Dawn Raids in the lockdown era – the risk is still real

Anyone who is tempted to breach competition law and expect to get away with it because of the Lockdown should think twice.

On 22 June 2021, the European Commission conducted an 'unannounced inspection' (the EU-euphemism for a 'dawn raid') in Germany at the premises of a business in the manufacturing and distribution of garments sector.

The European Commission had concerns that the inspected business could have violated the EU antitrust rules relating to anti-competitive arrangements (i.e. Article 101 of the Treaty on the Functioning of the European Union). Such breaches could include price-fixing, arrangements to prevent parallel trade, market sharing, customer allocation, resale price maintenance and so on.

The European Commission's officials from Brussels attended the premises in Germany to conduct the inspection. They were accompanied by their counterparts from the German competition authority (i.e. the Bundeskartellamt) which is based in Bonn.

While such inspections often lead to statements of objection and even decisions finding a breach (which could be accompanied by heavy fines), there is no guarantee that there was a breach of competition law simply because there was a dawn raid.

Commenting on this development, Dr Vincent Power of A&L Goodbody observed:

"There are indications from the European Commission that there has been a backlog of dawn raids built up over the Lockdown era so we could see an increase in dawn raids around Europe as restrictions ease.  Dawn raids can follow on a number of years from the breach so it could take some years for the dawn raids to come to light - there is no obligation to conduct the dawn raid within a specific period of time provided the breach is still capable of investigation."

He also observed:

"Dawn raids are about gathering evidence. Over time, some executives become more devious. They have probably not written anything down and not  communicated electronically but have ensured that their communications were oral (e.g. at the water cooler or at discreet meetings offsite). As the European Commission wrote in its press release in the Lifts cartel case: "[in] all four cartels high-ranking national management (such as managing directors, sales and services directors and heads of customer service departments) participated in regular meetings and discussions. There is evidence that the companies were aware that their behaviour was illegal and they took care to avoid detection; they usually met in bars and restaurants, they travelled to the countryside or even abroad, and they used pre-paid mobile phone cards to avoid tracking."

"Such easy contact in offices and other locations as well as other precautions were less easy in the pandemic lockdown. It is quite possible that there could have been more contact between competitors during the lockdown (especially in the early stages when there was so much uncertainty). There could now be more evidence of such contacts because steps had to be taken to communicate in ways which would leave more of an evidence trail."

"It may well be that competition agencies will find that the Lockdown will generate new cases and that there could be even more evidence of breaches than would usually occur.  Such investigations could however be messier because of the use of home computers and private mobile phones leading to further complications from an evidential perspective."

"So if anyone thinks that the Lockdown provided a cover, they will probably be very mistaken. The mysteries of the Lockdown have yet to reveal themselves!"

For details of dawn raids and how to deal with them click here.

For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 28 June 2021