Dawn raids are part of the palette of enforcement measures of the Dutch competition authority (the Authority for Consumers and Markets, ACM). The situations in which ACM can make use of this tool have been expanded beyond the scope of competition law. Even in cases where ACM eventually choses to deal with a compliance issue through alternative resolution instead of a fine, dawn raids can often be the first step.

Dawn raids - recent cases

Dawn raids are an effective means of checking the validity of indications that a specific business is not complying with the competition rules or sector specific regulation. Most recently, the ACM carried out dawn raids at the premises of an unknown number of providers of energy auctions. The dawn raids were a direct consequence of signals received by the ACM that the energy auctions and energy suppliers had made price-fixing arrangements.

Energy auctions group together consumers which wish to switch energy provider. The consumer group can stipulate a lower price to several energy providers. During the auction the energy providers will offer favorably priced contracts. Consumers can accept the offer. The ACM will be examining whether these energy auctions offer what they promise, or whether they restrict competition between energy suppliers.

Another example is the case of Dutch telecom provider,  KPN. The ACM imposed a fine of EURO 900,000 on KPN, after discovering that KPN had misled ACM when it provided tariff information in connection with the tender process of fixed-telephony services for various government organisations. KPN violated the transparency obligation after failing to inform some business customers about the fixed tariffs offered to government organisations, which in turn had a negative impact on competition within the telecommunications market.

ACM

On 1 April 2013, the Dutch Competition Authority ("NMa"), the Dutch Consumer Authority ("CA") and the Dutch Independent Post and Telecommunications Authority ("OPTA") merged to create the ACM. The creation of this new authority heralded a new era of "solution-oriented" enforcement and an increase in the scope of the powers of this merged enforcement body, including as concerns dawn raids.  

The ACM has in its first year been exploring alternative resolution methods for competition concerns. Its "solution-orientated" approach to such concerns is a new focus but is not totally novel for the Netherlands nor for other competition authorities. The predecessor of the ACM, the NMa, gained respect amongst its peers for its settlement procedure adopted in relation to the industry wide cartels in the construction sector. This procedure can be seen as the catalyst for the EU settlement procedure. The ACM stresses that its success should not be measured on the basis of the fines imposed but on the positive effects a certain solution has on the market. A dawn raid is often a first step, even in a case where an alternative resolution is eventually given preference over a full fledge investigation and fining procedure. A dawn raid and the subsequent investigation of the material gathered has a large impact on an undertaking. Therefore, in a particular case, it could result in an entity being  willing to negotiate with the ACM.

Streamlining Act

The new Streamlining Act, which came into force on 1 August 2014, could possibly support the solution-orientated approach of the ACM. This act amends the Act by which the ACM was established and the laws which ACM enforces. With these amendments, the different powers, enforcement tools and procedures of the three predecessors of the ACM have been harmonized, streamlined, and simplified, thereby creating a clear and uniform set of rules for ACM.

The Act  broadens the scope regarding dawn raids. Previously the ACM had the power to conduct a raid only in competition enforcement. This is now extended to telecoms and consumer protection. This can be expected to give rise to an increase in  the number of dawn raids. Further, as a result of the new Streamlining Act, the power to enter homes without the occupant’s permission now applies as concerns all Acts enforced by ACM. Information that has become available through one legal procedure, may now be used for another legal procedure (insofar as such exchange is necessary).

Dawn raids are high pressure situations for all those involved within the organisation. Time spent up front in preparing for such event can enable an organisation to respond more effectively. Many companies now have formal dawn raid procedures and a dedicated response team.  They also conduct training courses and stage mock dawn-raids to test the effectiveness of procedures. In the event of a mock or real raid they often chose to involve specialised legal technology providers to set up a document review tool. This allows them to analyse the documents seized by the regulator rapidly and prepare a response. This can be a means of making the most of the solution oriented approach of the ACM or of defending potential charges in a fining procedure.

While ACM has publicly stated its intention to work towards alternative solutions for compliance issues, the Dutch government is proposing to significantly increase the level of fines imposed, when the formal fining procedure is followed. There is therefore still every reason to take dawn raids seriously.   

Sarah Beeston is a partner and Madeleine Broersen is a lawyer in the European and Competition law team at Van Doorne