International Flavors & Fragrances has agreed to pay the European Commission €15.9 million after a senior employee deleted WhatsApp messages exchanged with a rival during a dawn raid.
In a statement today, the commission said the unnamed employee deleted messages containing “business-related information” after being informed about the agency’s raid last year.
The European Commission, UK’s Competition and Markets Authority and Switzerland’s Competition Commission raided the local premises of Firmenich International, Givaudan, Symrise and International Flavors & Fragrances over price-fixing concerns in March 2023, with assistance from the Department of Justice.
The enforcers warned that the companies may have colluded to coordinate their pricing policies, prevent rivals from supplying certain customers and to restrict the production of certain fragrances commonly used in the manufacture of cosmetics, personal care products, detergents and cleaning products.
During a conference today, Tobias Maass, a case handler at the commission, said the agency will go “full force” against such infringements and any deleted evidence could ruin a company’s chance of applying for immunity.
He noted that in this instance, the commission was able to recover the deleted data within four hours on the same day, adding that it is vital employees keep messages “if something fishy is going on” and they are involved.
However, he clarified that this case did not involve self-deleting messages.
The commission said in its statement today that IFF was immediately cooperative, admitted the infringement “on the spot” and helped the agency recover the deleted data after learning about the conduct. This led to the agency applying a 50% penalty reduction, having originally set the fine at 0.3% of the company’s total turnover – with the statutory maximum for dawn raid obstruction at 1%.
While the commission did not disclose further details about the role of the employee, IFF said in a statement today that the worker in question is no longer at its business.
The employee’s actions “are not tolerated” and the business stands firm in its commitment to ethical conduct, it added.
The commission did not comment on whether other raids in the case saw similar obstructions.
In setting its fine, the agency considered the seriousness of the infringement and in particular, the fact that a senior staff member had intentionally deleted the messages.
“In addition, the Commission was not informed of the data deletion. Instead, Commission inspectors had to detect the deletion themselves after the mobile phone was submitted for review,” the agency said.
The CMA extended the scope of its own probe earlier this year to cover no-poach concerns relating to Firmenich International, Givaudan, and IFF. However, the agency has not revealed whether that case also involves dawn raid obstruction. The agency also did not comment on whether IFF’s EU dawn raid conduct has impacted its own case.
Linklaters partner Berd Meyring said the optics of this “do not look great” but it is difficult to draw conclusions about the ongoing price-fixing case from this matter as the commission will have to prove communications led to a restriction of competition. “It could be an indication of guilt, and the commission may refer to this instance, but this alone is not enough to a restriction of competition.”
Companies are faced with a dilemma in these scenarios about whether to keep the employee on their books or sack them.
The commission has recently been trying to make points about evidence and procedures, which could remind businesses that it will enforce strongly against conduct that uses more of its limited resources. “It is constantly being asked to do more with less so when companies interfere with its investigations, that takes up more resources,” he said.
Meyring also noted that the EU cannot penalise individuals under the bloc’s antitrust rules but noted that companies can seek damages from former employees in these instances.
Cleary Gottlieb Steen & Hamilton senior counsel Antoine Winckler said this sounds like a “pretty harsh decision” given that it was an employee-specific blunder and that the company seems to have done everything it possibly could once the detection was made known to it.
“It is not clear whether compliance guidelines and training may have helped the company avoid the hefty fine nor where the obligations of a company to prevent infringements by individuals possibly acting against company policies stops,” he said.
To claim damages from the individual, IFF will likely need to show that it specifically warned against deleting WhatsApp messages “in non-ambiguous terms”, while he also noted the company will likely need to rely on the employee to keep cooperating with the commission.
Baker Botts partner Paul Lugard in Brussels said the decision shows that agencies increasingly rely on internal documents from the ordinary course of business to evaluate conduct and will intervene when access to those documents is prevented.
This is particularly relevant as some competition authorities appear to be giving less weight to traditional economic evidence and rely more on novel theories of harm and internal documents that may support those theories, he said.
Firmenich and Givaudan declined to comment on the case.
Counsel to Firmenich
Baker McKenzie
Partners Mara Ioana Ghiorghies in London and Roger Thomi in Zurich
Counsel to Symrise
White & Case
Partners Tilman Kuhn in Düsseldorf and Brussels, Jérémie Jourdan in Brussels and Paris and local partners Mathis Rust and Thilo Wienke in Düsseldorf, assisted by Lisa Bär