On 23 March 2017 the South African Competition Commission reported it had conducted dawn raids at the premises of nine fresh produce market agents. This is further confirmation of the Commission's increased reliance on its search and seizure powers to obtain information in cases of alleged cartel conduct.
The implications of a dawn raid are far-reaching. If it is reasonably suspected that a prohibited practice has taken place, the Commission may obtain a warrant from the High Court empowering it to search and seize any electronic data, records and documents from a company's premises. It is common practice for the Commission to make a copy of a company's entire document server, and to seize all information on the laptops and cellphones of identified key employees. In some circumstances, a dawn raid may be conducted without a warrant.
The frequency of dawn raids by the Commission has steadily increased since 2014. In 2016, the Commission conducted dawn raids on firms in the glass, wood, cargo shipping, packaging paper, and edible oils industries – a total of five raids, which is the same number as were conducted in the first eight years from the Competition Act's inception.
The Commission places significant value on the evidence obtained through search and seizure operations. The Commission very recently litigated and won in two High Courts, in cases brought by edible oils manufacturers seeking to prevent the Commission from relying on information seized during dawn raids conducted in that industry. The litigation and subsequent publication of the outcomes demonstrates that the Commission has the appetite and resources to vigorously protect the evidence yielded by search and seizure operations, in the face of challenges by the firms in question.
The implications for companies and their legal advisors are clear – as the Commission increases its reliance on dawn raids as an enforcement tool, it becomes increasingly important to have a clear and coherent strategy in place for dealing with the possibility of an unexpected arrival at the company's premises. To be adequately prepared for this possibility, businesses should:
- Formulate a dawn raid protocol, including an ABC of what to do and who to contact in the event of a dawn raid.
- Provide expert legal training to ensure employees are prepared and understand what action is required and prohibited as well as clarify the company's and employees' rights. Importantly, training should also be provided to reception staff.
- Determine a communication policy for internal and external announcements during and following the dawn raid.
- After a dawn raid, determine a pragmatic strategy for reviewing the seized information, analyzing the degree of potential risk, and engaging with the Commission.
A pro-active approach to training, awareness and communications regarding dawn raids can substantially reduce the commercial disruption caused, and also enables the subsequent investigation phase to be managed efficiently and effectively.