Dust off your dawn raid manuals: the heat is (back) on
Companies should brace themselves for multiple multi-jurisdictional dawn raids over the coming months. Employees will need to brush up on their dawn raid checklist too, as today’s ‘hybrid’ way of working may lead to competition authorities paying more home visits.
Statements made by the European Commission and the Dutch Authority for Consumers and Markets (ACM) show that they are ready to move forward at full speed with the collection of evidence at company premises and at employees’ homes. So far, the European Commission has conducted dawn raids in the wood pulp and animal health sectors, with the promise of more dawn raids in the pipeline. Buyer cartels, wage-fixing and no-poach agreements are particularly fair game.
Time for companies to double-check their dawn raid manuals, compliance programmes and recruitment policies. Specific dawn raid instructions for employees on what to do when officials ring their doorbell at home may also be worthwhile.
New types of cartels
Apart from dawn raids directed at suspicions of ‘classic cartels’ such as price-fixing or market-sharing, the Commission is on the lookout for new types of collusion. Variations on the buyer-side cartels which have been on the radar of many competition authorities (see our December 2019 newsletter), are likely to come under more intense scrutiny. Currently, the Commission, the ACM, the French authority, the Portuguese authority and the US Department of Justice have shown a particular interest in wage-fixing arrangements and no-poach agreements. Information sharing between competing employers on, for instance, wages or non-competes is also on the radar. So are unfair practices such as non-compete clauses in employment contracts or non-disclosure agreements for employees. Thus, dawn raids to investigate suspicions relating to these types of conduct may well be on the way.
New ways to detect cartels
New tools and increased international cooperation are being utilised to detect such suspicions more efficiently. The Commission’s intelligence unit is using IT forensics and data processing methods to find “suspicious patterns in very large volumes of data” faster. Moreover, competition authorities are exchanging ex officio leads and coordinating dawn raids at a global level. The Commission’s whistleblower tool has also proven useful in obtaining inside information to uncover cartels.
However, it is not all roses here, since the increased number of jurisdictions enforcing cartels, and the consequential rising number of cartel victims claiming damages, have led to a fall in leniency applications. The Commission is therefore considering whether the Leniency Notice will need further tweaking to entice cartel participants to continue to apply for leniency; an issue that is on the mind of other competition authorities worldwide.
Conclusion
Companies should realise that dawn raids, both at company premises and at employees’ private homes, are on the up, with anti-competitive conduct in labour markets as a potential hot topic. Specific pointers for HR staff on the potential antitrust risks of certain recruiting and hiring practices may need to be included in compliance programmes. Dawn raid manuals may also benefit from specific guidance for employees faced with home visits by officials.
This article was published in the Competition Newsletter of November 2021. Other article in this newsletter:
