On June 9, 2011 the European Commission announced that it had commenced an investigation into an alleged cartel in the seatbelts, airbags and steering wheels manufacturing sector with dawn raids (unannounced inspections) of manufacturers’ premises.
In making the announcement, the Commission stated:
“The European Commission can confirm that, starting on 7 June 2011, Commission officials carried out unannounced inspections at the premises of companies that supply car seatbelts, airbags and steering wheels, known in the industry as automotive occupant safety systems. The Commission has reason to believe that the companies concerned may have violated EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union).
Automotive occupant safety systems cover safety products such as seatbelts, airbags and steering wheels that are supplied to car manufacturers.
The Commission officials were accompanied by their counterparts from the relevant national competition authority.
Unannounced inspections are a preliminary step into suspected anticompetitive practices. The fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself. The Commission respects the rights of defence, in particular the right of companies to be heard in the Commission’s proceedings against them.”
The Commission has not yet identified the targets of its investigation. For the complete European Commission news release see:
Like the European Commission, the Competition Bureau has a wide range of enforcement powers available to it to investigate potential violations of competition law under the Competition Act, including the power to obtain search warrants, document production orders, orders compelling testimony under oath and wiretaps. The Bureau is increasingly resorting to these powers, particularly in relation to its enforcement priorities that include the detection and investigation of criminal cartels and deceptive and fraudulent marketing.
The Competition Act also contains obstruction provisions, which make it a criminal offence to impede or prevent (or attempt to impede or prevent) inquiries or examinations under the Act (see for example: Morgan Companies Fined $1 Million for Obstruction and Price-fixing).
As such, it is prudent for companies and organizations that may realistically face the prospect of a competition law investigation or search at some point – for example, companies engaged in higher risk industries and activities including construction, oil and gas and trade associations – are well advised to adopt basic search and seizure guidelines to reduce the likelihood of breaching Canadian competition law in the event of a search.
These commonly include guidelines dealing with how to deal with Bureau officials during a search, advising company/organization personnel, the control of information and PR, inspecting the search warrant and reducing the risk of breaching the obstruction provisions of the Act which can lead to significant additional liability (such as by breaching sealed boxes or rooms or impeding Bureau officers during a search).
For more information about the Competition Bureau’s enforcement powers see: Competition Bureau Enforcement.
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