The Competition Bureau recently published its Information Bulletin on Sections 15 and 16 of the Competition Act, which sets out the Bureau’s practices and policies under the Competition Act’s search warrant provisions and related powers for the search of computer systems. The Bulletin sets out what persons or businesses should expect from the Bureau during a search and with respect to the handling of any “records or other things” seized as a result of the search.
Although unable to provide for all eventualities, in our view the Bulletin provides general insight into the Bureau’s approach to section 15 search warrants and the related use of computer systems. The Bulletin does not, however, reveal any material changes in the search procedures utilized by the Bureau in recent years.
The Search Warrant Provisions
Section 15 of the Act allows the Bureau to apply to a judge for a search warrant authorizing a search of identified premises, and to copy or seize certain records or other things. The Bureau indicates that it will make such an application ex parte, that is, without notice to the persons subject to the order. The Bulletin confirms that a section 15 search warrant is the Bureau’s “tool of choice” for investigations such as cartels and mass marketing fraud, where the element of surprise is deemed important.
Section 16 of the Act provides that a person authorized to search premises pursuant to section 15 may use any computer system on the premises to search any data contained in or available to the computer system in order to search for records described in the search warrant. Notably, data obtained via the computer system can be searched even if it is not located on the premises or, for that matter, in Canada.
Obtaining the Search Warrant
In order to grant a search warrant, a judge must be satisfied that there are reasonable grounds to believe: (1) that a person has contravened an order made pursuant to the Act, an offence has been or is about to be committed, or grounds exist for the making of an order under the reviewable practice provisions of the Act; and (2) that there are, on the premises to be searched, records that will afford evidence relating to one of the situations denoted in (1).
Warrantless searches are also possible where exigent circumstances, such as a risk that evidence will be destroyed, would make obtaining a search warrant impracticable; these are, in the competition law context, rare events.
Executing Search Warrants
The Bulletin explains that, generally, a minimum of two staff members will execute a search. The “team leader” will generally present the warrant, communicate with corporate representatives and/or counsel, and manage the operation. All questions regarding conduct of the search should be directed to the team leader.
According to the Bulletin, searches will typically be conducted during normal business hours, although the Act does permit warrants to be executed between 6am and 9pm, and outside of those times with judicial authorization. Circumstances will exist, for example, where databases are being imaged or downloaded, when searches will extend beyond business hours.
The Bulletin indicates that most searches will proceed as follows: the search team will arrive; the team leader will enter the premises and present the warrant to the person in control; an explanation of the search will be provided and the team leader will advise the person that they may contact legal counsel; the team leader will outline the search before beginning; a tour may be requested and arrangements may be made for a work area for the search team. While the Bulletin states that searching may occur immediately, it also suggests that requests for a delay may be granted in order to allow for the arrival of senior corporate officials and/or counsel.
The Bulletin describes some of the steps that a search team will undertake to secure the premises, including sealing filing cabinets and shredders with tamper-proof seals and restricting access to computer systems. The Bulletin states, however, that the Bureau will attempt to interfere as little as possible with business functions.
The Bulletin also outlines how the review of records will be undertaken: the search team will conduct the initial selection of paper records, and subsequent review and culling will be performed by the team leader, who may then return some of the records. Copies of seized documents may be requested by the person or business being searched, and depending on the time required to do so and the facilities available, such requests may be granted. Requests for copies of essential working records will normally be granted.
Electronic records may be searched by electronic evidence officers. These officers may obtain evidence through a variety of means, including the production of an image of a computer hard-drive for examination off-site and even the seizure of a computer system for examination off-site (although, experience indicates that seizure of entire computer systems very rarely, if ever, occurs).
Photographs and videos may be taken as a form of note-taking or as a means of gathering evidence.
Where there is a claim or potential claim of solicitor-client privilege relating to records, the records will be packaged and sealed and put in the custody of a specified individual. Legal counsel for the target of the search will also generally be provided with a reasonable opportunity to review the documents and assert any claim of privilege, although such claims should be asserted at the earliest opportunity. While the “privileged” status may ultimately be decided by a judge, the Bulletin indicates that most often the determination will be made informally through negotiation. The Bulletin repeatedly refers to determinations with respect to privileged documents being made under a “mutually agreeable process”; while this is consistent with experience, it is only “mutually agreeable” to a point.
According to the Bulletin, privilege claims in relation to electronic records may take place following seizure due to the potential volume of such records.
Individuals may be questioned during a search for purposes of facilitating the search or gathering evidence. Where a person is considered a target of an inquiry, that person will be informed by the search team of his or her rights, including the right not to answer, and will be informed that any answers may be used as evidence. Experience indicates, however, that employees will not – without legal advice –appreciate their right not to speak with Bureau officers on matters unrelated to the facilitation of the search.
If records indicating evidence of a new violation of the law are found in plain view during a search, the Bulletin states that Bureau staff will seize those records.
Failure to Comply with a Search Warrant
A peace officer may accompany the Bureau on a search where the Bureau believes, on reasonable grounds, that access may be denied. Any attempt to impede or prevent the execution of a search warrant or to remove or destroy records constitutes a criminal offence and carries with it significant penalties, as detailed in the Act. The Bulletin outlines several of these offences and concomitant punishments as well as the possibility that obstruction of justice charges under the Criminal Code may be laid.
Confidentiality and Retention of Records
In accordance with statutory requirements, the Bulletin states that the Bureau will generally not comment publicly on the existence of an inquiry, or communicate information obtained through a search warrant, unless such information has been made public by other means.