Recent dawn raids by the South African Competition Commission on Pretoria autobody repair firms, as well as Unilever in Durban and Sime Darby Hudson & Knight in Boksburg in April this year, are a timely reminder that companies operating in Africa need to have an appropriate plan to deal with search and seizure operations by local competition law authorities.

Dawn raids have also been conducted by competition authorities in Zambia (on companies in the banking and fertilizer industries), Botswana (on suppliers of government food rations; medical aid schemes and panel beating companies)and Malawi (in the insurance, public transport, travel agents and independent school sectors). African authorities are increasingly willing to use their invasive statutory powers to obtain and preserve evidence of anti-competitive conduct, and companies accordingly need to have detailed procedures in place to deal with these operations and protect their legal rights.

Have a plan

Search operations can be hugely disruptive for both the company and its employees, unless they are dealt with in a carefully coordinated manner. A company may face serious interference with its operations on the day of the raid and thereafter, as well as the risk that its confidential pricing, customer and other information will enter the public domain. Unless the company has proper records of what documents and electronic data have been copied and removed, and which employees were interviewed, it may be difficult to defend the allegations of anticompetitive conduct. If company staff destroy documents during a raid, or the competition authorities are obstructed during the search, they may be liable for criminal prosecution. It is thus essential for companies to have a comprehensive plan in place to deal with a dawn raid. This plan should identify the team responsible for dealing with a search, including senior management, in-house legal counsel, the IT and security managers responsible for each site.  An external support team, including the company’s competition law advisors and investor relations personnel, should also be identified. This needs to be practical in view of travelling distances and the size and number of company premises potentially involved.

Be clear on internal process

Staff need to be clear on the procedures to be followed and who is responsible for dealing with the regulator in the event of a raid on the Continent. For example, competition authority staff should be asked to wait for the company’s legal advisors to arrive before commencing the search and the applicable warrant should be photocopied. The identification of each official involved in the raid should be checked.  Staff should be appointed to monitor the conduct of the search and record each document reviewed or removed by the authorities. These employees need to receive in-depth training, to ensure that they understand the crucial role they will play on the day of the raid.  Adequate measures to protect the company’s legally privileged and highly confidential documents should be put in place. It is a good idea to formulate an external communication plan to deal with questions from the press, as well as an internal communication plan to preserve confidentiality and deal with the impact on staff morale as far as possible.

After a raid

Once the search is over, the company will need to conduct a thorough internal investigation in order to determine whether the legislation applicable in one or more African jurisdictions has been contravened. If so, it may be possible to negotiate a substantial reduction in fines if the company offers to cooperate with the investigation being conducted by one or more African competition authorities. It is also important to determine at an early whether conduct in one African state may have an effect on neighbouring states which also enforce competition law. If so, the potential for the raid to trigger investigations in those states – and the potential to apply for corporate leniency - needs to be carefully considered, as swiftly as possible.

Companies should consult with their competition law advisors and put in place a detailed dawn raid plan. The powers granted to African competition authorities to search and seize documents and question staff members may differ from country to country, and competition regulators approach raids differently depending on their level of experience. The company accordingly needs to customise their dawn raid plan appropriately for each jurisdiction which is potentially at risk of a dawn raid.

Written by  Heather Irvine, Head of competition at Norton Rose Fulbright South Africa