Dawn Raids in Competition Investigations: Why Companies Need to Be Ready

Dawn raids are a term used to describe unannounced searches or investigations carried out by competition authorities, such as The Competition and Markets Authority (CMA) in the United Kingdom or the European Commission in the EU. These raids are a critical tool used by competition regulators to investigate suspected violations such as price fixing, market allocation, and bid rigging (or collusive tendering). The purpose of these raids is to collect evidence and information that can be used to build a case against an organisation. Because the consequences of a dawn raid can be severe, it is essential for companies to maintain readiness.

Consequences of Failing to Be Dawn Raid Ready

There are a number of issues that can arise from an organisation’s failure to be dawn raid ready, including:

1. Delayed Response: The organisation may not respond promptly to an authorities' requests, leading to delays and potential fines for non-compliance. It is critical to respond quickly to any investigation.
2. Destruction of Evidence: The organisation may inadvertently destroy or tamper with evidence if employees are not properly trained on what to do in the event of a dawn raid.
3. Breach of Confidentiality: The organisation may disclose confidential information to the authorities without proper safeguards, which can result in damage to the organisation's reputation or legal action by affected parties.
4. Disruption of Operations: A dawn raid can disrupt normal business operations, causing potential financial losses or delays in production.
5. Negative Publicity: Dawn raids are typically reported in the media, leading to negative publicity for the organisation in question. Subsequently, dawn raids may damage an organisation’s reputation and affect its ability to attract and retain customers and/or employees.
6. Costly Legal Proceedings: Failure to comply with competition law can lead to legal proceedings as well as large fines and other sanctions.

To avoid these potential consequences, it is crucial for companies to be proactive when it comes to being dawn raid ready. Organisations should implement various internal processes to ensure readiness for any potential searches or investigations.

Mock Dawn Raid Exercises

One way companies can be proactive is by conducting mock dawn raid exercises. These exercises are simulations of a real dawn raid that allow a company to test its readiness and identify any weaknesses or areas needing improvement. During these exercises, companies can practice their response to a dawn raid and assess the effectiveness of their internal processes and procedures. Organisations may choose to work with external counsel to seek legal advice and with specialist eDiscovery and investigatory partners in conducting mock dawn raids.

“Given the nature of modern business, generally speaking, dawn raids no longer involve large teams of officers carrying boxes full of papers out of the front door of a corporate headquarters—they are largely electronic exercises. Therefore, it’s particularly important for Legal and IT teams to have a close understanding of each other’s roles, responsibilities, and capabilities.” – John Cassels, Partner and Co-Head of Competition at Fieldfisher 

There are additional benefits to working with legal technology specialists as they have extensive knowledge and experience in supporting organisations through every stage of a dawn raid investigation. This support spans data collections, processing and filtering data, using technologies such as predictive coding to streamline review, and producing relevant documents to competition authorities.

Mock dawn raids should encompass all departments and personnel who may be involved in a real dawn raid, including legal, IT, human resources, and front desk personnel as they may be the ones first approached in a live raid. It is essential to ensure everyone is aware of their roles and responsibilities during a dawn raid and understands the procedures and protocols to follow.

Dawn Raid Response Plan

In addition to conducting mock dawn raids, companies should have a Dawn Raid Response Plan in place that they test and update regularly. This plan outlines the company's response to a dawn raid and the procedures to follow. The plan should also designate a team of individuals responsible for managing the response, including legal counsel, IT personnel, and communications experts.

Having a plan in place, including clearly defined roles within the dawn raid response, will reduce the risk of an organisation receiving fines for obstruction. Some examples of obstruction include refusing to answer questions during in-person interviews, destroying physical records, breaking seals placed by inspectors on individual offices and cabinets, or blocking inspectors from accessing certain areas of the building. Obstruction also includes lesser-known examples such as deleting electronic data, refusing to provide passwords or changing them, re-routing email exchanges, or blocking access to cloud-based storage areas. For these reasons, it is imperative to work in conjunction with specialised eDiscovery and legal technologists.

An organisation’s Dawn Raid Response Plan should also include guidelines for interacting with relevant authorities. Companies must ensure their employees understand their rights and obligations during a dawn raid, including the right to legal representation and the obligation to cooperate with authorities. Additionally, it is essential to ensure all communications with the competition authorities are clear, concise, and accurate.

“The key to Dawn Raid Response Plans is simplicity and practicality. Companies of all sizes and in all sectors are susceptible to dawn raids and individuals who find themselves on the front line during a raid, including those individuals at the front desk, don’t have time to re-familiarise themselves with pages and pages of documents.” – Shiv Haria-Shah, Partner at Fieldfisher

Dawn raids are a significant risk for most companies as the consequences can be severe and long lasting. Therefore, it is vital for companies to be proactive in being dawn raid ready by implementing various internal processes and conducting mock dawn raids. By doing so, companies can mitigate the risk of a dawn raid and ensure they are prepared to respond effectively and efficiently to any investigations by competition authorities.

Learn more about partnering with the specialised eDiscovery and legal technologists at KLDiscovery to assist with dawn raid readiness and response.

Olivier Aelterman

Olivier Aelterman is Director at KLDiscovery based in Brussels, where he acts as a primary contact and first-line guidance to his clients. Olivier has distinguished experience in document discovery and production to the European authorities as well as a high-level background in global Antitrust and Litigation matters. Olivier worked on most of the breaking news cases in recent years in Europe and has an extensive knowledge of large and complex cross-border projects.