Prysmian SpA (PRY) and Nexans SA (NEX) partly overturned a European Union decision ordering antitrust raids that seized swathes of company documents, a ruling that may clip the wings of the bloc’s competition regulator in future probes.
The EU General Court, the bloc’s second-highest tribunal, today partly annulled decisions by the European Commission from 2009 to raid the companies over their alleged roles in fixing prices for undersea and underground high-voltage power cables, saying the scope of its information-gathering was too wide.
“The commission will now have to make sure it’s on much firmer ground before it goes on a fishing expedition,” said Christopher Hutton, a competition-law specialist with Hogan Lovells in London.
The EU’s antitrust watchdog last year sent formal complaints to as many as nine companies including ABB Ltd. (ABBN) in the wake of its 2009 raids. Prysmian and Nexans argued that officials failed to adequately define the goal of the inspections, during which officials mined the contents of entire hard drives of several managers.
Nexans gained 1.6 percent in Paris trading today, after surging as much as 3.8 percent. Prysmian shares closed down 0.8 percent in Milan, after earlier rising as much as 1.5 percent.
“The commission has not demonstrated that it had reasonable grounds for ordering an inspection covering all electric cables and the material associated with those cables,” the Luxembourg-based court said. The companies’ other points, including a request to get back documents and copies taken during the raids, were rejected. The ruling can be appealed to the EU Court of Justice, the bloc’s highest court.
Following today’s decisions, the commission “won’t be able to use any of the evidence, documents or statements” from the raids that don’t concern high voltage underwater and underground cables, said Trevor Soames, a lawyer with Shearman & Sterling LLP in Brussels who isn’t involved in the matter.
The Brussels-based commission will closely examine the rulings “and the consequences that need to be drawn from them,” Antoine Colombani, a spokesman for the commission, said in an e-mail.
“It should however be noted that the General Court has upheld the commission’s inspection decisions as regards the high voltage underground and submarine cables which form part of the Commission’s ongoing cartel investigation into the power cables sector,” he said.
Angeline Afanoukoe, a spokeswoman for Nexans, declined to immediately comment. Lorenzo Caruso, a spokesman for Prysmian, said by e-mail the company needs to analyze the ruling in detail before commenting further.
Prysmian outbid Paris-based Nexans in 2010 to buy Dutch rival Draka Holding NV, creating the world’s biggest cable maker in an effort to restore margins and counter competition from South Korea.
The cases are: T-140/09, Prysmian, Prysmian Cavi and Sistemi Energia v. Commission, T-135/09, Nexans France and Nexans v. Commission.
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