Introduction on Dawn Raid
Any companies may subject to a “dawn raid”. Dawn raids are surprise investigations of premises carried out by the authorized officers of the Competition Commission (“the Commission”). Dawn raids are usually carried out without prior warning.
When competition authorities decide to carry out a dawn raid on a company, it is usually because they have reasonable grounds to suspect that serious anti-competitive conducts have taken place or is about to take place.
As such, advance preparation is essential since obstruction of search is a criminal offence.
Section 48 Warrant
Under section 48 of the Competition Ordinance, Cap. 619, the Commission may apply for a warrant from a judge of the Court of First Instance to enter and search any premises to obtain documents that may be relevant to an investigation by the Commission (“Section 48 Warrant”).
The powers conferred by a Section 48 Warrant are broad. They include, inter alia, the following:
- Using reasonable force to gain entry to the premises.
- Removing any obstructions to the execution of the warrant as well as any person who obstructs the execution of the warrant.
- Making copies and/or taking possession of any relevant documents found on the premises.
- Prohibiting any person from interfering with or removing any relevant documents on the premises.
- Taking possession of any computer found on the premises
- Request any person to explain the relevant documents
It should be noted that the premises specified in a Section 48 Warrant do not need to be a party under investigation. It may be a supplier or a customer of the investigated party.
Scope of the Search
The Commission officers will usually examine:
- Books and records
- Minutes of meetings
- Correspondence (emails and letters)
- Travel records
- Sales, invoices, pricing data
- Personal notebooks and papers
- Laptops and desktops
- portable hard drives and USB devices
- Mobile phones and tablets.
In EU, the Commission has used keyword search tools already built in in the computers as well as their own forensic IT software to conduct targeted searches to locate materials that might be relevant to the investigation.
Right to a Lawyer
The Commission’s Guideline on Investigations makes clear that there is no statutory requirement for the Commission to wait for the arrival of the party’s legal advisers before commencing its search.
However, if the party requests that legal advisers be present during search then the Commission may wait for a reasonable time for the arrival of external legal advisers if there is no in-house lawyer on the premises.
In the meantime, the Commission officers may impose any necessary measures to prevent documents from being interfered with.
Obligations to Assist in the Search
The company is obliged to assist and cooperate with the Commission officers during the search. This would include making available members of staff to produce and provide explanations concerning any relevant documents as well as providing access to computers where relevant documents might be located.
In order to prevent evidence from being tempered, the Commission may also ask the IT staffs of the company to temporarily disconnect any access to the computers and block all communication tools such as in-house messaging systems and email accounts. The Company should not interfere with such measures once they are in place.
It is a criminal offence to:
- Destroy or falsify documents;
- Obstruct the execution of a Section 48 Warrant by the Commission Officers; and
- Provide false or misleading documents or information.
Interviews with Staffs
If the Commission Officers request members of staffs to provide explanation of any documents, Counsel or legal adviser should be present to object to questions that are either irrelevant or beyond the scope of the subject matter of the investigation.
Breaking of Seals
In certain circumstances, the Commission may seal the business premises in order to preserve and avoid interference with the evidence in question. If so, the Company should ensure that the seal is not broken without consent from the Commission.
Practical tips on dealing with dawn raid will be discussed in the next post.