When the inspectors come

In recent months, we have seen numerous reports about “dawn raids”, unexpected inspections carried out by the Business Competition Office (GVH). As such raids can be carried out without prior notice to the subject, enterprises should be prepared for the possibility that one day GVH will come knocking on their doors. On the spot inspections are usually carried out by the Business Competition Office (GVH) but other authorities like the Health Insurance Authority may also be authorised to carry out similar inspections. Compliance with Law LVII. of 1996 about fair competition is generally checked using procedures which rely mainly on gathering on the spot information, Inspections or research may be carried out to gather information. Research allows GVH to use a wider range of tools than during inspections. Research may only be used in specific and well defined cases. Such cases are the suspicion of conspiracy to limit competition or to act in a co-ordinated manner, or the abuse of market power. Research begins without the subject of the procedure being served prior notice. Inspectors from GVH may appear on any premises of the entities subjected to research practically any time. GVH may impose a fine on the company subjected to the procedure if any attempt is made to obstruct, delay or prevent the procedure from being successful. Fines may range from HUF 50,000 to one per cent of net revenues, or HUF 500,000 in the case of individuals. There are procedural guarantees defined by law which serve to ensure that the rights of the entities subjected to such procedures are not violated and that data is obtained lawfully. Apart from these, a warrant issued by a judge prior to the proceedings is also required for the procedure to be lawful. The entities effected by the procedure are allowed to be present during inspection and research, although their presence is not a precondition of the procedure being lawful. There is only one type of document which cannot be examined, seized or used as evidence in these procedures. This is communication between the subject of the procedure and its legal representative (legal privilege). Apart from documents of this type, all other information or records can be used as evidence in procedures initiated by GVH. Enterprises should be prepared for “dawn raids” and should implement measures which allow the effective handling of such situations.