Guidelines
For inspection by the Indian Competition Authorities
What documents must the officials present?
- In principle, the officials (i.e., members from the Office of the Director General, Competition Commission of India, other police officers, and/or officers from the Central Government of India – collectively the ‘Officials’) must present a search warrant issued by the Chief Metropolitan Magistrate, New Delhi.
- If the Officials present a search warrant, request a copy for your records and check very carefully:
- Is our company the addressee?
- What accusations are being raised against our company (subject matter of the inspection)?
- Where may the Officials search, i.e., the details of the premises where the search is to be conducted, and the nature of documents/evidence intended to be gathered?
- If the Officials deny permission to make a copy of the warrant, note the date of the warrant, its identification number, the authority granting the permission to conduct the inspection, and the scope of investigation, including allegations (to the extent mentioned in such warrant).
- If there is no search warrant, object to any inspection. However, do not attempt to stop the Officials. This also applies if the Officials extend the scope of the investigation on the spot. Any obstruction to the Officials in any manner may attract both monetary penalties and criminal sanctions (including an imprisonment for a period upto three months).
- Request the Officials to call the two pre-identified independent witnesses (which may include retired employees, friends of employees, employees of customers, employees of vendors, etc.). If the Officials do not allow calling of pre-identified independent witnesses, then request the Officials to call two independent witnesses before commencing the inspection.
- Upon arrival of the Officials, immediately call your external legal counsel and inform them that there is an inspection. In your communication to the external legal counsel, convey all relevant details about the said inspection including the details regarding the warrant, designation of authorities conducting the inspection, number of authorities present on the premises, etc. They will give you initial guidance and will arrange for a lawyer to be on site as quickly as possible. Typically, the Officials are not obligated to wait for the external legal counsel to arrive at the premises before initiating the inspection. However, the same may be requested and insisted upon.
Where and how may the officials search?
- In principle, you are only obliged to passively tolerate the inspection. You are therefore not obliged to actively assist the inspection. However, if you refuse the inspection, the Officials may use direct force (e.g. to open a cupboard). Therefore, cooperation is recommended.
- The Officials may demand information that could enable access to evidence (e.g., passwords, location of documents) if they explicitly mention the duty to cooperate. In this case, you are obliged to cooperate and failure to do so can result in monetary penalties as well as other sanctions (see above at 1).
- The inspection can extend to all premises (business/homes/vehicles of the company personnel), cupboards, desks, safes, cars, IT systems, servers, hard disk drives, mobile phones, laptops, tablets or personnel. You may not deny the Officials access to any such premises and/or objects.
- The Officials are also entitled to ask questions (see below at 4).
What may the officials search?
Most important
Never voluntarily surrender any objects or documents. Always insist on a formal seizure, and check that the documents are sealed and secured separately or in bundles by the Officials properly. Further, ensure that the signatures of the Officials, company representative and the independent witnesses are affixed.
- In principle, the Officials may seize originals of all documents as evidence, even if they contain business secrets. Therefore, make at least three copies of every seized document, one for the Officials, one for the company and one for legal counsel.
- The following documents may ideally not be seized, copied or inspected by the Officials:
- Correspondence in the company with an external legal counsel, since these are considered protected under the Indian laws;
- Correspondence in the company with an in-house legal counsel, as long as such communications pertain to questions of law and relate to litigation.
- Practically, the Officials determine the relevance of information or documents, and it may be difficult to stop the Officials from wanting to inspect or even seizing such privileged documents. In such situations, request the Officials to review the document and show to the Officials those parts of the documents which prove their privileged character (so that the Officials may not seize the documents). Alternatively, verbal, and written protests should be registered with the Officials, and the company must contact its external legal counsel immediately for suitable advice.
- In general, Officials are also entitled to search for and seize digital data including IT systems, servers, hard disk drives, mobile phones, laptops, or tablets, as evidence. However, a request that the computers are left at the company may be made. Moreover, they may also conduct forensic search on all electronic devices seized. Grant access to computer files by providing passwords. Check that the electronic devices are sealed and secured by the Officials properly and the signatures of the Officials, company representative and the independent witnesses are affixed.
Important: always make electronic copies of all computer files which the Officials take away.
While not typically allowed, the Officials may seize any of the documents and devices available at the premises including “random finds”. “Random finds” are objects not related to the subject matter of the current investigation. In such cases, written protests should be registered with the Officials, and the company must contact its external legal counsel immediately for suitable advice.
- After conclusion of the inspection, ensure that the list of documents/electronic devices being seized, along with a ‘Panchnama’ (record of proceedings) are signed by two independent witnesses as acknowledgement of adherence to due process.
- Avoid signing any other document presented by the Officials without the prior approval from the legal department/ external legal counsel.
- Finally, when the Officials open such bundles/devices at their office, the authorised company representatives/their legal counsels present at the office of the Officials must ensure that the seal and the signatures are removed in their presence.
- The Officials are entitled to affix seals to premises, rooms, cupboards and documents, etc., during inspection which may last several days (including holidays). Do not break or tamper with this seal. Breaking a seal, even inadvertently, may result in heavy monetary penalties as well as other sanctions (see above at 1).
Who may be interviewed by the officials and how?
- The Officials are entitled to request from all employees and representatives of the company explanations of facts and documents that may be related to the purpose of the inspection and to record the answers in writing.
There is an obligation to cooperate in this respect and failure to do so can result in monetary penalties as well as other sanctions (see above at 1).
- Each interviewee must however bear in mind that they might be held personally liable for monetary penalty as well as other sanctions (see above at 1)!
- Only answer the questions that are asked. Stick to facts and information of which there is certainty. Give short and precise answers. Do not make up answers, speculate, or guess what the answer could be. Where uncertain, indicate that the requested information is not readily available and will be provided later. Do not volunteer any documents or information that is not requested.
While responding to questions, remember the company’s right against self-incrimination.
Presence of lawyers
- Request that you only be questioned in the presence of the external legal counsel.
- It may be possible that the Officials do not allow the employee being interviewed to contact an external legal counsel. This is since there is no statutory right to legal counsel during an interview of an employee. While a request for this may be made, it is not obligatory for the Officials to agree to this.
- Maintain detailed minutes of the communication with the Officials and verify if the Official is preparing record of proceedings.
External communication
Do not disclose any details or even the fact that an inspection is taking place to third parties without obtaining permission from the management/legal department.