General Court confirms European Commission was okay to search premises in alleged fragrances cartel

The suspicion

This case centered on suspicions that the Applicant had potentially engaged in anticompetitive practices. The Commission had gathered evidence suggesting the company might have been involved in exchanging sensitive business information and coordinating commercial strategies with competitors, possibly through the International Fragrance Association (IFRA). The Commission was required to balance its thorough investigation with legal requirements. Before conducting the inspection at the Applicant’s premises, they had assembled evidence including third-party testimonies that suggested a significant level of “interdependence and solidarity” among major manufacturers.

The indicia of wrongdoing

The Commission’s decision to inspect was based on several key findings: (i) The evidence indicated that the Applicant and three other manufacturing leaders had established a privileged position within IFRA. These companies were allegedly coordinating their votes and using the association to advance collective positions before regulatory authorities; (ii) further indications showed that these manufacturers had adopted similar pricing strategies and contractual practices. During one tender process, there were indications from responses that the Applicant initially aligned its behaviour with competitors before changing direction distancing itself from it – a pattern that attracted the Commission’s attention; and (iii) Additional intelligence suggested the possibility that these major players were working with IFRA to create entry barriers in the natural ingredients market, potentially protecting their investments in synthetic alternatives.

What the Court says

The case reinforces several important principles in competition law. The Commission must clearly articulate its reasons for an inspection – providing enough detail for the company to understand the scope, while preserving the integrity of the investigation. The Court determined the Commission had met this requirement. The judgment highlights the “sufficiently serious indicia” threshold – establishing that the Commission needs substantial evidence before conducting an inspection, but complete proof of wrongdoing is not required at this preliminary stage. The Applicant argued that the inspection violated its privacy rights, but the Court found that when balanced against the need to investigate potentially serious anticompetitive behaviour, the Commission’s actions were proportionate.

Practical implications

The decision underscores several important points of competition law: (i) Industry associations, while serving legitimate coordination purposes, can become venues where the boundaries between permissible information sharing and collusion may become blurred. The risk is higher for companies in concentrated industries with few major players; (ii) The Commission does not require definitive proof to justify an inspection – a collection of circumstantial evidence, when considered holistically, can provide sufficient grounds for an inspection; (iii) Companies have limited grounds to resist cooperation once the Commission arrives, particularly when the inspection decision clearly outlines its scope and purpose; and (iv) The Commission’s investigative powers remain robust, supported by the courts when properly exercised.