How To Survive Dawn Raids And Search Warrants In Antitrust/Competition Investigations

Antitrust and competition enforcement authorities increasingly are undertaking unannounced searches of premises to obtain evidence of possible competition law violations. Most commonly, these searches are being conducted at business premises, and therefore business managers need to know how to respond. Private residences, vessels, and motor vehicles also may be searched. Failure to comply with the law when a search is conducted can lead to fines and even jail sentences for obstructing justice. The authorities' investigation of the international automobile parts cartel began in early 2010 with a series of raids on the Detroit offices of several auto parts companies. In 2012, an executive of one of these companies was sentenced to a year in prison—not for price-fixing, but for obstructing justice by destroying emails and other documents after learning of the raids. Even in jurisdictions where competition violations do not carry criminal liability, missteps during a dawn raid may increase the authorities' suspicions and lead them to suspect wrongdoing where they might otherwise have determined through their search that no infraction had occurred. On the other hand, failure to exercise one's rights can lead to the loss of privilege and to a broader search and seizure than was authorized. In 2003, the European Commission carried out dawn raids on the United Kingdom premises of AkzoNobel Chemicals Ltd. and Akcros Chemicals Ltd. The Commission seized a number of documents that the companies claimed were privileged. The European Court of Justice eventually sided with the Commission. But the rules of privilege vary across the EU Member States, so the procedures for protecting potentially privileged documents must be carefully followed to avoid an unnecessary waiver. To be better prepared, 10-point checklists for various jurisdictions are provided below. These may be helpful to prepare employees for the eventuality of a search. But when the authorities come knocking, it is time to call in experienced legal counsel.

AUSTRALIA

Here's a 10-step checklist on how to respond when officials from the Australian Competition and Consumer Commission ("ACCC") carry out a dawn raid at your premises under the civil regime and criminal regimes. Civil Investigations at Business Premises Step 1. Contact outside counsel immediately and ask that the search be delayed until outside counsel arrives on sitenote that the ACCC is not required to do so, although it usually will, particularly if you are able to give them a reasonable estimate of how long they need to wait and assurances that there is no risk of evidence being destroyed, such as by asking staff to close their desks and computers and turn off any shredder. Escort the officials to a private meeting room and offer them an organizational chart and floor plan of the business. Identify locations where privileged material may be located, such as the legal department. Step 2. Copy the ACCC's documentation. Take a copy of the officials' identification (identification cards are issued by the Chairman of the ACCC) and check the documentation authorizing the investigation (authorization or a warrant). Make a copy of each of those documents and email them to your outside counsel. Step 3. Review the search warrant to (i) check that it is valid; (ii) check that it covers the company and premises; (iii) understand the scope and subject matter of the investigation (alleged infringements, relevant products/services, departments, geographical scope); (iv) understand the powers of the officials; (v) understand which ACCC inspector is responsible for exercising the search warrant; and (vii) identify the date, which is noted on the warrant, on which the warrant ceases to have effect. Step 4. Provide instructions to employees. Issue an internal announcement to inform staff that there is an official inspection and provide guidance on how to behave appropriately (in particular, instruct not to destroy documents, not to leak news of the investigation (even to family members), and remind of the duty to cooperate). There are a number of criminal offenses that may be committed through failure to cooperate, and fines also may be applied. Step 5. Organize staffing. Arrange for the internal team to have access to a separate meeting room from the ACCC officials. Arrange for members of the IT team to be available as their input will be needed; if IT support is outsourced, contact a senior person at the provider who can bypass the usual time-consuming protocols and helpdesk processes. Organize "shadowers" to follow each official at all times and brief them on the scope of the investigation and limits to the power of the officials to ensure that officials do not exceed their powers. Step 6. Follow each official at all times. Inspectors have the power to take possession of original documents. However, officials cannot take copies or take possession of documents that are legally privileged, including legal advice from in-house counsel or from external counsel. Step 7. Track and record all seized or produced documents. Take a written note of which rooms the officials visit; what desks, cupboards, files, computers they inspect; and whom they interview. Make a copy of all documents seized. Step 8. Provide support to employees questioned on documents or interviewed by officials on questions relevant to the investigation. Officials may request oral explanations of documents that are within the scope of the investigationmake sure the information provided is complete and accurate but that the answers are concise and no additional information is volunteered. Make sure that legal counsel is present for questions and that the questions are recorded. If this is not possible, ensure that a contemporaneous note be made so that the interviewee is given a chance to check, and confirm the accuracy of the transcript. A person may not decline to answer a question on the basis that the answer may incriminate or expose that person to penalty. Step 9. Before the officials leave, confirm you have followed these procedures. Make sure you have a copy of the documents as well as the officials' list of documents. Ask officials for their contact details and organize a point of contact at...