Dealing with a dawn raid

Last month, Mowlem and Morgan Sindall became the latest construction firms to go through the uncomfortable experience of an Office of Fair Trading dawn raid. This was a clear sign that the OFT is serious about its promise in its 2005/06 business plan to make cartel-busting in construction markets a priority. These latest moves follow a spate of investigations in the industry over the past couple of years, including raids on 22 companies last July.

This continued focus on the building industry has resulted in a hefty tally of fines for companies that have been found to have breached the competition rules, even taking account of reductions in the penalties for those co-operating as part of leniency programmes.

Most recently, in February, the OFT fined 13 roofing contractors about £2.3m, which was reduced to £1.6m by leniency, after it found that they had agreed to fix the prices for flat roofing and car park surfacing contracts through collusive tendering.

This was the fifth infringement decision by the OFT involving flat-roofing contractors and the penalties imposed today bring the total fines in this sector to just over £4.3m, reduced to about £2.5m by leniency. It is a safe bet that this will not be the last the industry hears about the matter.

The OFT now has an extensive armoury of investigatory powers under competition legislation, and can use covert surveillance and informants. The experience of a dawn raid - with officials turning up at business premises unannounced to conduct a thorough on-site inspection - can be particularly unnerving and disruptive. It therefore pays to be prepared.

Action such as intentional obstruction or concealing evidence should definitely be avoided since this is likely to be a criminal offence

Generally there is nothing to be gained by being uncooperative. Action such as intentional obstruction or concealing evidence should definitely be avoided since this is likely to be a criminal offence. Active co-operation may result in a reduced fine if an infringement is found to have been committed.

Nevertheless, it is important for companies to understand their rights and manage the inevitably painful process as effectively as possible. So what are some basic tips for dealing with a dawn raid?

• When the OFT officials arrive, summon a senior manager and a lawyer to join them as soon as possible. The OFT will typically be prepared to wait a short while until a lawyer is present. Do not remove or destroy documents or call third parties (you might be accused of tipping off another company involved).
• Check the officials' authorisation papers for undertaking the search and copy them to your lawyers so they can advise on the exact scope of the investigation and the precise powers available to the OFT. For example, their powers are more extensive if the investigation is backed by a warrant from a judge.
• During the raid, have on hand a team of employees and lawyers to allow the OFT inspection to take place efficiently and with minimal disruption. The officials may examine and copy paper files and computer records (such as emails) as long as these relate to the scope of the investigation. They will generally take copies but in some circumstances may insist on original documents. Make sure members of the team accompany the OFT officials wherever they go to organise copies of documents (including a set for the company), compile an inventory of all paper and electronic files examined (whether copied or not) and so on.
• Officials may not read or take copies of any document covered by legal privilege and the company should consult its lawyers to ensure that legal privilege is being properly protected.
• There are a range of questioning powers available to the OFT depending on the legal basis of the investigation, but typically officials can ask for on-the-spot explanations of relevant facts or documents. Identify the employee best placed to respond. Respondents are entitled not to answer questions that involve an admission of guilt but should answer questions to the best of their knowledge and should not give incorrect or misleading answers. Speculation and volunteering information not asked for should be avoided.
• An accurate record should be kept of the OFT's statements and questions, and the answers.
• At the end of the raid, hold an immediate debriefing session involving senior staff and legal advisers, in order to consolidate the record of documents taken and questions asked, and plan the company's response.

Unfortunately, a dawn raid may be only the beginning of an intensive OFT investigation process, but the steps outlined above will help to ensure the company in question is in the best possible position to deal with it.