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1. Legal Context
Competition law
is the law that promotes or seeks to maintain market competition by
regulating anti-competitive conduct by companies or businesses.
The Competition law in Kenya is mainly governed by provisions in the Competition Act No.12 of 2010, Laws of Kenya (“the Act”).
Dawn raids within the context of competition law is defined as unannounced visits by the Competition Authority of Kenya (“CA”)
on businesses, professional bodies, trade associations or even homes,
seeking information on potentially uncompetitive conduct and practices.
They typically involve
searching computers, servers, filing cabinets and business premises in
general for documents and information relevant to the investigation.
Employees may also be questioned during the search.
2. Dawn Raid Scenarios
CA may conduct a raid where a company /business is suspected of, amongst others;
- directly or indirectly fixing purchase or selling price or any other trading condition;
- dividing markets by allocating customers, suppliers, areas, or specific types of goods or services;
- being involved in collusive tendering;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at competitive disadvantage; and
- engaging in activities that otherwise prevents, distorts or restricts competition.
3. Why Dawn Raids Matter
The manner in which a
dawn raid is handled by a company/business can have very significant
consequences, both to its reputation and market value. Additionally,
fines can be imposed and enhanced where cooperation is deemed
inadequate. Notably, a person found guilty of hindering, opposing or
obstructing any person who is exercising a power or performing a duty
conferred or imposed under the Act is liable to a fine not exceeding
Ksh.500,000, or imprisonment for a term not exceeding 3 years, or both.
It is therefore
important for business owners and their employees to ensure that they
are adequately prepared and trained in the event of one.
4. Background On Dawn Raids
The term ‘dawn raid’
is synonymous with the term “search”. These are powers granted either by
statute or by a Court of law to permit the search of premises in order
to locate, seize and retain documentation or other material relevant to
an investigation. Searches are an important tool in the prevention,
investigation and detection of crimes and in the collection and
gathering of evidence.
In law, the power to
conduct searches is provided in various statutes with the primary law
being the Criminal Procedure Code (CPC) – Section 118. Once issued with
a search warrant the executor can compel any owner or resident of a
building to allow the Search Officer (“SO”) access to conduct the search.
5. Search & Seizure Guidelines
There is a Search and
Seizure Guideline that has been availed by the CA in their website to
provide guidance to their stakeholders. Some its salient points include:
- The format of the search warrant.
- Mandatory standards that the CA must maintain in detaining items.
- The requirement for authorised person to conduct to have written authorisation from the CA and to provide proof of identity.
- That the SO shall be provided with the necessary password, encryption code, decryption code, software or hardware or any other means.
- Requirements for material claimed as privileged information (privilege against self-incrimination and attorney-client privilege)
6. Recommended Protocol
Companies should
foremost ensure that they comply with any inquiries or requests made to
them by the CA as a means of averting any potential raid.
6.1 On arrival:
Ensure that search officers (“SO”)
provide proof of identity before allowing them past your reception area
furthermore, ensure that legal counsel are alerted at the first
instance about the raid. Note that sometimes the said officers may not
wait in such instances. Do not refuse entry without first obtaining
legal advice.
6.2 Conduct of investigation and interrogations:
Things to do:
- Identify key team
members (senior executives/legal advisers) to accompany the SOs at all
times and designate a senior executive to be the main contact person
answering the SO's questions. - Inform Head of
Information Technology that assistance may be required for the SO to
conduct its search, and that document destruction and deletion should be
suspended. - Set aside a room for use by the SOs, if possible with a photocopier.
- If the staff become
aware, reassure them and furthermore, instruct them to be cooperative
but not to speak to officials without an Advocate or senior executive
present, not to delete or destroy documents, and not to talk about the
investigation to third parties or staff in other offices. - Be polite but firm,
keep answers truthful, short and to the point, keep a written record of
all questions and answers, answer only questions of fact, not of
opinion. - If in doubt, ask to confer with the In-house Counsel/External Counsel.
Things not to do:
- Do not answer questions until either your in-house or an external counsel is present.
- Do not intentionally mislead the SO
- Do not make self-incriminating statements.
- Do not answer questions outside the scope of the investigation.
- Do not sign anything produced by the Inspectors without legal advice
Copying/removing documents
- Do not hand over legally privileged documents.
- Confirm whether the
document is within the scope of the SO’s authority. Take legal advice
before finally refusing to allow them to have a document. - Always try to
persuade them just to take copies – ensure that you keep list and
copies of all documents taken or copied by the SOs. - Where relevant, state that you are claiming confidentiality for all information in the copies or documents the SO has taken.
- Do not replace files until after debriefing meetings with your legal advisers.
7. Recommended safeguards:
- Identify
a dawn raid response team (to include external Counsel where in-house
is unavailable), as part of the company’s risk management plan; - Ensure that all key
employees have received appropriate data protection training, including
how and where data is stored, and what they should do in the event of a
dawn raid; - Create a telephone and email list of personnel who need to be informed immediately in case of an investigation;
- Inform the shareholders in the event a dawn raid occurs, especially for public listed companies; and
- Last but not least, carry out a mock raid on a periodic basis to keep yourself updated and ready
Should you have any enquiries regarding this article or any general queries on the subject matter, kindly contact Jomo Nyaribo, Partner and Angela Cherono, Senior Associate, MMAN Advocates.
Disclaimer: This
article has been prepared for informational purposes only and is not
legal advice. This information is not intended to create, and receipt of
it does not constitute, a lawyer-client relationship. Nothing on this
article is intended to guaranty, warranty, or predict the outcome of a
particular case and should not be construed as such a guaranty,
warranty, or prediction. The authors are not responsible for any actions
(or lack thereof) taken as a result of relying on or in any way using
information contained in this article and in no event shall be liable
for any damages resulting from reliance on or use of this information.
Readers should take specific advice from a qualified professional when
dealing with specific situations.