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Sector Insights

Hong Kong Competition Law - Surviving a dawn raid

25.04.2016 Maritime

Since the Competition Ordinance came into force slightly over four months ago, the Competition Commission (‘Commission’) has received more than 750 complaints. However, the Commission has been reticent about which business and industries they will target. The reality is that any business, no matter large or small, is subject to the Competition Ordinance, and hence to being investigated for misconduct. The most powerful weapon in the Competition Commission’s arsenal is the Dawn Raid, where the authorities turn up unexpected and unannounced. In this briefing, we demystify the Dawn Raid.

Which authority is responsible for conducting investigations and dawn raids?

The Competition Commission is vested with the authority to carry out investigations into any conduct that constitutes or may constitute a contravention of a competition rule, if it has reasonable cause to suspect that a contravention has taken place, is taking place, or is about to take place. 

What powers do they have?

The Competition Commission has the power to enter and search the premises. In order to do so, it must first obtain a warrant from the Court of First Instance, which will state the scope of the search and seizure operation. A warrant may empower Commission Officers to take possession of, inspect, and make copies of documents or extracts of documents, to take possession of computers and if any information is contained in an electronic form, to require that information to be transcribed into a format that is legible and can be taken away.

If entry to the premises is obstructed, the Commission Officers have the power to remove the obstruction by force.

Do the exceptions of Legal Professional Privilege, Privilege against Self-Incrimination or Confidentiality apply?

Documents exchanged between a solicitor or counsel and client are subject to legal professional privilege. The right to legal professional privilege is protected under the Competition Ordinance which means that companies can resist production on the basis that the document contains external counsel’s advice and therefore is covered by legal professional privilege. However, a counsel or solicitor is still required to disclosure the name and address of his/ her client if asked by the authorities.

An individual or company is not excused from producing documents on the grounds of confidence or self-incrimination.

What are the Penalties?

Individuals and companies are under a duty to cooperate with the authorities in investigations. The Ordinance creates criminal offences (e.g. for providing false and misleading information, destroying or falsifying documents, obstructing a search or disclosing confidential information provided by the Commission) punishable by fines of up to HK$1 million and imprisonment of up to 2 years. 

Surviving a Dawn Raid

The key to surviving a dawn raid is to be prepared and to have trained staff on the premises to assist with the investigations. At the very minimum, companies should have a compliance officer ready to act as a dawn raid coordinator and train core employees. This could include the receptionist, IT staff, and the in-house legal team in responding to a dawn raid.

Our team at Ince & Co can help you prepare for a dawn raid. We have extensive experience in providing in-house training to help businesses understand the differences in the type of investigations and the limits of the authorities’ powers. We can also assist in preparing Competition Compliance Checklists and manuals. We have a 24 hour emergency response service which also offers a dawn raid response team, who will be available to advise and support during a dawn raid investigation. Please contact us for more information.