Don’t touch that. Dawn raids and the EU seal.

A costly mistake.

While reading a Bloomberg news story on the EU probe into possible collusion between Veolia, Suez and Saur to fix French water services prices, I was reminded that last year Suez’s subsidiary Lyonnaise des Eaux stumbled across one of EU Competition law’s most onerous and unusual provisions.

Suez was fined €8 million for opening a door.

Unless you have actually been raided, you probably are not aware that the Commission’s inspectors often seal rooms when carrying out dawn raids at corporations suspected of violating Competition law. In the Suez case, when the EU team returned the day after the initial raid to continue its search, it found that a seal on an office door had been removed.

Under EU regulations, the Commission can fine a company up to 1% of its total turnover (worldwide) for a seal broken either intentionally or negligently. You basically have no excuse.

Since Suez cooperated with the Commission, the fine is much lower than 1% of their global turnover. Still, I’m not sure their CFO was impressed with the savings.

This is not the first time a seal has been broken. In an even more costly “seal case”, the EU fined E.ON Energie €38 million. E.ON challenged the fine and lost on appeal.

The moral of the story?

Competition law compliance training should be adapted to each employee and contractor in your organization. In this case, a short and frank discussion with the administrative and cleaning staff would have been worth say, €8 million. These discussions should be renewed any time there is a change in staff or service providers.

Photo: European Union © 2012

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