Brush up and avoid dawn raid drama - the clock is ticking
There is no time like the present for companies to give their staff an opportunity to brush up on their responsibilities so they know what to do during dawn raids. The number of dawn raids may increase once the EU's national competition authorities (NCAs) are empowered as a result of the newly adopted ECN+ Directive.
The number of fines for IT-related dawn raid obstruction may also rise, with the European Commission taking the lead. Even though the European Court of Human Rights recently confirmed that dawn raid procedures should be subject to comprehensive judicial review, there seems to be no immediate recourse available against the actual conduct of EU officials during dawn raids. All the more reason for companies to be fully prepared for what lies ahead.
Once the ECN+ Directive has been incorporated into national law, NCAs currently lacking the necessary tools to gather evidence can use their newly obtained powers to conduct dawn raids. This may also lead to more fines being imposed on companies for not cooperating, with NCAs possibly following the approach taken by the European Commission.
Companies failing to cooperate with a European Commission dawn raid may face fines of up to 1% of their total turnover. Given today's growing digital developments, it is likely there will be more fines for IT-related actions by companies. For instance, the Commission recently sent a statement of objections to Slovakian state-owned railway company ZSSK for obstructing a dawn raid. According to the press release, the Commission suspects ZSSK of (i) having provided incorrect information on the location of the laptop of one of its employees and (ii) failing to provide requested data, which was lost when the company reinstalled the laptop. Similarly, in 2014 the General Court upheld a fine of EUR 2.5 million imposed on a Czech energy company for obstructing a dawn raid by failing to block an email account and divert incoming emails [see our December 2014 Newsletter]. According to the General Court, the Commission had been right to assume that once it hands over the inspection decision and the explanatory note to a company's authorised persons, it is up to the company to take all necessary measures to ensure that the Commission's instructions are implemented. Companies should therefore make sure they have clear dawn raid instructions, preparing not only their key personnel but also their IT staff, on their responsibilities during a Commission dawn raid. They should also double-check whether their instructions follow the Commission's explanatory note.
This is particularly advisable given that immediate legal recourse to tackle EU officials' conduct during dawn raids is limited. The validity of the Commission's decision ordering the inspection can be reviewed by the EU courts. However, as recently confirmed by the General Court, allegedly unlawful conduct Commission officials during a dawn raid is usually not challengeable on a standalone basis. Companies can either have this conduct reviewed with the Commission's final infringement decision or refuse to cooperate, thus provoking a decision by the Commission to impose a fine for non-cooperation, which can be challenged before the EU courts. In such cases, as confirmed by the European Court of Human Rights last month in the context of a Slovenian competition authority's fine for dawn raid obstruction, companies should be entitled to have all evidence relating the factual aspects of that decision fully reviewed. Even so, before being confronted with these kind of options, companies should make sure their staff brush up on their responsibilities so they know what to do during a dawn raid before it's too late.
This article was published in the Competition Law Newsletter of December 2018. Other articles in this newsletter:
