Both the European Commission and the national competition authorities of the Baltics (the Estonian Competition Board, Competition Council of the Republic of Latvia and Competition Council of the Republic of Lithuania) have powers to carry out so called "dawn raids" 's i.e., surprise, on-the-spot investigations by inspectors of the competition authorities aimed at finding out infringements of the competition laws, such as cartels.
The powers of the Commission inspectors are established by Council Regulation 1/2003, while the powers of the national competition authorities are established by the national competition laws.
Dawn raids initiated by the Commission may be carried out by 1) the Commission inspectors without an involvement of the national competition authorities, 2) Commission inspectors with the assistance of national inspectors or 3) only by the national inspectors acting on behalf of the Commission.
Dawn raids initiated by the national competition authority are performed by national inspectors.
Pursuant to Council Regulation 1/2003, the Commission inspectors may: enter any premises, land and vehicles of enterprises;with prior authorization from the competent court of the member state in which the dawn raid is performed, search private homes, vehicles of the personnel of the enterprise, if a reasonable suspicion exists that materials related to the inspection are kept there;examine books and business records; take away copies of such documents;seal any business premises and books or records; request oral explanations of facts or documents on spot;for collecting information on the subject-matter of an investigation interview any other person who consents thereto. It is noteworthy that inspectors cannot inspect materials protected by legal professional privilege (attorney-client communication). Also, persons interviewed by the inspectors are protected by the right against self-incrimination.
The powers of the Lithuanian, Latvian and Estonian competition authorities generally follow the pattern of those of the Commission inspectors. However, there are certain peculiarities 's e.g., in Lithuania and Estonia, the competition authorities do not have the right to search private homes and vehicles of the employees of enterprises, while in Latvia inspections can be performed not only in the private premises of the employees but also in the premises of any third persons.
If an enterprise refuses to submit to an inspection initiated by the Commission, fines up to 1 percent of the annual turnover of the enterprise or even of a group of enterprises to which the enterprise belongs, may be imposed. In addition, a daily penalty of up to 5 percent of the group's daily turnover may be imposed. Similar fines may be imposed by the Competition Council in Lithuania.
In Latvia, a fine for not providing the information requested by the Competition Council can amount to 10,000 lats (14,200 euros), while in Estonia a fine for inter alia interfering with an inspection can reach 100,000 kroons (6,391 euros).
Nowadays, dawn raids are common not only in the old 15 EU member states but also in the new 10 member states. For instance, in Lithuania the Competition Council performed about 10 dawn raids in 2004. A couple of dawn raids have been performed in Estonia since May 2004. Although the competition authorities have not performed any dawn raids in Latvia yet, they have sought court warrants permitting such activity. To date no dawn raids initiated by the commission have been performed in the Baltics.
It is obvious that a dawn raid can be very disruptive for the business of an enterprise and therefore should be taken seriously. The possible damage of a dawn raid can be reduced if the personnel of an enterprise is prepared to deal with it 's e.g., for this purpose the dawn raid instructions may be issued by the enterprise and provided to the employees for familiarization.
Raminta Karlonaite is a senior associate at Sorainen Law Offices in Vilnius.
