In a judgment dated October 10, 2014, the French administrative Supreme Court (Conseil d’Etat) ordered the Prime Minister to repeal in part article R. 464-29 of the Commercial Code. The decision transferred de facto a part of the litigation relating to the decisions made by the chief case handler of the French Competition Authority (FCA) (Case Handler) relating to the protection of trade secrets to the jurisdiction of administrative courts.
The National Union of manufacturers of insulating mineral wool brought an action for annulment of the Prime Minister’s refusal to repeal article R. 464-29 of the Commercial Code before the Conseil d’Etat. This provision states that decisions of the Case Handler related to either protection or disclosure of trade secrets can be challenged only when an appeal on the merits is lodged against the FCA’s decision. In its judgment based on the right to judicial remedy of parties to proceedings before the FCA, the Conseil d’Etat overturns a part of the above described process.
From a practical stand point, when evidence or portions thereof are considered to contain trade secrets, the Case Handler can deny communication to or consultation of such evidence by a party unless the evidence in question is necessary for the exercise by another interested party of its rights of defence. The Conseil d’Etat has identified two situations depending on whether the Case Handler either:
- grants such protection, and therefore decides that certain parts of the investigation must be covered by trade secret or be maintained under such protection or
- permits access, either by denying that the relevant evidence is covered by the protection of trade secret or by granting a waiver of such protection.
Given the radically opposite effects of the two decisions, the Conseil d’Etat held that in the first scenario the decisions of the Case Handler are more likely to harm the adversarial nature of the proceedings brought before the FCA, rather than the trade secret itself. Therefore, any challenge on such grounds can be made in the action on the merits. Conversely, access to items which are deemed to contain trade secrets is harmful simply on the ground that they have been disclosed. Therefore, according to the Conseil d’Etat such claims are detachable from the main procedure, and must be subject to a separate appeal.
Since, on the basis of article R. 464- 29, the legality of the second type of decision could not be challenged independently from the substantive claim based on the evidence in question, the Conseil d’Etat ordered the Prime Minister to partially repeal the article within three months following the notification of its judgment. However, it should be stressed that, more than three months after the judgment, these provisions are still in force.
In the absence of a substitute provision, any decision refusing to grant or suppressing the trade secret protection can be challenged in first and last instance before the Conseil d’Etat. Conversely, the Paris Court of appeal will retain jurisdiction on decisions granting or maintaining protection of trade secrets. The judicial and administrative judges will therefore be required to harmonize their approaches, especially since no definition of trade secret exists in France to date. Competition newsletter – No 47 Norton