Investigation

Commencement of investigation

How is an investigation into a suspected breach of competition law started?

An investigation into suspected violations of competition law arises when an agency receives information suggesting a violation. The information can come from a variety of sources (eg, pre-merger filings, articles on consumer or economic subjects, other government investigations, individual or corporate whistle-blowers, or Congressional inquiries may spark an investigation). The Department of Justice (DOJ) and Federal Trade Commission (FTC) will share information through a clearance procedure to prevent duplicative investigations. The FTC recently expanded its criminal referral program, under which it shares information regarding corporate misconduct with local, state, federal and international criminal law enforcement partners.

Limitation period

What are the limitation periods for investigation of competition infringements?

The statute of limitations period is five years for criminal competition infringements and four years for civil competition infringements. However, it is important to note that various tolling doctrines can apply. For example, antitrust statutes suspend the limitations period while government prosecution is pending, giving claimants one year from the end of government prosecution to file. (See, eg, Morton’s Market Inc v Gustafson’s Dairy, Inc, 198 F.3d 823, 829–32 (11th Cir. 1999), amended on other grounds, 211 F.3d 1224 (11th Cir. 2000), cert. denied, 529 US 1130 (2000).) In addition, when a company conceals its antitrust violation, the limitations period is tolled so long as the violation remains concealed such that claimants could not discover the violation through due diligence. (Id. at 832–34.)

Information-gathering powers

What powers does the competition authority have to gather information?

Both the FTC and the DOJ’s Antitrust Division rely on civil processes, including civil investigatory demands and subpoenas, to gather facts about suspected violations as a first step in the investigation process.

If the DOJ or FTC issues a subpoena to compel testimony or obtain documents, companies should pay attention to the deadline and scope of required responses to ensure compliance. Where a company intends to dispute the alleged violation, it should initiate communication with the subpoenaing agency to understand the nature of the investigation and identify ways to reduce the scope of requested materials.

Dawn raids

For what types of infringement will the competition authority launch a dawn raid? Are there any specific procedural rules for dawn raids?

The DOJ’s Antitrust Division may issue search warrants to investigate criminal antitrust violations. In many instances, these search warrants are executed through ‘dawn raids’.

A dawn raid usually is conducted by officers and agents of the DOJ, the Federal Bureau of Investigation (FBI) or other law enforcement agencies. The agents’ search may include corporate file servers, local computer files, electronic storage devices, mobile devices, file cabinets, work rooms and document disposal containers, and the agents will seize or make copies of documents and electronic data. The agents also may seek to conduct employee interviews during the raid. It is important that company employees cooperate with the agents’ search and do not attempt to hide or destroy evidence.

Dawn raids – rights and obligations

What are the company’s rights and obligations during a dawn raid?

The company should request a copy of the search warrant and any other documents authorising the raid when the authorities arrive. Targets of the search warrant have legal rights against overbroad and unlawful searches.

Refusal to cooperate

What are the penalties and other consequences for refusing to cooperate with the authorities during an investigation?

Leniency applicants are required to fully cooperate with the DOJ and any refusal to cooperate will result in the forfeiture of any leniency or sentencing enhancement.

If the DOJ or FTC issues a subpoena to compel testimony or document production, companies should pay attention to the deadline and scope of required responses to ensure compliance. Where a company intends to dispute the alleged violation, they should initiate communication with the subpoenaing agency to understand the nature of the investigation and identify ways to reduce the scope of requested materials.