Electronic Searches: Turning Every Page

Cartel documents are not always neatly filed.
By: Newtown grafitti

Electronic documents change the way competition authorities search for documents when carrying out inspections. But that doesn’t mean that companies are worse off than before.

In days past Commission officials on inspections occasionally found lever arch files labelled “Cartel Minutes”. Even in the last ten years, the Commission uncovered a cartel that operated on the basis of a written cartel agreement.

This generous aid to the Commission’s investigations rarely happens today: cartelists have become more careful, and electronic documents have largely replaced paper ones.

Searching the more modern way
By: See-ming Lee

It’s this latter point that I want to touch on here. As companies have increasingly moved to electronic documents rather than paper ones, so Commission investigative practices have similarly had to move towards searching electronic evidence. The Commission has recently updated its public memorandum on inspections, updating in particular the information on electronic inspections.

The Commission’s practice has been critcised. John Temple Lang, a former Commission official (one of my former Directors, and one of the best writers on competition matters) and now Counsel in Cleary Gottlieb, has written an article(*) arguing, in short, that the Commission should be more transparent in its electronic inspections. In particular, Mr Temple Lang argues that the Commission should disclose the search terms which it intends to use when searching electronic sources.

A future Commission official failing to understand the nature of proportionality.
By: Jerry Huddleston

He says that undisclosed electronic searches risk being disproportionate and infringing the target company’s right to privacy; as the Commission is obliged to act proportionately and respect the right to privacy, then the searches risk being illegal.

Mr Temple Lang is certainly right that the Commission must act proportionately and with respect to a company’s right to privacy. Where we part company is when he argues that the Commission should be obliged to disclose its search terms so that the target company can assess whether the search is disproportionate.

There are a couple of problems with this.

  • First, routine disclosure of search terms may directly or indirectly disclose aspects of the investigation which should properly be kept – at this stage of the inspection – confidential from the party being investigated. This might include the identity of the immunity applicant, the identity of other parties under investigation (and who may not yet have been inspected), the identity of various parties in the target company (who may not yet have been inspected) and so on. All of these points may become known later in the procedure – and indeed some will be revealed quite quickly as the inspection takes place – but disclosure in advance may harm the investigation.
  • Second, the search terms are likely to change over the course of the inspection. Officials never have a perfect understanding of the scope of the case at the start of the inspection. Search terms will develop depending on how the inspection develops. Would disclosure apply at every stage? Does each inspector have to report back to the team leader, who would have to disclose to the company, each investigative route they intend to pursue before they have pursued it?

But the main problem with Mr Temple Lang’s argument is more fundamental: what, in any event, is the significance of search terms?

The use of search terms is only a “first cut.” The Commission will inspect the selected documents before deciding which to copy for the file; the company and its advisers can similarly inspect the documents and raise objections on scope or privilege if they wish.

Yes, the search terms procedure does as Mr Temple Lang notes, lead to temporary copies of documents that are then reviewed manually. But objecting to these temporary copies makes little sense. Only documents selected for the file are retained. The other temporary copies are destroyed. The company’s rights aren’t undermined in any way.

Searching electronic documents in this way – search terms first, and final selection later – is in fact advantageous to the company because search terms are by their nature imprecise. There will be false positives – documents caught by the search terms that are not relevant but which manual review will then discard. But there will also be false negatives – documents not caught by the search terms that are relevant.

Of course this false positive and false negative problem could be remedied by the Commission by dispensing with the first stage of using search terms. Inspectors could simply look at every document.

Back in the old days, when Commission officials inspected a company they would routinely check every piece of paper in the office of the people they were investigating. A file labelled “Cartel Minutes” might cut down on the need to examine other documents, but cartelists were rarely so accommodating. Instead they would often hide relevant pieces of paper, or file them under misleading headings or code-names. The only way to make sure that papers were not relevant was to look at their contents. This was – and is – perfectly legal and we could transpose the practice to electronic files.

Information may still be filed under misleading headings or code-names. The only way to make sure that electronic documents are not relevant is to look at their contents. It seems unarguable that the Commission could look at every electronic individually, without pre-selecting them with search terms.

Turning Every Page.
By: Kate Ter Haar

Of course, this would be more time consuming for the Commission and for the company compared to using search terms. Perhaps Mr Temple Lang would regard that as disproportionate too.

 

 

 

 

(*) Legal problems of digital evidence, J Antitrust Enforcement (2013)doi: 10.1093/jaenfo/jnt007First published online: August 2, 2013

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