The Netherlands Authority for Consumers & Markets (ACM) imposed a 1.84 million euro fine on a company for obstructing an investigation into competition-distorting practices. What was the cause? Employees of the company being investigated left WhatsApp chat groups and deleting conversations during an ACM dawn raid, as this ACM news release reports.

The ACM's powers to enforce policy

A watchdog within the meaning of the Dutch General Administrative Law Act (Awb), the ACM has sweeping powers that it may wield to the extent reasonably necessary for the performance of its supervisory duties. One core duty of the ACM is to enforce the ban on cartels (Section 6 of the Dutch Competition Act). As part of its investigations, the ACM is authorised to enter industrial premises (Section 5.15 Awb) and to demand inspection of or to makes copies of documents (Section 5:17 Awb). In addition, employees of the company under investigation are required to cooperate with the officers of the ACM (Section 5:20 Awb), although such cooperation is subject to a number of conditions (know thy duties and definitely know thy rights!). Pursuant to Regulation (EC) No 1/2003, the European Commission (“EC”) – being the EU competition authority – has similar powers to enforce the provisions of Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TfEU”).

Leaving WhatsApp groups and deleting conversations

In this case, the ACM suspected the company had violated the cartel prohibition and for this reason paid it an unannounced visit. Where the ACM rather euphemistically calls this a “company inspection”, the general term used for these visits is “dawn raid”. At the beginning of any dawn raid, the ACM carefully explains that employees are required by law to cooperate in the investigation and that they are not allowed to destroy, withhold or in any other way dispose of evidence. During this raid, some employees of the company left WhatsApp group chats and deleted their conversations.

The ACM “takes this very seriously”, in their own words, because the WhatsApp chats could have contained evidence relevant to the investigation. Another example that ostensibly innocuous social media may offer a platform for competition-distorting arrangements came to light earlier this year, when the EC imposed an 811 million euro fine on Barclays, The Royal Bank of Scotland, Citigroup and JPMorgan. Forex dealers had exchanged sensitive information and harmonised their trading strategies in an online chatroom called the "Three Way Banana Split”, which gave the cartel its slightly frivolous moniker.

In the Dutch case, the company admitted that its employees were wrong to have left the WhatsApp chat groups and to have deleted the chats, which has been a mitigating factor in determining the amount of the fine. The company also lent its full cooperation to the investigation into the deleted conversations, in a way beyond its legal obligation. Although these circumstances induced the ACM to reduce the fine by 20%, the imposition of the fine will go on the record. This case emphasises once again the possibly severe consequences a dawn raid may have.

Preparing for a dawn raid. On-the-spot assistance.

A dawn raid by the ACM or the EC is a drastic measure and may have potentially grave consequences. Apart from that, the dawn raid itself will cause the company and its staff acute and severe stress. Thorough preparation and effective on-the-spot assistance can make a world of difference.

AKD's specialist Dawn Raid Team makes that difference for your company. The team members are spread over our offices in Belgium, the Netherlands and Luxembourg, making it possible for them to be on hand and provide assistance immediately in the event of a dawn raid. They will instruct your staff, monitor the watchdog's every investigative act, and make certain that your company will not surrender more data and documents than is strictly required. As noted earlier, the investigative powers of supervising authorities are fettered by restrictions and conditions. Members of AKD's Dawn Raid Team regularly provide training to companies to help them prepare for dawn raids.

For more information please contact Joost Houdijk or Tom Binder.