In a judgement dated 14 September 2010 in the matter
Akzo Nobel Chemicals and Akcros Chemicals/Commission (Case
C-550/07 P), the European Court of Justice (ECJ) has reconfirmed
that the internal correspondence with in-house counsel/staff
lawyers within a company is not protected by the confidentiality
extended to communications between clients and lawyers (legal
privilege). This judgement conclusively establishes that companies
will have to tolerate investigations and, where necessary, the
securing of correspondence exchanged between staff lawyers and
company employees by the European Commission, if the purpose of
such investigations is to procure evidence of unfair competitive
practices.
The status quo in European law
In a judgement of 18 May 1982 in the matter AM & S/Commission,
the ECJ had already made the protection of the confidentiality of
communications between clients and lawyers in proceedings before
the European Commission dependent upon two conditions: firstly, the
correspondence with the lawyer must be in relation to the
client's right to defence. Secondly, this
correspondence must originate from external lawyers who are
enrolled as members of a bar or law society in a Member State of
the European Union. The ECJ based its conclusions on
corresponding common legal principles and traditions of the Member
States.
In its most recent judgement, the ECJ has clarified once again that
an in-house counsel who occupies the position of an employee in the
company – even if he is enrolled as a member of a bar or
law society in one or several Member States - does not enjoy a
level of professional independence comparable to that of an
external lawyer on grounds of his economic dependence and close
ties with his employer. For this reason, the ECJ's case law
also does not violate the principle of non-discrimination, as a
staff lawyer's position fundamentally differs from that of an
external lawyer. Moreover, and as expressly emphasised yet again by
the ECJ in its judgement, the legal systems of the Member States do
not show any prevailing trend towards protecting the
confidentiality of internal communications with staff lawyers
within the company or group, with the result that a further
evolvement of the case law to extend the protection of
confidentiality to communications between staff lawyers and company
employees already lacks justification on grounds of European
law.
Pursuant to the latest judgement of the ECJ, it is now conclusively
established that the use of confidential documents as evidence in
antitrust proceedings of the European Commission is only
impermissible if
- this concerns correspondence with an external lawyer who does not occupy the position of an employee of the company in question and who is enrolled as a member of a bar or law society in a Member State of the European Union, and
- the correspondence with the lawyer is related to the client's right to defence. The ECJ understands such correspondence as being all correspondence exchanged between the external lawyer and the company prior to the opening of the proceedings and after the opening of the administrative proceedings, and in connection with the subject matter of the proceedings or in reference to the ongoing proceedings (this also includes documents containing the wording or results of legal advice that was given by the lawyer over the telephone).
Scope of applicability of the case law of the ECJ
The ECJ's case law on the legal privilege not only relates to
investigative proceedings regarding horizontal hardcore cartels
(e.g. price-fixing agreements, market divisions), but also covers
all review proceedings concerning violations of antitrust law, i.e.
in particular also abuse proceedings and proceedings concerning the
prohibited consummation of a transaction prior to merger control
clearance.
Practical consequences
Since the most recent judgement of the ECJ simply confirms
established previous case law and administrative practice, from the
perspective of the legal advisors there should be no changes
whatsoever as a result of the judgement. In cases where there is an
obvious risk of incurring a fine, staff lawyers are advised to give
internal advice orally, to the extent possible, and to consult
external lawyers at the earliest possible opportunity.
No legal privilege in national antitrust proceedings of the
German Federal Cartel Office
With regard to national antitrust proceedings of the German Federal
Cartel Office [Bundeskartellamt], please note that German law does
not provide for a comparable general and comprehensive protection
of lawyers' correspondence to that applied in proceedings of
the European Commission. Documents found on the business premises
of the relevant company or on the business and/or private premises
of the accused party can also be secured or seized if they are
correspondence with an external lawyer.
This is not the case only once an external lawyer has been
appointed as defence lawyer in an administrative offence
proceeding. In this case, the authorities are barred from accessing
any correspondence with the defence lawyer in said proceedings as
of the time of the external lawyer's appointment as defence
lawyer ("defence lawyer privilege"). The authorities are
then not even allowed to seize this correspondence and use it as
evidence if it is in the custody of the accused party.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.