THE INDIAN PERSPECTIVE OF ATTORNEY CLIENT PRIVILEGE OVER DOCUMENTS SEIZED DURING RAIDS UNDER THE COMPETITION ACT, 20021
The concept and the usage of 'Attorney client privilege' material/communication, specifically, post dawn raids have been established across the globe under antitrust investigations. However, the Indian regime has not yet laid down any principles.
Powers of the Director General under the Competition Act, 2002
Under Section 41 of the Competition Act, 2002 (Act) the Director General (DG) has been provided with the powers to enquire/investigate into anti-competitive agreement/abuse of dominance or regulating any combination, including the power to carry out raids.
Dawn Raids can be carried out where, during its investigation the DG apprehends that an attempt may be made by the parties in altering, hiding, destroying, mutilating, falsifying or tampering with the physical documents as well as the documents stored in desktops/laptops/servers/phones which would be irretrievable in due course. In order to carry out the dawn raid, the DG must file an application before the Chief Metropolitan Magistrate, New Delhi and obtain a warrant.
Dawn raids are conducted in a covert manner leaving no scope for the party under investigation to scuttle the search in any manner and not to give any opportunity to 'sanitize' the records. Therefore, one has to be cautious and in the event that a 'dawn raid' takes place, the officers are under an obligation to cooperate/assist the investigator failing which penal provisions may be triggered.
Dawn raids conducted by the DG
Till date the DG has conducted five dawn raids:
- In September 2014 dawn raid was conducted in the offices of UK construction equipment manufacturer JCB India in relation to an information filed by Bull Machines alleging abuse of dominant position in the market of backhoe loaders.2
- In August 2016 the offices of Eveready Industries India Limited, Indo National Limited and Panasonic Energy India Co. Limited were raided in relation to allegation of fixing prices of zinc carbon dry cell batteries, limiting supplies of batteries and dividing geographical markets and consumers amongst themselves.3 The matter was taken up suo-moto by the CCI pursuant to an application filed by Panasonic Energy in May 2016 under the CCI's Lesser Penalty Regulations, 2009. Vide its order dated 19.04.2018, the CCI found Eveready, Indo National, & Panasonic facilitated by Association of Indian Dry Cell Manufactures had indulged in anticompetitive conduct of price coordination, limiting production/supply as well as market allocation in contravention of section 3 of the Act and imposed a penalty on Eveready, Indo National and Panasonic at the rate of 1.25 times of their profit for each year from 2009-10 to 2016-17 and the association at the rate of 10 percent of average of its receipts for preceding three years.
- In November 2018 dawn raid was conducted at the premises of United Breweries, Denmark's Carlsberg and Anheuser-Bush In Bev in relation to the allegation of price fixing of beer in Indian markets. The raid was reportedly triggered by one of the cartel participants who had filed a leniency application before the CCI.4
- In March 2019 the offices of global commodities traders namely Glencore Agriculture India Pvt. Ltd., Export Trading Group, and Edelweiss group were raided by the DG office in relation to an allegation of cartel amongst the companies for discussing prices of pulses while importing and selling them in the India at higher prices during the years 2015 and 2016 when there was severe shortage.5
- In July 2019 the local unit of French firm Mersen SA and Assam Carbon Products Limited were raided based on a complaint filed by Indian Railways in relation to allegation of bid rigging over prices of carbon brushes procured by India Railways.6
- Finally, in September 2019 the DG raided the premises of four companies namely Shivalik Agro Poly Products Ltd, Climax Synthetics Private Ltd., Arun Manufacturing Services Private Ltd. and Bag Poly International Ltd. for allegedly colluding to rig bids for covers/tarpaulin sold to Food Corporation of India.7
What all can the DG seize during the dawn raid?
During such raids, the DG can seize any books, notes, relevant minutes of meetings, attendance registers, any email communications, WhatsApp communications or any other relevant documents available either in physical form or in electronic/digital form in hard disks of any computer/laptop/server/electronic storage device including CDs, DVDs, disks, tapes and pen drives, personal communication devices such as mobile phones, iPad, pager, electronic diaries etc which may helpful to the DG for the purpose of the investigation. The list is just an illustrative one and the DG may seize any other document which might be relevant for the investigation.
Whether the DG can seize 'Attorney Client Privileged' documents?
According to the search warrant the DG has the right to search the premises of the parties being investigated thoroughly and seize the documents relevant to him which might even include communications that may qualify as Attorney client privileged. However, neither the Act nor the Regulations states as to how the DG has to deal with such documents/communications when conducting dawn raids.
Out of the five dawn raids conducted by the DG, the CCI has passed an order under section 27 of the Act only in one of the cases being Suo Motu Case No. 02 of 2017 in Re Anti-competitive conduct in the dry cell batteries market in India and the rest are pending investigations. In the said order of the CCI there is no mention of any issues relating to Attorney client privilege.
The Evidence Act, 1872 on Attorney Client privilege:
As mentioned above, the Act has no provision relating to privileged documents, however Section 126 of the Evidence Act, 1872 states that "no barrister, attorney, pleader or vakil shall at any time be permitted, unless with his client's express consent, to disclose any communication made to him in the course and for the purpose of his employment as such barrister, pleader, attorney or vakil, by or on behalf of his client, or to state the contents or condition of any document with which he has become acquainted in the course and for the purpose of his professional employment, or to disclose any advice given by him to his client in the course and for the purpose of such employment: Provided that nothing in this section shall protect from disclosure—
(1) Any such communication made in furtherance of any [illegal] purpose; [illegal] purpose;"
(2) Any fact observed by any barrister, pleader, attorney or vakil, in the course of his employment as such, showing that any crime or fraud has been committed since the commencement of his employment. It is immaterial whether the attention of such barrister, [pleader], attorney or vakil was or was not directed to such fact by or on behalf of his client.
Further, Section 129 deals with confidential communications with legal advisers. The said section reads as "No one shall be compelled to disclose to the Court any confidential communication which has taken place between him and his legal professional adviser, unless he offers himself as a witness, in which case he may be compelled to disclose any such communications as may appear to the Court necessary to be known in order to explain any evidence which he has given, but no others.
The position across the world
Jurisdictions like the United States of America, European Union, and Hong Kong, to name a few have recognized the importance of Attorney client privilege during dawn raids. An analysis of the best practices is discussed below:
The position in the US is slightly different since they recognize two doctrines, namely, Attorney Client Privilege and Work Product Privilege. Attorney Client Privilege covers oral and written communications made between clients and their internal & external counsels for seeking and providing legal assistance8. However, Work Product Privilege is broader since it covers documents which are prepared in anticipation of litigation9.
The United States Supreme Court in Upjohn v. US10 has stated that "the purpose of privilege "is to encourage full and frank communication between attorneys and their clients, and thereby promote broader public interests in the observance of law and administration of justice. The privilege recognizes that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer's being fully informed by the client." Further the Supreme Court explained that the privilege protects "not only the giving of professional advice to those who can act on it, but also the giving of information to the lawyer to enable him to give sound and informed advice."
In order to establish the attorney-client privilege in the US, four elements are necessary. Firstly, the person or entity asserting the privilege must be a client; Secondly, the person must be licensed as an attorney to whom the communication is made; Thirdly, confidentiality must be maintained in communication. And Fourthly, the communication must be made for the purpose of seeking legal advice or representation11
According to the Antitrust Division Manual, search warrants are executed by Federal Bureau of Investigation agents12 and personnel from the Antitrust division investigating team are not allowed to be present during the search and seizure operations. In case the FBI agents come across any document which might qualify under 'Attorney client privilege', they are mandated to stop reviewing the said document and keep it separately from the material which is being seized. Post the search and seizure operations FBI agents are instructed to hand over the said documents to the Antitrust Division Prosecutors who are not part of the underlining investigating team. The Team (appointed prior to the search and seizure operations) which is designed to minimize the intrusion into privileged documents. 13
Post the search and seizure operations, the Team would review the said documents and asses the legal privilege claims. In addition to the aforesaid, the Team would also invite the company to raise legal privilege claims on the documents seized during the search operations. Further, any documents acknowledged by the company as legally privileged is separated from the documents seized and the veracity of the said claims is determined by the Team.
In case the Team discovers that the assertions made by the company are valid then the said documents are returned to the company without being shown to the investigating team. However, in case the Taint Team views the assertions by the company are not valid, it would communicate its decisions to the company's counsel.14
In the European Union 'Legal Professional Privilege' (LPP) protects the communication between the lawyers and their respective clients. This privilege was formulated in the case of AM & S Europe Limited v. Commission of the European Communities15 wherein the European Commission (Commission) decided to investigate AM & S Europe Limited in relation to competitive conditions concerning the production and distribution of zinc metals. The Commission directed AM & S to provide certain documents and this was denied by the company by claiming that the documents are covered under legal privilege. The Court of Justice held that the confidentiality of written communications between lawyers and clients should be protected at community level. The aforesaid view was affirmed in a refined manner by the European Court of Justice in the case of Akzo Noble chemicals and Akcros Chemicals v. Commission16 wherein the Commission had conducted a dawn raid in the offices of Akzo Noble chemicals and Akcros Chemicals in relation to a pending investigation. During the dawn raid, the officials took copies of several documents including email communication between Akcros Chemicals General Manager and Akzo's coordinator for competition law. Both the companies challenged the Commission's decision before the European General Court for seizing emails that are subject to legal professional privilege. The European General Court rejected the said plea by the companies. The said order was challenged by the companies before the European Court of Justice who upheld European General Court's decision. The ECJ stated that the protection of LPP is subject to the following cumulative conditions:
a) The exchange with the lawyers must be connected to the client's rights of defense; and
b) The exchange must emanate from 'independent lawyers' that is to say 'lawyers who are not bound to the client by a relationship of employment.
Under Hong Kong Law, LPP applies to communications between lawyers and the clients for the purpose of obtaining advice. The said privilege also extends to communications with in-house counsels who are providing independent legal services. The Hong Kong Competition Commission has published guidelines namely 'Investigation powers of the Competition Commission and Legal Professional Privilege' wherein it ensures that LPP issues arising in the context of dawn raid are dealt impartially and expeditiously. The Commission seeks ot achieve this by: (a) minimizing the risk of privileged material being inadvertently read by Commission staff involved in the investigation; (b) ensuring that any disputed material seized during a search is properly identified, isolated and securely stored pending resolution of the dispute; (c) endeavoring to ensure that disputes relating to LPP are resolved by agreement between the commission and the investigated parties to the extent possible; and (d) ensuring the prompt return of any material or information to its rightful owner as soon as it is determined that the material or information is protected by LPP. 17
In Mexico there is no specific law regarding professional privilege before Competition authorities. However, Article 7318 of the Federal Law on Economic Competition19 states that the investigative arm of Federal Economic Competition Commission (COFECE) can requisition any information or documents related to their ongoing investigations. In furtherance to the aforesaid, Article 75 of the Federal Law on Economic Competition states that COFECE may order the performance of on-site inspections/dawn raid for obtaining the information and documents related to the investigation. However, it is completely silent on usage of communications between lawyer and the client. Recently, COFECE published rules for handling attorney-client communications20 which are substantially similar to the ones published by Hong Kong.
Competition authorities across the globe have been dealing with attorney client privilege for several years. Under such circumstances, the CCI should adopt the best practices in other jurisdictions while dealing with issues relating to Attorney Client Privilege communications/documents procured during dawn raid, and publish appropriate guidance on the issue.
1 Nidhi Singh Prakash is a Managing Associate in the Competition Law Practice Group at Luthra and Luthra Law Offices. She graduated from NALSAR University of Law, Hyderabad and did her LLM from George Washington Law School, Washington DC. She regularly represents major international and domestic clients in several on-going conduct related investigations/inquiries before the Competition Commission of India (CCI), National Company Law Appellate Tribunal (NCLAT), Delhi High Court and Supreme Court of India in relation to anti-competitive practices and abuse of dominant position (cement, real estate, steel, telecommunication, sugar, financial institutions, heavy machinery, tyres, explosives, paper, glass, cables, pharmaceuticals, aviation, chemicals, film production & distribution, bath fittings and IT/ITES sectors).She can be reached at email@example.com.
8 Fisher v. United States, 425 U.S. 391, 403 (1976)
9Fed. R. Civ. P. 26(b)(3); United States v. Nobles, 422 U.S. 225, 237-38 (1976)
10 499 U.S. 383,389 (1981).
12 Antitrust Division Manual, Fifth edition, available at https://www.justice.gov/atr/file/761166/download
14 "Dispelling the perception that Legal Privilege impedes Antitrust Enforcement- the US Experience:", Scott D Hammond, Competition Law International, Vol.11 No.2, October 2015 Available at: https://www.gibsondunn.com/wp-content/uploads/documents/publications/Hammond-Dispelling-The-Perception-That-Legal-Privilege-Impedes-Antitrust-Enforcement%20-CLI-10-2015.pdf
15 Case C-155/79, Order dated May 18, 1982.
16 Case- 550/07, Order dated September 14, 2010.
18 Article 73 of the Federal Economic Competition Law: The Investigative Authority may require any individual or undertaking to submit the information or documents deemed necessary in performing its investigations and shall state the legal status the individual or undertaking have under the investigation, either as a defendant or as a collaborating third party. Moreover, it may summon individuals or undertakings related to the facts for interviews, as well as order and conduct on-site inspections, regarding locations where there may be elements to be included in the substantiation of the investigation. The individuals, undertakings and Public Authorities shall have a ten-day period to submit the information and documents required by the Investigative Authority. This period may be extended for an additional ten-day period at their request, if the complexity and volume of the information requires the extension.
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