Irish subsidiaries of UK firms warned of increase in ‘dawn raids’ by watchdog
EU cartel investigators likely to access British firms through Irish divisions post-Brexit
Dawn raids on Irish subsidiaries of UK companies are expected to increase significantly in the wake of Brexit, as European Commission cartel investigations are barred from enforcement activity on British soil, a legal expert has said.
Dr Vincent Power, a specialist in European competition law at A&L Goodbody solicitors, has said raids might take place in Ireland in cases relating to suspected illegal behaviour in UK affiliates and that staff may not know why they are being targeted.
“[If] you can’t get into your neighbour’s back garden you go to your other neighbour’s back garden, you get a ladder and you look over the wall,” Dr Power said.
With an increased frequency of corporate “dawn raids” in recent years, hundreds of Irish-based companies now prepare for such an eventuality, although the number of those who are anticipating raids due to UK ties specifically is thought to be far fewer.
Between 2014 and 2018, the European Commission issued cartel-related fines amounting to more than €8.5 billion.
One high-profile case in 2017 saw four Irish-based insurance brokers raided by the commission and the Irish Competition and Consumer Protection Commission (CCPC) as part of an investigation into suspected breaches of EU antitrust rules.
Raids on businesses across Europe are also intent on uncovering evidence of anti-competitive deals, abuse of dominance and unlawful state aid.
Should the UK leave the EU, its businesses will still be subject to the same competition law where activities affect trade between member states. However, investigators would not be expected to have the same access.
Dr Power, who trains company executives on how to deal with unexpected raids, says investigators could access potential evidence held on IT systems via subsidiary offices.
After Brexit, he says, such raids in Ireland will likely increase in both frequency and intensity as more detailed information is sought in the absence of simultaneous operations in the UK.
“The easiest way to [investigate a suspected case involving a UK company] would be to work their way through the back door,” he said.
Raids are unannounced, typically involve a large number of agents and can last for days. It is an offence to block access and to give false information, breaches of law that can incur substantial penalties.
Eon, the German energy company, was fined €38 million for tampering with a seal placed on one of its offices following a dawn raid in 2006.
Investigators use a list of search terms in computer systems to seek out evidence, an approach that makes the targeting of Irish-based companies easier given the common language.
Dr Power said companies innocent of any criminal activity can be raided as part of a wider investigation, and so staff training on how to respond has become more common.
“It’s a bit like having a fire drill. It doesn’t mean that the company is full of arsonists, it just means some day this might happen,” he said.