Post-pandemic competition dawn raids

After a period of reduced dawn raids due to COVID-19, both the European Commission and the Spanish Markets and Competition Commission (CNMC) have resumed their activity with over 20 dawn raids in the last few months. Everything suggests that this increase in inspection activity will continue in 2022 and that there may be relevant changes to adapt the dawn raids to the increase of remote working.

The European Commission has resumed its activity

After completely interrupting its inspection activity throughout the pandemic, the Commission resumed it in the last few months with 4 dawn raids since June 2021—the same number as between January 2018 and June 2021.

On June 22, 2021, the Commission carried out a first inspection in the garment manufacturing and distribution industry in Germany. Further inspections ensued in October 2021 in the wood pulp sector, with simultaneous searches at the headquarters of several companies present in various EU Member States.

Following these two inspections, Commissioner Vestager publicly stated that these searches were just the start of a series of raids planned for the months to come.

Since then, the European Commission conducted further inspections at the headquarters of Zoetis, Inc., a company in the animal health sector with registered office in Belgium, as part of an investigation into abuse of dominant position. At the end of November 2021, the Commission carried out dawn raids at several companies in the defense sector.

The CNMC has also resumed its activity after the 2020 slowdown

The CNMC progressively increased its inspection activity in the last few years, from 6 inspections of 20 companies in 2016 to 13 inspections of 35 registered companies in 2019 (almost double).

In 2020, the COVID-19 pandemic hampered the agency’s ability to conduct searches of premises, with only 4 dawn raids in 2020—half of them before March’s lockdown.

Apparently, the CNMC has resumed its inspection activity, at least since June 2021, when it cooperated with the Portuguese competition authority (Autoridade de Concorrência) to carry out simultaneous searches of several corporate database companies operating in both countries.

In June and November 2021, the CNMC investigated several companies in Spain’s military equipment market. According to the information published by the agency, the inspections concerned potential bid rigging in tenders called by the Spanish Ministry of Defense related to the supply, maintenance and upgrade of military equipment, especially military vehicles. Following a complaint, at the end of December 2021 the CNMC carried out inspections at the headquarters of several companies in the plastic and metal waste management and recycling industry.

More dawn raids are expected: in the last few days, new CNMC Competition Director María Luiso Tierno Centella referred to a series of raids already planned. She also pointed out that searches of premises should increase to pre-pandemic levels during this year.

Regional authorities do not lag behind

In the last few months, regional authorities also seem to have resumed their inspection activity in different sectors.

In February 2021, the Catalan Competition Authority (ACCO) conducted searches of premises regarding potentially anti-competitive agreements in the framework of public tenders for technical service contracts related to institutional and official events. This was ACCO’s first inspection since 2019.

The Andalusian Competition and Economic Regulation Agency (ACREA) carried out two inspections in December 2021 in the school transport and road maintenance sectors, two areas of concern following recent resolutions by the CNMC and other regional authorities.

...and it is the same throughout the EU

Authorities in other EU Member States have also been active in 2021, especially during the last months of the year, in line with the trend seen in Spain and at the European Commission level.

The Greek authority was the most active in 2021, with at least 9 inspections in sectors as diverse as fuel refining and wholesale and retail marketing, IT services, supermarkets and suppliers, teleconferencing and natural gas. Other authorities, like those of Portugal, Romania or Hungary, have also conducted inspections in various sectors such as diagnostic tests, finance, motor vehicles and brick manufacturing.

The French authority (Autorité de la concurrence) carried out inspections in the collection and use of pharmacy data and the food retail sectors. In this case, the French agency searched the private homes of various employees suspected of anti-competitive practices—a power rarely used by competition authorities.

Remote working and “home office” inspections

Of all this activity, the case of the dawn raids carried out in private homes in France may be the most relevant in terms of future implications. With a greater number of employees working from home and a situation that is still far from normal due to the variable incidence of the pandemic, competition authorities will most likely adapt their protocols to ensure the effectiveness of inspections.

On that basis, an increase in searches of private residences cannot be ruled out as remote working becomes commonplace in many companies. This will be the case particularly when authorities suspect that employees keep relevant documents at home.

The Spanish Law on the Defence of Competition already grants the authority the power, prior judicial approval, to carry out dawn raids in private homes (and in any other office, premises or place suspected of holding relevant evidence of competition violations). So far, Spanish competition authorities have not made much use of this power, but in view of the new circumstances it cannot be ruled out that inspections in private homes will increase in the coming years.

Meanwhile, inspections progressively adapt to the new context, incorporating new techniques such as:

·       Remote access to data stored on the employees’ computing devices, even in their own home, and the possibility of requesting employees to provide remote access to data (in fact, in a recent case a competition authority required remote control of an employee’s computer).

·       Continued inspections from the authorities’ headquarters: the authorities can copy and seize data and documents to review them on their own premises, so that the search at the headquarters of the company does not need to take several days. Given the difficulties of remote working, this practice—already common in European Commission inspections—may become more frequent in Spain.

·       Interviews: the authorities can request meetings with employees via video call, even if they are at home, and may ask for explanations about certain documents or e-mails seized during the inspection.

Conclusions

Dawn raids have significantly increased across all EU countries as competition authorities are eager to resume their inspection activities after the COVID-19 slowdown. This trend will likely continue,at least during 2022, as authorities respond to all the complaints received since the start of the pandemic. Also, the rise of remote working will probably bring major changes, including inspections in private homes or even remote access to information without the need to physically visit the business premises.

Therefore, in addition to reinforcing employee training, it is essential to review internal guidelines and protocols in order to adapt to the latest regulations and competition authorities’ practices.