(4 min read)
In the complex world of regulatory investigations, unannounced inspections, known as "Dawn Raids ", stand out as a particularly invasive method used by competition authorities to investigate potential breaches of competition law, including cartels, abuse of dominance and anti-competitive agreements or violations of digital and foreign subsidy regulations. These surprise inspections are designed to catch businesses off guard, allowing investigators to seize documents and data that may be crucial to their investigation.
Our previous discussion in Part 1 of our Dawn Raids in Ireland series on Powers of the CCPC delved into the procedural aspects of these raids, offering insights into what businesses can expect when they find themselves at the centre of an investigation conducted by the Competition and Consumer Protection Commission (CCPC) or by the European Commission (EC).
As we transition to this Part 2 of our series, the focus shifts to what happens after the Dawn Raid ends. The Authorised Officers remove any 'seals' that were affixed during the inspection and, before leaving the business premises, ask a business representative to review and sign the Site Exhibit List setting out the records seized by the competition regulator.
This is typically just the beginning of a new challenge for the business. A review of the business's commercially sensitive data by the CCPC could potentially cause substantial harm to the business. The business will therefore need to act with great urgency to protect its rights in relation to the seized data that is subject to legal professional privilege, irrelevant or private, or confidential.
Claims that Seized Material is subject to legal professional privilege (LPP)
It is protocol by the CCPC that where claims of LPP are made, these documents must be placed in a 'sealed envelope'. This process ensures confidentiality is preserved (in relation to the CCPC) until the High Court or an Adjudication Officer decides on its status.
The CCPC's 2023 Statement on Privacy and LPP Rights sets out the principles that may be applied by the CCPC in following the 'sealed envelope' procedure:
- if during a Dawn Raid, there is a dispute as to whether seized material is subject to LPP, the CCPC may request that the material is placed in a sealed envelope (or, for electronic material/devices, stored separately) pending a determination by the High Court. In the interim, the CCPC will make arrangements for the safe-keeping of the material to ensure its confidentiality is maintained; and
- if, after the Dawn Raid, the business wishes to make claims that certain seized material is subject to LPP it should do so 'as soon as practicable' after the conclusion of the Dawn Raid. The CCPC notes that, should it find any information in the seized material potentially subject to LPP, steps will be taken to ensure the confidentiality of that information is maintained until its status is determined.
Claims that Seized Material is Irrelevant / Private
Irish competition legislation doesn't contain a mechanism for handling claims that seized material is irrelevant to the investigation and/or private. However, a ground-breaking 2017 Supreme Court judgment in CRH plc., Irish Cement Limited and Seamus Lynch v. the Competition and Consumer Protection Commission provides insight into how claims of irrelevance and/or privacy, may be handled by the courts. This case related to a Dawn Raid by the CCPC under a Search Warrant, at the premises of Irish Cement Limited ("ICL") a subsidiary of the CRH group. The CCPC seized a copy of the entirety of the e-mail box of Seamus Lynch, a senior executive within CRH at the time of the Dawn Raid – who had previously been employed by ICL.
CRH, ICL and Mr. Lynch:
- contended that Mr Lynch's e-mail box included documents that did not relate to ICL but rather related to CRH and/or other subsidiaries of CRH, and that those documents were outside the scope of the Search Warrant, and private; and
- proposed a process to the CCPC for the 'sifting' of the seized material which involved their legal advisors taking a 'cursory look' at the disputed documentation with ultimate recourse to the High Court for its determination in the event the dispute couldn't be resolved.
Rejecting the proposed 'sifting' process, the CCPC claimed that, apart from material subject to LPP, it had the right to go through all the seized material and determine what it was entitled to seize. This led to CRH, ICL and Mr. Lynch seeking various remedies in the High Court which stopped the CCPC from accessing, reviewing or making any use of the seized material. The Court also made a declaration that the CCPC had acted ultra vires, contrary to statute and outside the scope of the Search Warrant. Moreover, the Court held that if the CCPC were to review all the material this would amount to breach of the plaintiffs' right to privacy. The CCPC appealed to the Supreme Court which dismissed the appeal, but importantly noted that:
- An entity whose digital material had been seized and was to be searched could reach an agreement with the CCPC on an 'appropriate mechanism' which might include a key word search process and a rendering of out-of-scope material 'invisible'.
- With respect to privacy claims, the entity should specify the particular items of 'genuinely private concern and of no relevance to the case under investigation' that had been taken in the Dawn Raid.
- The CCPC could invite submissions as to 'word searches and the appropriate analysis to bring to light relevant material' and the plaintiffs would be entitled to respond, bearing in mind that the CCPC had statutory responsibility for the final decision.
These principles are broadly reflected in the CCPC's 2023 Statement on Privacy and LPP Rights. Ultimately, if an agreement is reached between the searched business and the CCPC on an appropriate 'sifting' mechanism related to seized material, this agreement could potentially be made an order of court under the High Court's inherent jurisdiction, deriving from Article 34.3.1 of the Irish Constitution.
Maintaining Confidentiality over Seized Material
The issue of maintaining confidentiality over seized material pending the determination of its status, can also be the subject of disputes. For example, a 2024 High Court judgment in Commission for Communications Regulations v. Eircom Limited, related to a Dawn Raid by the Commission for Communications Regulations ("ComReg") of Eircom's premises in which some of Eircom’s digital data was seized. ComReg brought an application to the High Court under the Communications Regulation Act 2002, which provides for a 'sealed envelope' procedure relating to seized material that is subject to LPP or irrelevant to the investigation.
ComReg's application sought the court's approval of a 'step plan' to remove LLP and irrelevant material from the seized data while maintaining its confidentiality. The step plan envisaged ComReg conducting electronic word searches, taking into account submissions of Eircom regarding search terms that should be used. However, Eircom claimed that if ComReg conducted the electronic word searches, then, by virtue of ComReg being the party conducting the search, it may have access to privileged or private/confidential material, which belonged to Eircom. On this basis, Eircom claimed the confidentiality of its information would not be ‘maintained’, as required by statute. Accordingly, Eircom claimed that it should conduct the electronic searches, and then provide the refined data to ComReg, after the removal of privileged and irrelevant information.
The High Court ruled against Eircom, determining that ComReg's inability to guarantee absolute confidentiality does not provide a valid justification for Eircom to carry out the search. Where a search and seizure by a regulator is permitted by statute, the search of the data seized should be done by the regulator, not by the regulated. Moreover, the judgment found that the High Court can give directions for a step plan under which electronic word searches would be used to eliminate privileged and irrelevant information, avoiding the need for a document-by-document review
EU Dawn Raids – How will DG Competition Handle Disputes in relation to Provisional Data Set(s)
The European Commission Directorate-General for Competition's (DG Competition) Explanatory note on Commission inspections pursuant to Article 20(4) of Council Regulation (EC) No 1/2003 (revised in March 2024) provides that the searched business will be given the opportunity to review the provisional data set(s) selected by DG Competition's inspectors to be added to the case file, in order to determine if the business wishes to raise claims related, for instance, to data that is:
- potentially protected by LPP;
- a special category of personal data (i.e. of the business' employees); or
- not related to the subject-matter of the inspection Decision.
For various reasons it is important for the business to take the opportunity to make such claims (as appropriate) before a copy of the data is seized by DG Competition.
For example, where a claim leads to serious doubts about the potential for data to be subject to LPP, a 'sealed envelope' procedure may be adopted by DG Competition until its status is determined. The General Court in Case T-255/17 Les Mousquetaires and ITM Entreprises v Commission ruled that refusal of DG Competition to protect personal data is a challengeable act, but only if the request of the business to have those data protected was made before the data seizure. As such, an application challenging the seizure must be made to the General Court while the inspection is still ongoing. In all cases, the records copied during a Dawn Raid will be covered by DG Competition's obligation of professional secrecy.
Conclusion
A business that is the subject of a Dawn Raid should be asking various questions in relation to any data proposed seized or copied in the Dawn Raid. Questions should include whether the regulator is entitled to seize and review the data; or is the fact that the data is irrelevant to the investigation and/or private, renders it out of scope? Can legal professional privilege be asserted by the business over some of the seized data? Moreover, will the CCPC maintain confidentiality over the seized data?
As has been outlined above, the business will need to act urgently to protect its rights in relation to the seized data. A business that has taken the time to implement a document filing system that appropriately categorises and files documents (for example, in relation to whether they are subject to LPP) may be better prepared to readily raise objections to the seizure of certain documents in a Dawn Raid. Part 3 in our Dawn Raids in Ireland series identifies the key steps for businesses to take when faced with a Dawn Raid.
Contact our Competition Team to ensure your team knows their rights, obligations, and best practices to minimise their risks and protect your business and check out our website for further updates.
