Expect the Unexpected: Preparing for Dawn Raids

• Pages: 213-227

213

CHAPTER 19

EXPECT THE UNEXPECTED:

PREPARING FOR DAWN RAIDS

Picture the scene: it is 9 am on an ordinary Tuesday morning. As senior in-house counsel

for a large, multi-national corporation, you have a full day of meetings and conference calls

scheduled with your business and legal teams. Your telephone rings: it is the receptionist calling

to say that six officials from the European Commission (EC) have arrived with a warrant to

inspect the offices immediately. She asks you what to do.

The simple and first answer is: stay calm. From what you have heard, it sounds like your

company is the subject of a “dawn raid”—an inspection by an antitrust authority to collect

evidence of possibly unlawful behavior.

Dawn raids are no longer a rare occurrence, a ‘nightmare’ that happens “to somebody else.”

A dawn raid is one of the most powerful in a growing package of enforcement tools available to

antitrust enforcers around the world, and their success has been central to the detection by

antitrust authorities of clandestine anticompetitive agreements and conduct. In today’s

environment, where antitrust agencies from around the world coordinate their enforcement

activities, dawn raids pose a real peril to all companies wherever their operations are based

geographically, even if the company is at low antitrust risk. A dawn raid is an extremely

intimidating and uncomfortable experience for all involved, even for companies and counsel who

have prior experience of raids, and whether or not the company has committed any infringement

of applicable law(s).

Companies cannot afford to put their heads in the sand and hope that a raid will never happen

to them. Dawn raids are invariably detrimental to the companies concerned. At a minimum, the

interruption of business activities can reduce productivity for several days while the investigation

is being conducted, and give rise to a longer-term lack of confidence among employees.

Externally, the reputational damage can have lasting negative effects in the market place, causing

panic among investors and concern from customers who may suspect they have been

overcharged as a result of a conspiracy between and among its suppliers. Susceptibility to these

potential consequences are compounded by the unexpectedness of the raid. Companies may find

themselves ill-equipped to deal with government officials in the building so that they struggle to

implement important strategic decisions while the authorities are on-site and may fail to engage

in appropriate “damage control” to assuage the immediate negative publicity that arises.

In your position as senior in-house counsel, you need to be prepared to protect your

company’s rights of defense and minimize potential exposure. To mitigate the risk associated

with a dawn raid there are many measures that companies can adopt, both in advance and during

an inspection, to preserve rights of defense and, critically, to understand quickly what conduct is

being investigated. This article will identify and discuss some of these important practical

measures. After a short overview regarding the nature and legal basis for raids, the article turns

to examine what practical steps you can take now to prepare for the worst, ranging from how to

deal with the inspectors upon arrival, monitoring the search and information gathering process,

and the conduct of employee interviews. Finally, there are some do’s and don’ts for handling the