Trends in Competition Investigations in Europe

Sarah Chambers:
Welcome to the Ashurst Legal Outlook. I'm Sarah Chambers, and I work in Ashurst's digital team, turning legal input into digital output. In today's episode, we're going to be discussing trends in competition investigations in Europe. I've recently had the very great pleasure of working with the European Competition team on a dawn raid app. For this podcast, I'm joined by two members of that team, who led the development of the app, Michael Holzhäuser, from our Frankfurt office, and Fiona Garside from our London office. It was fascinating working with this pair, learning more about dawn raids and some of the trends that they could observe, including some that intersect our respective areas of focus. Here's our conversation.

Sarah Chambers:
Well, first of all, hello and welcome to Michael and Fiona.

Michael Holzhäuser:
Hey, Sarah. Thanks for having us.

Fiona Garside:
Hey, Sarah.

Sarah Chambers:
Oh, thank you so much for joining me today. We've all recently been working on an app together that helps our clients prepare for and respond to a dawn raid. And as part of that exercise, we've been talking a lot about some of the trends that you've been seeing in the competition investigation space. So as competition practitioners, what are the key issues you're seeing in raids at the moment?

Michael Holzhäuser:
Well, Sarah, several issues come to mind. Firstly, the resumption of raids because cartel prosecution has of course been restricted during the pandemic, mainly because collecting evidence through dawn raids of business and private premises was not possible. However, cartels are not going away and the authorities' investigations pipeline is filling up. So authorities at both national and supernational level have started to pick up inspections now, and more importantly, the authorities stressed that they are planning a series of raids in the months to come. So companies should expect a significant increase of dawn raids in the short to medium-term future.

Michael Holzhäuser:
Secondly, the role of technology is certainly an issue. Authorities are increasingly making use of technology during dawn raids. It enables them to collect large volumes of data quickly and review it at their leisure. So this raises challenges for both companies being raided and their advisors. Where search terms are pre-programmed, it may be difficult for advisors to keep a detailed log of the search terms applied by inspectors. And thirdly, the scope of investigations changed. I feel that the sectors that are subject to investigations have broadened during the pandemic and concern basically all industries. What do you think, Fiona?

Fiona Garside:
I think that's right, Michael. I think recently we've seen a wide variety of sectors experiencing dawn raids from eyewear, to pasta, fashion, waste collection, military equipment, and then back into pharmaceuticals, your more traditional spheres. We've also seen warnings coming from competition authorities worldwide that the pandemic must not be used as a cover for anti-competitive behaviour. And most recently, they've warned companies that are active in global supply chains; exactly that, that they shouldn't be using the pandemic as a cover and to expect heightened scrutiny in the months to come.

Sarah Chambers:
Gosh, that's super interesting. So starting with that rather ominous piece that you mentioned there, Michael, that clients should be expecting regulators, if you like, to come back to life and for this sort of activity to resume. What does that mean for our clients, and what should they be doing?

Fiona Garside:
I think first and foremost, it means obviously the more raids there are, the more likely you, yourself, are to be raided. That means it's more important than ever that you make sure your processes are up to date, that your staff are fully trained, that everyone knows exactly what will happen when an inspector shows up at your door. Given what Michael said, that there have been less raids in recent years, it's important that staff are retrained, those processes are refreshed, and that really you just make sure everyone's comfortable with what they need to do in that situation.

Sarah Chambers:
And I know that when we've been working together, some of the stories that you both have told me about your experience of working on dawn raids and some of the activities that you've witnessed yourself, they sound like an incredibly stressful thing to live and work through. What steps could our clients be taking to ensure that they are comfortable, and prepared, and ready to respond in the event that a competition authority turned up on their doorstep?

Michael Holzhäuser:
They should have an effective, comprehensive, and tailored compliance programme in place. A comprehensive crisis reaction plan is certainly a part of that. And well-prepared dawn raid response teams need to include staff ranging from Reception, IT, HR, PR, legal department, and management. And of course, external lawyers who know the team, procedures, the communication lines, have the resources to support and expertise to defend the rights of the company. And our app can help with all of that.

Michael Holzhäuser:
Another important point to consider is that it is just not enough to set up procedures and provide guidelines. Rather, the dawn raid response teams will regularly need to have refresher trainings and practice the worst case scenario. Also, internal processes may have changed, especially during the pandemic. So use this as a chance to look at your own dawn raid processes as a whole. Do contacts need to be updated? Has how you access the building changed? Which staff members are working from home? So everyone needs to be really up to date.

Sarah Chambers:
Yeah, that's interesting. So how is this trend, first off, that's seeing an increased focused on raids manifesting in your day-to-day work? What changes is this resulting in, in terms of what clients are asking from you as competition practitioners?

Michael Holzhäuser:
First, we definitely recognize an uptick in request for dawn raid trainings, with a focus on the use of forensic technology and also the review of compliance processes. And we also have more requests for mock dawn raids and this is highly welcomed because the mere theoretical training session alone, however effective, will not prepare you as well for the stressful and disruptive challenges a dawn raid raises, as actually having experienced and tested the processes in practice.

Sarah Chambers:
And we've obviously been working hand in glove over the last little while to launch Raid Assist, a dawn raid app. So tell me and our listeners a little bit more about that app and how the idea for it came about.

Fiona Garside:
I think, as Michael's touched on, essentially it is an off-the-shelf raid policy or process that you can follow. It's obviously not tailored to your business, but it has the basic elements that every raid process needs to have, and that's tailored to every team. So including the teams Michael talked about earlier, we have tailored guidance for Reception, Security, for the legal team that are actually shadowing, and that enables you to follow it step-by-step through the raid. We wanted it to be useful in that actual raid situationsothe guidance is kept high level, and streamlined, straightforward, so you can follow it. I think, Sarah, as we've been joking about throughout, now you feel you could run a dawn raid yourself. And that's really what we wanted to provide our clients with, that comfort that their staff have what they need at their fingertips. There's also sections where we do provide more detailed guidance if clients want to refer to that as well.

Sarah Chambers:
And I know when we were putting it together, we did obviously a lot of market research, and it's fair to say there are lots of other law-firm dawn-raid apps out there. What was the impetus for launching the Ashurst one now? And how do you think that the Ashurst app is different?

Michael Holzhäuser:
I think the answer would be because it really became much more relevant, firstly, because, as mentioned before, we are anticipating and increased number of raids in the short to medium-term future. And as regards the distinguishing features of our app, it's neither merely a digitized version of some golden rules nor just a legal tech tool, but rather a virtual guide, if you will, a technology-based solution targeted at specific teams. So it's really a step-by-step guide on your phone.

Michael Holzhäuser:
And the crucial distinguishing factor is that we didn't shy away from giving away free expert advice to create real added-value for our clients. And you can see this in our download bank, where you will find templates, checklists, and jurisdiction-specific guidance with a great level of detail that can be shared. Finally, we did not just publish the app and are waiting for our clients to prepare themselves and contact us, but rather we are actively looking to work with our clients to tailor the app to their specific needs.

Sarah Chambers:
And that's really interesting. I mean, and actually dovetailed back in with this second trend that you mentioned at the start of the conversation, Michael, which was in putting an app into our client's hands to provide them a blueprint to guide them through a raid, the notion that technology is playing a much larger role in a raid situation. Can you elaborate further about how you're seeing that manifest itself?

Michael Holzhäuser:
You have to differentiate between the various stages of the raid. And before the raid, the clients can use technology to ensure that their staff are really familiar with the internal processes. Previously, most companies used cumbersome, hard-copy manuals and guidance. Now, concepts like our app mean that you can have all that information readily available on your phone, but also email templates and other content in order not to lose valuable time. However, I feel that companies are benefiting even more from technology during the raid.

Fiona Garside:
I think that's right. I think, one of the first things to highlight is that tech gives you the ability to very quickly contact your external lawyers and that's obviously the most important thing to do when inspectors show up. And for that reason, we've included our contact details in our app so that you have them to hand, should you need them. But also, tech is playing a role in how the raid actually plays out. So authorities, as we've touched on, are increasingly tech savvy. They're using pre-programmed search terms. They show up; they collect large amounts of data and it can be increasingly difficult for shadowers to understand exactly what search terms they're looking at.

Fiona Garside:
That makes it even more important that you're vigilant during a raid, and you pay attention to what they seem to be interested in. It also gives the IT team a much more inspector-facing role. And so it's really important that they understand their role in the raid, what they might need to provide, what they need to have ready in advance, but also what questions they shouldn't be answering and should be referring back to the legal team. Because, obviously, it's very important to keep any engagement with the inspectors to a minimum without legal advice, and that's why you should contact your legal advisors straight away. And legal advisors also play a key role after the raid. Michael, did you want to touch on eDiscovery?

Michael Holzhäuser:
Yeah. Thank you, Fiona. You already mentioned it. The document review that takes place after the raid – it's connected with more and more data being collected and having to be reviewed afterwards. So eDiscovery tools are crucial to manage and prioritize the review of a potentially large number of documents. And it's not only the regulators who review these documents. After the raid, also we, as legal advisors, will review every document that has been collected, copied, or reviewed during the raid and potentially many more, just in order to obtain a better picture of what has actually happened and faster than the authorities.

Michael Holzhäuser:
So in times of big data and remote working patterns, we are observing a shift from dawn raids to e-raids, requiring the inspectors to use IT forensics to collect the relevant data, cull it, filter it, and review huge amounts of documents. We are using the same machine learning tools as the authorities to analyze the data, but to a much larger extent, artificial intelligence to predict relevant documents and obtain results more quickly, ultimately be in a position to develop the most effective defence strategy, for example, apply for immunity.

Sarah Chambers:
And again, it demonstrates another one of the ways that I think the two teams, the Competition team on the one side, and also how Ashurst Advance intersects with your practice on a day-to-day in terms of doing that work as well. How is the role of technology generally changing your practice, both as lawyers generally and also specifically as competition practitioners?

Fiona Garside:
The role of lawyers has always been to find the most effective solution for our clients. More and more, those solutions are actually tech solutions. So it's really important that we understand our clients' problems, so we can look at the latest digital offerings and be able to provide technology-based solutions where they are most appropriate, like the app, for example. It's also offering us different ways of interacting with clients, so whether that is through the app or through offering e-compliance modules that are not the traditional, cumbersome e-compliance modules of before, but something much more interactive and interesting.

Fiona Garside:
For us, as competition lawyers as well, tech is going to be a very interesting sector over the next however many years. There's a lot of scrutiny from competition authorities, and there are going to be new regulations brought in to regulate digital companies much more closely. So we expect a lot more enforcement action, but that is definitely a topic for another time.

Sarah Chambers:
So if listeners are going to take one thing away from this particular podcast, what would you like that to be?

Michael Holzhäuser:
I think from my side, that would be that it's more important than ever to be prepared for the possibility of a raid and work with us through technology-based solutions.

Fiona Garside:
I'd echo that, Michael. I think, particularly working with us through technology-based solutions. Please do download the app. A lot of work has gone into it, and we do think it's a very useful tool. So do encourage all of your staff read through and make sure they're familiar with their role as well.

Sarah Chambers:
Thank you, both. That's a super, clear call to action. Thank you, Michael and Fiona, for your time today, been an absolute pleasure to talk to you.

Fiona Garside:
Thanks, Sarah.

Michael Holzhäuser:
Thanks for having us, Sarah.

Sarah Chambers:
If that's piqued your interest, you can find the Raid Assist app in both the Google Play Store and the Apple App Store. It's completely free to download, and no registration is required. We'd also love to hear your feedback on it. And if you enjoyed this podcast episode, please subscribe to Ashurst Legal Outlook on Apple, Spotify, or wherever you get your podcasts. While you're there, feel free to leave us a rating or review. All that's left for me to say is thanks very much for listening, and goodbye for now.