The Akzo Nobel case - frequently asked questions
Key points to note about the judgment and its implications for in-house lawyers and companies.
Please note that this frequently asked questions document is not legal advice. While care has been taken to ensure that the contents of the frequently asked questions are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to this.
Judgment was delivered on 14 September 2010 in Akzo Nobel Chemicals Limited and Akcros Chemicals Limited v Commission of the European Communities (C-550/07).
The judgment has confirmed existing EU case law that, in relation to EU competition law investigations carried out by the European Commission, the advice of in-house lawyers is not covered by legal professional privilege (LPP).
As such, documents containing advice or other confidential information given by an in-house lawyer cannot be withheld from the European Commission during a competition law investigation on the grounds that they are privileged.
The Court's judgment is based on a line of case law that was first set down in 1982 in AM&S Europe v Commission of the European Communities. This case established the principle in EU law that LPP only applies to communications with "independent" lawyers. The Court considered that this excluded lawyers bound by a relationship of employment with their client.
In essence, the most recent ruling does not change this principle. The case has however attracted a lot of publicity and increased awareness amongst the profession.
The case concerns investigations carried out to ensure the application of EU competition law, primarily under the Modernisation Regulation 1/2003. Any legal advice given by an in-house lawyer on competition law will not be protected from disclosure to the Commission.
However, it does not affect the scope of privilege as a matter of law in England and Wales. Under English law, the advice of in-house lawyers continues to enjoy ostensibly the same protection as the advice given by a lawyer in private practice. Such advice must be given in the capacity of legal advisor.
In English law, this principle protects the clients' fundamental right to communicate and seek advice from their lawyer freely and in confidence, regardless of whether that lawyer works in-house or not.
At first instance, the General Court found that internal company documents, even if they have not been exchanged with a lawyer or have not been created for the purpose of being sent to a lawyer, may nonetheless be covered by protection of confidentiality of communications between lawyers and their clients, provided they were drawn up exclusively for the purpose of seeking legal advice from a lawyer in exercise of the rights of defence.
Under EU law, undertakings which are subject to competition investigations are afforded certain procedural safeguards, termed collectively ‘the rights of defence.’ These include, for example, the right to know the case being alleged and the right to be heard. Privilege can only be claimed in relation to those documents that arise after the Commission has commenced its inquiry or investigation into alleged anti-competitive conduct or in relation to those earlier documents which have a clear relationship with the subject matter of the investigation
Any documents that contain advice that is covered by LPP should be clearly marked as such.
The Court does not draw a distinction between public and private employers. Given the extent to which public or quasi-public bodies operate on the market, there is a possibility that their conduct could be covered by the competition provisions of the EU Treaty, in the same way as that of a private operator. However, any activity should constitute that of an ‘economic operator'.
In-house lawyers will have to decide whether to instruct external lawyers based on a range of factors relevant to their business. The fact that any legal advice given by an external lawyer would be protected by LPP in any EU competition law investigation should be borne in mind.
Advice given by an in-house lawyer orally rather than in writing would not be discoverable by the Commission unless it has been committed to writing (through repetition in an email, for example). The Commission may, however, make requests for 'all necessary information' under Article 18 of the Modernisation Regulation and this might conceivably require a client to disclose the gist of in-house legal advice given orally.
At the time of writing, LPP applies to advice given by in-house and external lawyers during an investigation under the UK Competition Act 1998. It is the Society's current understanding that UK competition enforcement authorities, such as the Office of Fair Trading (OFT), will respect LPP when conducting an investigation under the EU competition rules.
Sections 30 and 65A of the Competition Act 1998 effectively apply the common law on privilege to documents requested by the OFT or other regulatory body in the course of competition investigations in England and Wales.
It is not yet clear what impact the Court's judgment will have on domestic litigation conducted in the Courts or the Competition Appeal Tribunal (CAT) in England and Wales. The Society doubts whether the judgment ought to have the effect of changing the common law on LPP applied by the Courts and CAT, since that is a matter for national procedural rules.
The EU's Court of First Instance gave a ruling in this case (T-253/03) in September 2007. Elements of this judgment were not appealed. As a result:
- Companies under investigation by the Commission do not have to reveal the contents of the documents in question when it presents Commission officials with relevant material to demonstrate their confidential nature justifying protection.
- Companies are entitled to refuse to allow Commission officials to take even a cursory look at the documents which they claim to be privileged.
- The Commission is not entitled to read the contents of the document before it has adopted a decision allowing the company concerned to refer the matter effectively to the General Court. The Court found that, should the Commission read the content of a confidential document, this is in itself a breach of the principle in question.
The Society will work with other business and legal professional bodies to convince other EU governments and the EU institutions of the merits of recognising LPP for the advice of lawyers practising in-house when they are regulated by a bar or law society in their home Member State.