European Court of First Instance Declines to Extend Antitrust Legal Privilege to In-House (and Non–EU-Qualified Outside) Counsel
On September 17, the European Court of First Instance handed down the long-awaited judgment in the Akzo Nobel (Akzo) case, upholding the Commission’s May 8, 2003 decision on the scope of legal privilege in the context of EU antitrust law. The court confirmed that communications between a company and its in-house counsel do not fall under the protection of legal professional privilege (LPP). In the EU antitrust field, LPP therefore continues to apply only to communications between the company and its external EU-qualified lawyers in relation to the defense of the company in a given case.
The Akzo case was initiated in February 2003, when the Commission conducted an investigation at Akzo’s premises, seeking evidence of anticompetitive practices. Akzo claimed that certain documents that the Commission intended to seize were protected by LPP. Akzo argued that these documents had been prepared for the purpose of seeking legal advice from external counsel in relation to a compliance program, or were other documents that constituted privileged communications with its in-house lawyer. The Commission demanded to take a “cursory look” at the documents to decide how to proceed. Specifically, the Commission decided on the spot that email communications with the in-house lawyer were not covered by LPP. The Commission put the other relevant documents into a sealed envelope, which it held separate from the rest of the file. Subsequently, the Commission issued a formal decision that the compliance program documents did not qualify for LPP.
The Court of First Instance concluded that the Commission had failed to follow the correct procedure when demanding to read the documents in question. According to the court, as long as the company can provide a reasonable explanation for why a document is privileged, and if a cursory look would reveal the content of the document, the Commission should place it in a sealed envelope immediately, without looking at the document. The Commission may take the sealed envelope with a view to a subsequent resolution of the dispute.
On substance, the court found that the Commission was correct in determining that the documents in question did not benefit from LPP. The court concluded that, in line with previous case law (the AM&S judgment of 1982), LPP does not extend to in-house counsel, but is limited to communications seeking advice on a given matter from external lawyers with EU qualifications. However, internal documents that have been created for the specific purpose of seeking advice from external lawyers may be protected by LPP. This is the case even if the documents have not yet been exchanged with the outside counsel, provided that the documents have been prepared in the exercise of the rights of defense. By contrast, documents prepared in the context of a general compliance program do not benefit from such LPP, as such programs often encompass information which goes beyond the exercise of the rights of defense.
For the purposes of EU antitrust law, the implications of this case are as follows:
- Documents prepared by, or exchanged with, in-house lawyers are still not protected by LPP.
- Internal documents that have been prepared in order to seek advice from EU qualified external lawyers may be protected by LPP, provided that their purpose is to exercise the company’s rights of defense.
- Internal documents, such as workbooks or summaries, are protected even if they are not intended to be exchanged with the outside counsel, if they are created for information-gathering purposes in order to explain the facts of the case to the outside counsel when seeking advice on a given matter.
- The mere fact that a document has been discussed with an external lawyer is not sufficient to give rise to LPP.
- A company may legally prevent the Commission from looking at a document until a formal decision regarding LLP has been adopted, subject to giving a reasonable explanation that the document is legally privileged.
For more information, please contact any of the following Morgan Lewis attorneys:
Izzet M. Sinan
This LawFlash is provided as a general informational service to clients and friends of Morgan, Lewis & Bockius LLP. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship.