How to handle dawn raids by

competition authorities
The office of the Director-General (DG) as per Section 41 of the Competition
Act, 2002, is the investigative arm of the Competition Commission of India
(CCI) conducts search and seizure operations in the country. The first search
and seizure operation commonly known as dawn raids was conducted at the
premises of M/S JCB India Ltd., an Indian subsidiary of a United Kingdom-based
construction company (JCB India) on 22 September 2014. 

The second one was carried out on the premises of  Eveready Industries Limited
(Eveready), a well-established dry cell manufacturer. In the case of
multinational corporations, the search and seizure can be conducted in several
or simultaneous jurisdictions and at different locations in the same jurisdiction.
The raids are conducted covertly, leaving no scope for the party under the
investigation to fetch the search in any condition and also to provide an
opportunity to refresh or clean the records. 

The act empowers the DG to conduct such dawn raids after obtaining a warrant
from the Chief Metropolitan Magistrate, Delhi. Hence, the dawn raid is an arm to
resolve the CCI to conduct search and seizure operations under the provision of
the Act. Thus, the first DG conducted a surprise raid but it will not be the last
one. Nevertheless, it is essential to co-operate and facilitate relevant
information and documents to the competition authorities and it is also essential
for the companies in India to know what they should do in such a course of a
dawn raid to control the consequences and fallout.

What is a dawn raid

A dawn raid is known as undisclosed or surprises search and seizure, it is a type
of investigation operation that is majorly conducted by all the investigative
agencies around the globe to examine major antitrust or competition law
violations to prevent suspects off guards. These surprise inspections are
conducted without any warning or notice and are usually conducted in a period
when it is least expected, hence, at the crack of the “dawn”. 

It is inherently intrusive and conducted to disclose the evidence to establish an

anti-competition practice going around. The power to conduct a dawn raid by
the DG is conferred under Section 41 of the Competition Act, which states that
the investigation by the DG should comply with Section 240 of the Companies
Act, 1956 and 240A of the Companies Act, 1956; however, the act is repealed
and the present power is conferred under Section 219, and 220 of the
Companies Act, 2013 and it dispose of the express requirement to get a warrant
from a judicial magistrate before initiating a search and seizure operation.
Although the Code of Criminal Procedure, 1973 (CrPC) states that to conduct a
search and seizure operation carried out by the DG it is necessary to option a
judicial warrant first, notwithstanding, the lack of an express requirement under
the Companies Act, 2013, the DG seeks a warrant from the Chief Metropolitan
Magistrate in Delhi before conducting a dawn raid.

 Powers enshrined to the Director-General

 It empowers the DG to seize the books and documents of the
company.
 Emails and electronic evidence also play a particular interest to the
antitrust authorities across the world.
 The DG may seize documents, electronic devices i.e., hard-drive, and
storage chips from the device.
 The DG has the power to testify to any employees or person connected
with the investigation during the dawn raids.

The power exercised by the competition authorities will create major disruption
for the company and may lead to the sign of stating and proceeding leading to
files, damage action, injunction, and disqualifications of directors. To ensure an
effective investigation process, it is better to be acquitted with the authority’s
processes and procedures to make reasonable decisions at the times of dawn
raids. Hence, preparation for dawn raids is of utmost importance.

Dawn raids under the Competition

(Amendment) Bill 2012
The Competition (Amendment) Bill, 2012 was introduced in the Lok Sabha in
December 2012 stating the following on dawn raids:

1. The chairperson of the CCI may direct the DG to conduct dawn raids if
the investigator during the investigation has reasons to believe that the
party has hidden or omitted to provide certain relevant information or
documents which he or she is supposed to produce or if there is a
threat to dispose of or destroy the evidence.
2. Reasonable force can be used by the competent authorities in such
cases to carry out the dawn raids.

The term “reason to believe” has a wide connotation and the commission may
undertake fishing activity to get evidence during dawn raids. As per the bill, the
commission should have reasonable belief before conducting dawn raids by the
DG. In the case of Rai Bahadur Seth Sreeram Durga Parasd Ltd., the court
observed that there is no definite definition of the term and it would depend on
various circumstances. Hence the investigation process to issue a warrant may
involve the below-mentioned elements:

 Article of search.
 Place or location in which they are concealed.
 How they are concealed.
 The person who has the said article or document or the location where
they are concealed.