The Netherlands Authority for Consumers & Markets (ACM) and the European Commission (the Commission) may conduct dawn raids if they suspect a company of being involved in competition law infringements. ACM also has this power in cases of consumer law infringements.
Several dawn raids were recently conducted in the Netherlands and abroad, e.g. in the tyre industry, at an IT equipment manufacturer and at online food delivery platforms. ACM this month raided a Dutch branch of a pharmaceutical company as part of an international investigation into possible prohibited agreements to delay the introduction of a biosimilar drug (see also here).
In this blog, we address the rights and obligations in the event of such a dawn raid by the competition authorities.
Powers of ACM and the Commission
If an infringement is suspected, ACM and the Commission have the power to conduct dawn raids at a company. That power is set out in Article 5:15 of the Algemene wet bestuursrecht (General Administrative Law Act) and Article 20 of EU Regulation 1/2003. The authorities do not need prior judicial authorisation to do so, but they do need such prior authorisation to enter private residences.
The authorities have various powers during a dawn raid. They may, for instance, search cabinets, desks and bags on the company premises. Vehicles may also be searched. The authorities have the authority to take away physical documents and digital files. Laptops, phones (including private phones), e-mail and servers may therefore be subjected to an investigation and may be copied. If the investigation cannot be completed within one day, the authorities may seal cabinets and rooms to continue the investigation at a later date.
There are, however, limits to the powers of ACM and the Commission. ACM may use its powers only insofar as that is reasonably necessary to perform of its task. The powers must furthermore be exercised in the least onerous manner. A supervisory authority may not, for instance, carry out what is known as a fishing expedition. It may therefore search for information – and take away such information – only if it falls within the scope of the investigation.
The scope of the investigation is set out in the statement of purpose with which the supervisory authority must provide the company before inspecting or copying documents. The statement of purpose clarifies the extent of the company’s obligation to cooperate and sets out the limits of the authorities’ powers. The statement of purpose should therefore contain the essential components, such as the suspicion of the infringement that the authorities wish to verify, the legal qualification of the infringement, and the time period in question. In principle, the investigation should be limited to the company, products and period named. If the authorities exceed those limits, that may mean that the data collected must be excluded from evidence (see this recent ruling). It is therefore important immediately to request and verify the statement of purpose at the start of the dawn raid.
Duty to cooperate and interrogation
If ACM is at the door, the company’s employees are obligated to let the offers into the building. If necessary, the police may help the officers gain access. The officers may not be obstructed during their investigation. The duty to cooperate also means that employees must answer non-incriminating factual questions, for instance regarding the position held by a particular employee. The same applies to questions about evidence that is wilsonafhankelijk (obtained independent of the will of the person involved), such as the password of a laptop or of an email account.
It is also essential that employees do not remove evidence during the dawn raid. If they do, the company and the employee in question run the risk of a high fine. Employees should therefore be properly instructed about what they may and may not do once the authorities have started the on-site investigation. It may also be necessary to impose technical restrictions centrally, such as blocking access to the inbox of certain individuals.
Directors and employees of the company may be questioned during a dawn raid. They may also be summoned for questioning at a later time, for instance at ACM’s offices. Officials must caution persons before the start of the interrogation. That involves notifying the persons concerned that they are not obligated to answer. Failure to caution a person may mean that the statement cannot be used as incriminating evidence.
Rights during a dawn raid
Three rights are crucial during a dawn raid.
First, the company has the right to consult a lawyer during the dawn raid. ACM and the Commission are usually willing to wait about half an hour for the lawyer to arrive at the company premises. The lawyer may assist the company in all contacts with the authorities, in particular during interrogations. The lawyer may also help ensure the orderly conduct of the investigation and check that the authorities are not improperly exercising their powers.
The second right is the right to remain silent. Directors and employees of the company may invoke their right to remain silent during an interrogation. They may not be forced to make an incriminating statement. This does not apply to former employees, however, unless they themselves are the subject of the investigation.
The right to remain silent does not alter the fact that directors and employees must cooperate in the investigation. This sometimes creates a delicate balance that may in practice be perceived as awkward by the person interviewed. Moreover, judges generally attribute greater reliability to the first statement made – often during the dawn raid. A dissenting statement made at a later stage is therefore usually of limited value.
It is therefore crucial that the interrogation be conducted carefully and that the person in question does not make a false or inaccurate statement inadvertently or under pressure from the supervisory officers. It is therefore important that a lawyer is present at all times during the interrogation and that the following rules of thumb are applied:
- keep answers as short and factual as possible;
- do not speculate;
- do not give information that is not requested (do not provide a personal interpretation); and
- always request a clarification if a question is unclearly worded or is open to multiple interpretations.
The right to remain silent does not apply to material obtained independent of the will of the person involved, such as existing documents or digital data. Such material must therefore always be provided if requested by the supervisory officer. Once material is lost – for instance because a whiteboard has been wiped clean – the company is not required to reproduce it.
The third and final right is legal privilege. In principle, the authorities may not take away any communications between the company and its lawyer. This is also known as privileged correspondence. Officers may, however, take a cursory look at documents to determine whether that is the case, unless that could already harm the privileged nature. This practice has been criticised and ACM is currently looking into the possibility of appointing a special officer to ensure that supervisory officers cannot gain access to privileged information during a dawn raid. It is currently unclear exactly what that officer’s role will be and how his or her independence will be guaranteed.
More information on dawn raids and the underlying grounds can also be found in this, this and this blog.
Information on dawn raids by ACM and the Commission can be found at invalacm.nl.
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