NCPA - National Center for Policy Analysis

Dawn Raids Help EU Antitrust Officials Amass Power

March 1, 2002

The European Union's bureaucrats -- who mainly regulate trade and antitrust matters -- were never envisioned as a substitute for the member-nation's governments. But they have become creative about pushing the boundaries of the authority they do have.

EU agents under antitrust chief Mario Monti can walk without warning into any company doing business in the 15-nation union to look for whatever they think might be proof of illegal activity. Such a dawn raid, as they are called, occurred in 1999 at the London offices of Coca-Cola. The company says it is cooperating, but the antitrust agents exercise surprisingly strong powers.

  • Any evidence they find can be used to levy fines as steep as 10 percent of a company's world-wide revenue.
  • There's no judicial review before a raid and no statute prescribing when the raids should be conducted.
  • Raids have roughly doubled to about one a month since 1999 -- and Monti is pushing to extend them to executives' homes.
  • Monti is also seeking the power to interrogate employees about antitrust violations without guaranteeing they would be entitled to consult a lawyer.

Lacking the legal weaponry of a full-fledged government -- since there is no EU criminal law and there are no EU jails -- the antitrust team has come up with some imaginative approaches to expand its power.

For instance, long denied the power to regulate food safety, they have used their international trade authority to block imports of genetically modified crops. Unable to set tax rates across Europe, EU regulators craft rules that pressure governments to adopt a uniform value-added tax.

Source: Philip Shishkin, "European Regulators Spark Controversy With 'Dawn Raids,'" Wall Street Journal, March 1, 2002.

 

Browse more articles on Economic Issues