC rulings] to have retroactive effect the consequence of which would be to call into question the liability of the undertakings concerned in cases in which the Competition Authority had made a final finding of infringement of EU rules on competition, thus creating a systemic risk of impunity for such offences.”
The ruling of the European Court of Justice will, therefore, have significant implications.
The impact of the PCC’s rulings on competition law enforcement in Portugal
In the specific cases that gave rise to three constitutional decisions, the PCC ordered the Lisbon Court of Appeal to reconsider the contested judgments in the light of its rulings.
While the Lisbon Court of Appeal’s next steps in these cases remain to be seen, these rulings have the potential to transform Portuguese competition law enforcement.
Outside their own cases, echoes of the PCC’s rulings are already found in other case law, such as in the aforementioned Supreme Court of Justice’s Judgment, affecting the corresponding case still pending before the PCA. According to the Judgment, dawn raids based on a warrant issued by a public prosecutor took place in December 2018, and the seizure of emails had been litigated in several instances since then, by multiple parties subject to the inspection.
There was also an annulment decision from the Portuguese Competition Court issued in March 2024, annulling a 190 million euro fine applied by the PCA to companies active in the private healthcare sector.
The PCC’s rulings could call into question the validity of several pending antitrust cases, and they also have the potential of changing the modus operandi of the PCA, leading to tighter a priori control and exploring several strategies to mitigate risk on those pending cases.
When appropriate, the PCA is currently conducting dawn raids with two warrants: one from the public prosecutor and one from the criminal judge, specifically for the inspection and seizure of emails.
In pending cases in which dawn raids occurred without a warrant from a criminal judge, the PCA may be providing incentives to the parties, with the aim of obtaining the evidence, for example, the voluntary delivery of emails by whistleblowers and/or by parties engaged in settlement procedures in exchange for additional reductions in fines, thereby minimizing the risk of lack of evidence for cases involving non-settling parties.
It is important to note, in this regard, that between 2016 and 2023, the PCA adopted 26 fining decisions, totalling almost €1.2 billion in fines. Of these 26 cases, prior to the PCC’s rulings, 1 (one) was judicially annulled and 4 (four) did not involve dawn raids. In other words, 21 of the 26 infringement decisions adopted by the PCA since 2016 – which represent around €1.1 billion in fines – are based on potentially invalid evidence. While some of these decisions are already final and, as such, are not capable of being appealed, the majority of these cases are still pending before the courts. This means that many of these PCA decisions could be annulled by the courts since they were based on invalid evidence, rendering them null and void.
In conclusion, catalyzed by the PCC’s rulings, competition law enforcement in Portugal is undergoing a profound period of reflection. This process seeks to balance the preservation and respect of fundamental constitutional values with the necessity for robust enforcement of competition law, both at the national and EU levels. In today’s digital age, entirely prohibiting searches and seizures of information in respect of common means of communication, such as emails, seems impractical. However, article 34 (4) of the Portuguese constitution is unequivocal, making Judge Afonso Patrão's reasoning straightforward.
Is it up to the constitutional judges to provide a contemporary interpretation of the constitution? Could a constitutional revision in this regard be necessary? Might the European Court of Justice, invoking the principles of effectiveness and primacy of EU law, impose such an interpretation? This ongoing debate underscores the intricate interplay between constitutional principles and the practical demands of effective competition law enforcement. It highlights the evolving nature of legal frameworks in the face of contemporary challenges and the need for a harmonious integration of constitutional fidelity with modern-day legal requirements.
