Dawn raids and legal privilege

Dawn raids conducted by the Slovakian competition authorities have their legal basis (apart from EU legislation with respect to the entitlement of the European Commission) in local competition legislation. This local legislation provides rights and obligations for the Anti-monopoly Office when conducting dawn raids.

However, the legislation does not directly regulate(1) the legal privilege in relation to the Anti-monopoly Office performing dawn raids (ie, protection of communications between the undertaking subject to the dawn raid and his or her attorney as part of the client's rights of defence). The protection of legal privilege is implied mainly from the right to legal aid (defence) stipulated in the Constitution and other legal regulations (eg, the Criminal Code and the Attorneys Act). In practice, the Anti-monopoly Office tends to follow EU case law. There are even two Supreme Court decisions related to legal privilege during a dawn raid.

New Anti-monopoly Office practice

Over the last few months, the Anti-monopoly Office has increased its activity with regard to dawn raids conducted in relation to alleged cartels or abuse of dominant position.

With respect to this increased activity, Anti-monopoly Office inspectors have been criticised for allowing undertakings subject to a dawn raid to call their attorneys to come to the premises in order to provide legal aid during the inspection, but expressly prohibiting them from informing their attorneys as to why they should come. If undertakings fail to comply with this prohibition, inspectors have been threatening them with fines for failure to cooperate.

This new practice is not laid down in any publicly available document and there has been no official communication from the Anti-monopoly Office in this regard. Inspectors are applying it only during actual dawn raids. This practice has been subject to criticism, mainly from the Bar Association after it received information about the practice from attorneys and undertakings.

Legal issues

The rationale behind this practice can be seen with respect to the possibility that an attorney may inform other participants in an alleged cartel about an ongoing dawn raid and thus may obstruct the performance of other dawn raids. Although the Anti-monopoly Office could justify its practice based on this reasoning, it cannot be justified in relation to the rights of the subject of the dawn raid.

This is because the practice breaches the basic right of an undertaking to legal representation, as provided mainly in the Constitution. As highlighted by the Bar Association, for an attorney to provide complex and sufficient legal aid to its client (in the case of a dawn raid or otherwise), it needs all of the information required to provide this aid. The Anti-monopoly Office's practice prohibits attorneys from providing full legal aid to their clients, as they are not made aware as to why their clients need their services and are thus unable, for instance, to prepare properly.

The practice poses other practical problems, particularly in relation to the urgency of the matter (the Anti-monopoly Office usually waits for an attorney to arrive for a limited time only); the attorney may not assess the urgency of the matter and thus may fail to arrive in time. In addition, the attorney may be unable to assess whether the matter requires the attention of other lawyers on the scene (eg, a specialist in competition law). Therefore, the practice brings certain practical problems with regard to providing legal aid.

The practice could also be seen as breach of legal privilege protection, since communications between a client and attorney should not be subject to an Anti-monopoly Office inspection; thus, the Anti-monopoly Office should not impose rules on these communications. In addition, where an undertaking breaches the prohibition imposed by inspectors, the Anti-monopoly Office should not be entitled to impose a fine, as inspectors cannot monitor communications between a client and attorney.

Complying with new practice

The Anti-monopoly Office's practice when conducting dawn raids poses various legal issues. Nevertheless, an undertaking facing a dawn raid will generally try to comply with inspectors and thus will try to comply with this new practice. How to comply with this practice and still get the necessary legal aid could be difficult depending on the circumstances. One potential solution is to call only attorneys specialising in competition law, although this solution might not be helpful in every case (eg, when specialised attorneys are unavailable at the required time).

Comment

It will be interesting to see how the Anti-monopoly Office applies this practice in upcoming dawn raids and whether the legality of it will ever be subject to court scrutiny. Nevertheless, the practice is arguably harmful to undertakings subject to dawn raids and breaches their basic rights – particularly the right of defence. Thus, this new practice is arguably contrary to law and the Anti-monopoly Office should avoid using it.

For further information on this topic please contact Jitka Linhartová or Michal Lucivjanský at Schoenherr by telephone (+420 225 996 500) or email (j.linhartova@schoenherr.eu or m.lucivjansky@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.

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