SOUTH AFRICA: FIRST DAWN RAIDS BY THE COMPETITION COMMISSION IN SEVERAL YEARS ARE A REMINDER TO MAINTAIN DAWN RAID READINESS

By Nazeera Mia,Heather Irvine Friday, August 26, 2022
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The Competition Commission announced on 25 August 2022 that it had conducted search and seizure operations at the premises of eight insurance companies operating in Gauteng, KwaZulu-Natal and Western Cape provinces.

The Commission alleges that a number of life insurers fixed prices and/or trading conditions in respect of fees for investment products such as retirement annuity and premiums for life insurance cover such as dread disease cover / chronic medical condition cover, disability cover, life cover and funeral assistance benefits in contravention of section 4(1)(b)(i) of the Competition Act. According to the Commission, the companies shared information on premium rates for risk-related products and fees for investment products, in order to adjust the prices of their existing and new insurance products. The search and seizure operations are being conducted as part of an ongoing investigation that was initiated by the Commissioner in January 2021.

This search and seizure is a reminder to companies operating in South Africa that they need to have a comprehensive dawn raid policy and training program in place. The plan should identify the core team responsible for dealing with a search, including external legal counsel, senior management, in-house legal counsel, and the IT and security managers responsible for each site. Investor relations and public relations personnel should also be identified.

Staff need to be clear on the procedures to be followed and who is responsible for dealing with the regulator in the event of a raid. For example, competition authority staff should be asked to wait for the company’s external legal advisors to arrive before commencing the search and the warrant should be scanned and sent to the legal team. The plan needs to take into account travelling distances and the size and number of company premises potentially involved. Staff should be appointed to monitor the conduct of the search and record each document reviewed or removed by the authorities. This team of ‘shadow’ employees is critical in dealing with the complaint in the wake of a raid and they need to receive in-depth training, to ensure that they understand the crucial role they will play. 

Adequate measures should be put in place to protect the company’s legally privileged and highly confidential documents. It is a good idea to formulate an external communication plan to deal with questions from the press, as well as an internal communication plan to preserve confidentiality and deal with the impact on staff morale as far as possible.