An inspector calls: Tuesdays are the favourite day of the week for dawn raids

The rules governing dawn raids by competition authorities in the EU are complex.

Article first appeared in Competion Law Insight, 21 January 2014

The rules governing dawn raids by competition authorities in the EU are complex. Powers vary depending on whether the raiding authority is the European Commission or a national competition authority; the suspected infringement; and the legal basis for the decision to investigate and the execution of the investigation. In the heat of the moment, companies can compromise themselves if they do not ask the right questions or do the right things.

Under Regulation 1/2003, the Commission’s powers to investigate suspected infringements of EU competition law include entering any premises, land or means of transport of the company; examining the company’s books and other business records, irrespective of the medium on which they are stored; taking copies of any extracts from such books or records; sealing any business premises and books or records during the inspection; and asking any member of staff for an on-the-spot oral explanation of facts or documents relating to the inspection, and to record the answers in any form.

A company may consult a legal adviser during the inspection but the presence of a lawyer is not a legal condition for the validity of the inspection, and inspectors will only accept a short delay pending consultation of the lawyer before starting their inspection.

In May last year, the European Commission published revised guidance on the conduct of dawn raids and in particular sought to clarify the powers of inspectors to access and store electronic data.

The guidance highlights that a company’s obligation to cooperate with Commission officials carrying out a dawn raid inspection extends to enabling access to all electronically stored data. A company may be required to provide members of staff to assist inspectors with IT-related tasks, such as the temporary blocking of individual email accounts or removing and reinstalling hard drives from computers. When such actions are taken, the company must not interfere in any way with these measures and must inform relevant employees accordingly.

The Commission’s guidance, together with compliance and dawn raid training, can support a risk management strategy. Variables such as business sector, market structure and history of transgressions are also relevant in understanding businesses’ regulatory risk. However, there are, in addition, statistics that can help to inform how companies might choose to target their resources in order to minimise their cost of preparedness.

We have analysed a random sample of 20 (relatively recent) EU cartel investigations to identify when the dawn raid that generally kickstarts these investigations took place. The results are detailed in below table.

 

EU Cartel investigation	Date of first dawn raid	Day of week
Calcium carbide	16 January 2007	Tuesday
Mountings for windows and doors	3 July 2007	Tuesday
Freight forwarding	10 October 2007	Wednesday
Cathode ray tubes	8 November 2007	Thursday
Consumer detergents	17 June 2008	Tuesday
Smartcard chips	21 October 2008	Tuesday
Refrigeration compressors	17 February 2009	Tuesday
North sea shrimps	24 March 2009	Tuesday
Automotive harnesses	24 February 2010	Wednesday
Polyurethane foam	27 July 2010	Tuesday
Paper envelopes	14 September 2010	Tuesday
Trucks	18 January 2011	Tuesday
Euro interest rate derivatives	18 October 2011	Tuesday
Industrial bearings	8 November 2011	Tuesday
Car thermal systems	22 May 2012	Tuesday
Plastic pipes	26 June 2012	Tuesday
Car carriers (maritime)	6 September 2012	Thursday
Car battery recycling	26 September 2012	Wednesday
Sugar	23 April 2013	Tuesday
Cargo train transport services	18 June 2013	Tuesday

 

Fifteen of the twenty raids first took place on a Tuesday, with the remaining five starting either on a Wednesday or Thursday. In our sample, there were no raids that started on a Monday or on a Friday. From the perspective of the antitrust regulators that carry out such raids, this makes sense. EU Commission officials are based in Brussels. Unless the premises being raided are also in Brussels, the officials will need to travel to the target premises on a business day to be ready to conduct the raid first thing in the morning on the following business day. Having (presumably) carried out the preparatory work that is required for such an operation, including ensuring that the Commission has taken decisions where appropriate, it makes sense that the officials would then travel to the relevant location(s) on a Monday, ready to proceed with the raid on Tuesday morning. Starting on Tuesday allows sufficient days to continue gathering and securing evidence before the intervention of a weekend, when there is likely to be an enhanced risk that evidence will be compromised.

As regards the time of year, it is notable that none of the raids in the sample started in August or December. The Commission is effectively closed for the entire month of August so, to that extent, the statistics reflect annual holiday patterns. As regards December, it may be that the intervention of the Christmas break (and the prevalence of Christmas parties) militates against initiating a raid, with forensic evidence-gathering, at the year end.

Companies that consider themselves potentially to be at risk of an unannounced visit from EU inspectors should ensure that key executives trained to manage dawn raids are readier on Tuesdays than on other days of the week. Holidays should be encouraged during August and December.

For further information contact John Cassels, Partner, Competition & EU Regulatory at Field Fisher Waterhouse LLP.