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Competition & EU law insights

Keeping you up to date on Competition & EU law developments in Europe and beyond.

| 5 minutes read

Navigating the maze: Challenges and lessons learnt in competition investigations and dawn raids

Competition authorities across the globe regularly use the powers available to them to undertake investigations where they suspect that companies may have violated competition law. While the precise information-gathering powers of authorities vary across jurisdictions, dawn raids conducted by competition authorities are disruptive and stressful moments for any business, presenting significant challenges for managing the company’s legal risks. Effective preparation and a nuanced understanding of the processes involved can avoid mistakes in responding to dawn raids, which can have significant adverse consequences. 

In this article, we explore four dimensions of these investigations, highlighting key challenges that a business might encounter and some corresponding lessons that help navigate through a dawn raid, regardless of jurisdiction. 

Have a plan in place

Investigations, and in particular dawn raids, are confronting events for all parts of a business. It is likely that staff will be under immense stress and pressure when authorities come knocking on the door. The challenge is compounded by the reality that dawn raids are a little like lightning: they appear in a flash and rarely strike the same spot twice. It is likely that many in-house lawyers (let alone other employees) will have never experienced a dawn raid in their careers.

This underscores the importance of businesses having in place a pre-prepared strategy that can be put into action in the event of a raid . In particular, business interruption can be mitigated, risk managed, and stress minimised by ensuring that staff are aware of their particular roles, rights and obligations . 

For example, reception staff need to know how to handle the first contact with authorities , and who to immediately contact within the business. IT staff should be briefed on their responsibilities, which may include blocking email accounts and making available vast amounts of data at short notice. Above all, it is crucial to make all employees understand that they must not obstruct the investigation. Moreover, it is important to appoint a dawn raid coordinator (or coordinators), for instance from within the in-house legal or compliance team. 

It is also useful to stress-test these policies to understand how employees will respond if required to put them into practice. Like a routine fire drill, dawn raid simulations can be effective training for employees and a reminder of the company’s dawn raid procedures . Bird & Bird’s dawn raid game is also a useful resource for testing and refreshing employee’s knowledge of the key “dos” and “don’ts” in case of a dawn raid.

Anticipate the challenges associated with document production

Complying with document production requests of investigators has become more difficult in recent years as businesses create and store increasingly large volumes of electronic data. At the same time, hybrid work environments are creating new challenges as the lines blur between personal and work devices, and workspaces and private homes.

The company’s IT team thus must have a comprehensive understanding of the type of documents they may be requested to produce and where they are stored. 

Data is increasingly stored in the cloud , meaning that downloading the data can take a significant amount of time. Moreover, old data is sometimes stored in locations that are difficult to access. It is therefore important that the IT team explains to the investigators from the outset how the IT infrastructure is set up, how data is stored and how quickly it can be made available. Please see our article on the technical aspects of a dawn raid or competition, and our article on cooperating efficiently with the forensic IT team for more detail on this point.

The inspectors typically ask the employees targeted by the investigation to hand over their smartphones, tablets and laptops for copying. This is generally a shocking experience for the persons involved, who find themselves temporarily unable to communicate with colleagues, business partners and their families. To avoid panic reactions or obstructive behaviour, it is important to explain to the employees concerned that they have to comply with the investigators’ request and to stress that they must not delete any data on any device. The same applies for hardcopy documents: no shredding or binning is to happen during the investigation. However, it is important to check whether the authority is not overstepping its powers, for instance in seizing original documents or personal devices. In some jurisdictions, the authorities may only do so if they are unable to make copies on site. If requested, the company thus should make photocopying or printer facilities available to the investigators. 

It may also be useful to ask forensic experts to assist the company in case of a dawn raid.  They can allow the company to run a document review in parallel to that of the inspectors in order to understand its exposure and, if appropriate, file a leniency application as soon as possible during or after the dawn raid.

Coordination with data protection and employment/labour law experts should also be front of mind as many jurisdictions require that certain information be provided to custodians when their data is retrieved (see our articles on employment and data protection considerations for further information on this point). Some jurisdictions also have stringent requirements regarding specific information that employees must receive before their data may be reviewed. 

Knowing how to navigate privilege

Some company information or data will invariably be subject to legal privilege, which protects certain communication between the company and its legal advisers. Identifying the material that is subject to privilege, and navigating the relevant rules regarding production of that privileged material can present a significant challenge in case of a dawn raid. 

It is important that the business has a good understanding of the scope of privilege principles under the applicable laws, which vary by jurisdiction. For example, communication of employees with the company’s in-house legal team are privileged in some jurisdictions but not in others. As the investigation or dawn raid gets underway, it is important to identify all documents that are likely to be protected by privilege and object to their review by the investigators.

Rules also vary in relation to whether privileged material may be copied or seized by investigators. If local law prohibits investigators from requiring the production of privileged materials, then consider agreeing with investigators on a method for excluding certain classes of documents. If privileged material must be produced, then it is important to understand how privilege claims may be subsequently asserted.

Managing the messaging

Finally, news about a dawn raid or investigation may travel fast both within and outside the business, and it is important to anticipate that employees, business partners or journalists ask questions regarding the business’s involvement in potential violations of competition law. 

The business will need to take a front-footed approach to deciding how it will respond to such questions, including whether and how it will brief employees or provide public comment.

For more information, please contact Anne FederlePatrick CordwellGabor Kutai or Serena Du.

This article is part of a special edition on Investigations of our monthly newsletter Competitive Edge.




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