It’s the situation every General Counsel dreads: 9:00am on Monday morning and there’s a call from reception: “Officials from the competition authority are here and want to inspect our offices. What shall I do?”
As antitrust enforcement continues to increase across Asia, dawn raids are becoming common. Hong Kong’s Competition Commission conducted several in its first year of enforcement, for example.
Don’t be caught out – our ten top tips for dawn raids are below.
Before the raid – prepare
Tip 1: Put in place guidelines, procedures and training programmes.
Dawn raid guidelines (tailored by jurisdiction) will help key staff understand what a dawn raid involves, and what their respective roles, rights and obligations are during a raid.
Conduct regular training. Employees should be made aware that authorities may request access to any of their documents or communications, including messages stored on handheld devices or communications on social media platforms.
Tip 2: Establish a response team.
Your dawn raid team should comprise legal counsel (internal and external), senior executives, and employees from IT and communications.
Ensure the response team can coordinate the dawn raid across multiple sites and jurisdictions. Every team member must understand their role in the event of a raid.
Tip 3: Know your IT systems and data policies.
Understand how your IT systems and servers operate. For example, can your IT systems facilitate quick responses to large data requests from officials?
Understand where your data is held (which may be tricky with ‘cloud’ storage) so you can assess which data protection laws apply.
Put in place appropriate data retention guidance and be ready to implement automatic document preservation protocols quickly in a raid - or you risk being perceived as having tampered with evidence which can result in personal liability in some jurisdictions.
Tip 4: Protect legally privileged documents.
Legally privileged documents should be clearly labelled and, if possible, stored separately. Note that legal privilege does not exist in some jurisdictions.
During the raid – react
Keep calm and follow your agreed procedures. Your response team will coordinate the company’s response to the dawn raid, providing guidance and assistance to staff involved in the inspection.
Tip 5: Check officials’ identity and authorisation.
If possible, make copies or take note of identity cards and any authorisation warrant. These should be passed to the response team.
Tip 6: Alert the response team, including external counsel.
Ask officials to wait for external counsel before starting their inspection. If they refuse, ask them to at least wait to question employees, inspect offices likely to contain legally privileged information, or start copying or removing documents.
Tip 7: Co-operate at all times.
Staff must usually cooperate with the officials at all times – failure to do so is a criminal offence in many jurisdictions.
Tip 8: Shadow officials throughout the inspection if permitted. If you are prevented or restricted, voice your concern and try to persuade the officials to allow shadowing.
Shadowing will usually be performed by external counsel (or response team members if the officials start the inspection before external counsel arrive).
The shadow should take contemporary notes of the inspection, (politely) stop the officials looking at legally privileged information if possible and refer any disputes to the response team lead.
Tip 9: Prepare a communications plan.
Draft an email ready to be sent to relevant employees. Among other instructions you will want to inform them of the inspection, advise them not to destroy documents or otherwise obstruct the inspection, not to communicate details of the inspection to anyone (internally or externally) and to contact the response team with any questions.
Consider whether your company needs to notify any other regulators or other stakeholders of the inspection. Is a public statement necessary? Be prepared for questions from the press.
Consider who internally needs to know about the inspection (company directors, parent company etc). Establish an ongoing communications plan.
Immediately after the raid – review
Tip 10: Conduct your own internal investigation and consider next steps.
Conduct a thorough internal investigation to identify potential competition breaches.
Consider whether to apply for leniency in any affected jurisdictions to try to secure a fine reduction or full amnesty. Remember that you may be in a race – generally only the first few applicants benefit!
Follow up with the competition authority, for instance in relation to any documents held under seal (perhaps because they may be legally privileged), to complete any unfinished searches of electronic materials, or to raise any procedural concerns you have about the inspection.