'Dawn Raids' - Do You Know What To Do?

INTRODUCTION

A 'dawn raid' is an unannounced visit, usually to your business but possibly also to your home, by the competition authority, in Australia the ACCC. Officers will usually arrive at the beginning of the day, when businesses are least prepared and capable of responding and can involve a search of your filing cabinets, your computer systems or even your car. Dawn raids are most commonly used for 'cartel busting'.

While dawns raids are historically very rare, the recent focus of ACCC enforcement activities on detecting and prosecuting cartels, the impending criminalisation of cartels in Australia, recent changes to the Trade Practices Act to extend the ACCC's search and seizure powers and the trend overseas towards the increasing use of dawn raids by regulators in the pursuit of cartels suggest that complacency is inadvisable. Rather than being taken by surprise by a 'dawn raid', it is important that your company has clear guidelines for employees to follow if the ACCC turns up one day. In this update we describe the steps you should take if the ACCC does seek to search your premises.

ACCC'S SEARCH AND SEIZURE POWERS Recent amendments to the Trade Practices Act have extended the ACCC's powers to enter and search premises where it believes there may be material relevant to a contravention of the Act. Previously, the ACCC had the power to authorise a member of its staff to enter a company's premises and to inspect and copy documents where it had reason to believe that a person had contravened or was contravening the Trade Practices Act. The recent changes extend the ACCC's powers to enable it to search for and seize documents. However, under the new provisions the ACCC must obtain a search warrant from a Magistrate prior to entering premises without consent.

The ACCC can now search a company's premises in two ways:

By obtaining a search warrant from a Magistrate.

With the consent of the company.

The ACCC is permitted to search for and seize 'evidential material' which consists of documents or things that may afford evidence relating to a contravention of the Trade Practices Act, Part 20 of the Telecommunications Act 1997 or Part 9 of the Telecommunications (Consumer Protection and Service Standards) Act 1999.

WHAT TO DO IF THE ACCC COMES KNOCKING We have prepared the following guides to assist your employees to deal with an ACCC search. These guides cover what to do if the ACCC:

Presents a search warrant for your company's premises.

Requests the company's consent to enter and search premises.

In addition to the information in the guides, staff confronted with an ACCC search should remain calm, not panic and deal politely with the ACCC officers.

If the ACCC conducts a search of your premises, you should also consider sending a member or members of your staff to other locations which the ACCC is likely to simultaneously search, for example, the CEO's home, a factory or warehouse (if applicable), or any suburban office(s) you may have.

GUIDE 1: SEARCH WARRANTS If the ACCC presents a search warrant for your company's premises:

1. Do not obstruct entry of the ACCC onto the premises

When the ACCC arrives at your premises you should:

Ask to see the search warrant, and take a copy.

Ask to see the ACCC inspector's identity card and identification of any person assisting the inspector, and take a copy of that identification.

Where the ACCC inspector produces an identity card:

Ask the ACCC officers to wait in a meeting room until a senior manager or lawyer of your company arrives.

If the ACCC officers refuse to wait, permit them to enter, however make a note of why they refused to wait1.

If the inspector fails to produce an identity card at your request, you may refuse entry.

2. Call senior managers and lawyers

Immediately call senior management and your company's lawyers (either in-house legal counsel or external lawyers) to inform them of the ACCC's presence and the search warrant. Inform them of the number of ACCC officers present, so that they can arrange for sufficient company representatives to be present to monitor each ACCC officer's search. Up to date contact details should be available to reception staff/security guards who are likely to be the first to encounter the ACCC officers.

3. Fully inform your lawyer of the contents of the warrant

You should advise your lawyer of the specific details contained in the search warrant. Ideally, your lawyer should sight a copy of the warrant. This will enable your lawyer to determine whether the search warrant is valid and advise on its scope and how the company can comply with it.

For a search warrant to be valid, it must set out the following:

The address and a description of the premises to which the warrant relates.

The kind of 'evidential material' that is to be searched for under that warrant.

The contraventions of the Trade Practices Act to which the warrant relates.

The name of the inspector who is to be responsible for executing the warrant.

The times at which the warrant may be executed (it may be executable at any time of the day or night, or during specified hours).

The day (not more than one week after the issue of the warrant) on which the warrant ceases to have effect.

4. Monitor the ACCC's search

As long as they do not impede the search, your staff and/or your lawyers should:

Accompany each ACCC officer at all times while they are on your premises.

Prepare a list of all documents viewed or copied by each ACCC officer.

Try to ensure that only material covered by the warrant is taken in the search.

In the event that an ACCC officer wishes to remove documents from the premises, if possible, you should make a copy of the documents. If a copy cannot be made on the premises, you should request the ACCC provide you with a copy of those documents as soon as practicable after the seizure.

If the ACCC seize a thing under a search warrant, you should request a receipt for the thing from the officer.

5. You should assist the ACCC

During the search you should:

Provide the ACCC officers with all reasonable facilities and assistance.

Answer questions asked by the officers.

Upon request, produce evidential material to which the warrant relates.

Failure to comply is an offence under the Trade Practices Act with a maximum penalty of $3,300.

Ideally, you should have a lawyer with you when you answer the ACCC's questions. You should only answer the question if it relates to the search warrant and should not volunteer extra information that has not been requested. Make a note of any questions asked by the ACCC officers and your answer.

You should take care not to make any false statements. In addition, you should be aware that you are not excused from answering a question or producing material on the grounds it might incriminate you.

6. Do not give ACCC officers documents subject to legal professional privilege

You are not required to give ACCC officers documents that are subject to legal professional privilege2. These are documents which contain communications between your company and its lawyers for the purpose of receiving legal advice.

Documents you know are subject to legal professional privilege should be put in a secure container and given to your lawyer.

If you are unable to verify whether documents are subject to legal professional privilege you should expressly reserve the company's right to continue to claim privilege. You should take a copy or make a note of the documents concerned and request that the documents be stored separately from the other documents and not reviewed by the ACCC until the privilege issue is resolved.

7. What powers does the ACCC have under a search warrant?

The ACCC officers may do any of the following after entering the premises:

Search the premises for and seize 'evidential material' specified in the warrant.

Make copies of that material.

Operate electronic equipment at the premises, such as computers, to see if the kind of material specified in the warrant is accessible by doing so.

Take equipment and material onto the premises, and use it for any of the above.

Seize other material not specified in the warrant where the officer believes it is evidence of an indictable offence against the Trade Practices Act, Part 20 of the Telecommunications Act 1997 or Part 9 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 and s/he believes it is necessary to seize that material to prevent the concealment, loss or destruction of the material.

GUIDE 2: ENTRY BY CONSENT If the ACCC seeks to enter your premises by consent:

1. Do not give consent

Your staff should have clear instructions that they are not authorised to give consent on behalf of the company to the ACCC to enter the premises.

In any case, the ACCC must inform the person that they may refuse consent. Further, the consent of a person is not effective unless it is voluntary.

If your company refuses the search and the ACCC wishes to persist with the search, it must obtain a search warrant from a Magistrate.

2. Call designated person immediately

Staff should ask to see the ACCC officers' identity cards and immediately contact a designated person to deal with the request. The designated person will generally be your company's lawyer (either in-house legal counsel, or external lawyers). The designated person should be the only person authorised to either grant or refuse consent to the ACCC to proceed with their search.

Up to date contact details of the designated person should be available to reception staff and security guards who are likely to be the first to encounter the ACCC officers.

Ask the ACCC officers to wait in a meeting room until the designated person arrives.

The designated person should ascertain the reason for and scope of the ACCC's search.

3. What if the ACCC proceeds without consent?

If the ACCC proceeds with their search without a warrant and without consent you should immediately contact your company's lawyer and/or the police.

4. What to do while a search takes place

If consent is given and a search takes place, you should:

Closely monitor the search (see section 4 of Guide 1).

Not give ACCC officers documents subject to legal professional privilege (see section 6 of Guide 1).

5. What search and seizure powers do the ACCC have, where consent is given?

The ACCC officers may do any of the following after entering the premises:

Search the premises (including anything on the premises) for 'evidential material'.

Make copies of the material.

Operate electronic equipment to see whether the material is accessible.

Remove evidential material from the premises but only with the consent of the owner of the material (the ACCC officer must inform the person of the purpose for which the material is required and that the person may refuse consent).

Secure material, pending the obtaining of a search warrant to seize it.

Take equipment and material onto the premises, and use it for any of the above.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further -- by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

Ms Fleur Gibbons 

DLA Phillips Fox

201 Elizabeth Street 

Sydney

NSW 2000

AUSTRALIA

Tel: [phone]

Fax: [phone]

E-mail: [e-mail]

URL: www.dlaphillipsfox.com

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