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.

Limitation period

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

Targets of a search warrant have legal rights against overbroad and unlawful searches.

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 weight will the authorities place on companies implementing or amending a compliance programme in settlement negotiations?

Following the Antitrust Division's July 2019 guidance on the evaluation of corporate compliance programmes in criminal antitrust investigations, prosecutors will evaluate whether to recommend a sentencing reduction based on a company’s effective antitrust compliance programme.

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 and/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.

Confidentiality protection

What confidentiality protection is afforded to the company or individual, or both, involved in competition investigations?

Criminal investigations typically proceed pursuant to grand jury subpoenas governed by the Federal Rules of Criminal Procedure. A grand jury determines whether there is sufficient probable cause to indict the target of a criminal investigation and may subpoena testimony and evidence. In this process, the matters before the grand jury may not be disclosed by the prosecutors, jurors and court employees. This secrecy is strictly enforced, with violators subject to contempt of court proceedings.

Civil investigations are also confidential, including both the existence of the investigation as well as confidential company information and witness testimony disclosed (15 USC section 1313(c); 15 USC section 57b-2(b)).

Plea negotiations are generally confidential; however, a defendant in breach of a plea agreement – such as by failing to cooperate in the investigation – may forfeit this confidentiality. In the United States, courts do not participate in these discussions, but the resulting agreements are generally disclosed in open court (unless doing so would jeopardise a secret investigation) for acceptance of the court.

Refusal to cooperate

What are the penalties for refusing to cooperate with the authorities in an investigation?

Refusing to cooperate with the DOJ will forfeit any leniency or sentencing enhancement associated with cooperation. Furthermore, refusal to appropriately produce witnesses and documents could subject the company to criminal contempt and obstruction of justice charges. The penalties for obstruction of justice are often much more severe than those for the underlying cartel offence. Obstruction of a government antitrust investigation can be punished by a jail term of up to 20 years and fines in excess of US$500 million (see 18 USC section 1512(c)(2)).

The DOJ has regularly prosecuted companies it deems to have corrupted its investigative processes, especially with false statements or alteration of documents.

Infringement notification

Is there a duty to notify the regulator of competition infringements?

Leniency applicants are required to fully cooperate with the DOJ. Although there is no duty to notify the regulator of competition infringements, not doing so may lead to drastic criminal penalties and civil litigation.

Limitation period

What are the limitation periods for competition infringements?

The statute of limitations for criminal conspiracies, including antitrust conspiracies, is five years. For civil actions, a suit must commence within four years after the cause of action has accrued.