Conflicting legal professional privilege regimes
Legal professional privilege in practice
The director of the Competition Authority's legal department recently stated(1) that the authority will not align its legal professional privilege practice with the Akzo ruling of the European Court of Justice (ECJ).(2) According to the authority, denying legal professional privilege to in-house lawyers would harm their competitive position in regard to external lawyers.
Conflicting legal professional privilege regimes
The Dutch rules on legal professional privilege differ from the EU rules in the sense that in-house counsel admitted to the Bar – regardless of the country of establishment – enjoy legal privilege. In the Akzo ruling the ECJ confirmed the 1982 AM & S ruling,(3) clarifying that communications between in-house counsel and companies remain unprotected by legal professional privilege in European Commission investigations, regardless of whether the in-house counsel is a member of the Bar.
The Competition Authority is of the view that without legal professional privilege, an in-house lawyer would no longer qualify as a viable competitor for external lawyers,(4) and therefore it has retained legal professional privilege for in-house lawyers. As a result, conflicting legal professional privilege regimes remain after Akzo, depending on the capacity in which the authority conducts an investigation. For instance, if Competition Authority officials conduct investigations on the basis of Dutch competition law, Dutch national rules apply and correspondence with both in-house and external counsel is covered by legal professional privilege. The same applies to investigations by the authority at the request of the commission or a competition authority of another member state.(5) However, if Competition Authority inspectors merely assist commission officials, EU rules apply(6) and correspondence with in-house counsel has no legal professional privilege coverage. It is therefore imperative for companies to verify at the start of a dawn raid which authority is conducting the dawn raid and, more importantly, in which capacity the authority is conducting the raid in order to determine the level of legal professional privilege protection. In this context, the Competition Authority has provided the following overview.
| Competition Authority capacity | Legal base | Legal professional privilege |
| Authority conducts investigation under Dutch competition rules (Article 6/24 of the Competition Act) | Chapter 6 of the act | Yes |
| Authority conducts investigation under EU competition rules (Articles 101 and 102 of the Treaty on the Functioning of the European Union) | Articles 88 and 89 of the act | Yes |
| Authority assists European Commission in investigation under EU competition rules | Article 89b of the act | No |
| Authority conducts investigation at request of commission or other EU member state's competition authority | Article 89g of the act | Yes |
Legal professional privilege in practice
The Competition Authority's policy with regard to legal professional privilege protection is laid down in the Procedure in Relation to the Inspection and Copying of Analogue and Digital Data and Documents.(7) Companies can claim legal professional privilege for analogue documents during the on-site investigation. The Competition Authority official will want to verify this claim by skimming through the document. However, in case of a dispute on legal professional privilege coverage, or if the company refuses to allow authority officials to skim through the document, a 'sealed envelope' procedure similar to that under EU case law(8) applies. The authority official will place the document in a sealed envelope and hand it to an independent authority official, the legal professional privilege officer. This procedure also applies to digital data, unless it is technically impossible to separate the privileged digital data from the other data sets.(9) The company subsequently has 10 business days to substantiate its legal professional privilege claim to the legal professional privilege officer for the analogue and digital data in the sealed envelope. If the legal professional privilege officer is not convinced of the validity of the claim, the company has another five working days to provide a more detailed explanation. If the legal professional privilege officer remains unconvinced, the data and documents in question will be provided to the authority case team within five working days. In these five additional working days, the company can bring the matter before a court in interlocutory proceedings.
According to the Competition Authority, the legal professional privilege officer is a more efficient and less time-consuming solution to resolve legal professional privilege disputes than the European Commission's procedure, as the latter procedure can take years.(10) However, the major difference from the European Commission's procedure is that the authority's legal professional privilege officer – who is part of the authority and not an independent court body – will review the contents of the documents in the envelope before deciding on the legal professional privilege claim, whereas the envelope in the European Commission's procedure remains sealed during its decision on the validity of the legal professional privilege claim. It is only at the European General Court that the envelope sealed during a commission dawn raid will be opened to review the actual contents of the documents, unless the company decides not to challenge the commission's decision or the time period during which an appeal can be lodged expires. It seems that most companies are likely to prefer the latter procedure at an independent court over the Competition Authority's 'fast-track' option.
For further information on this topic please contact Jolling De Pree or Erik H Pijnacker Hordijk at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email ([email protected] or [email protected]).
Endnotes
(1) Speech of January 20 2011 by MTJP van Oers.
(2) Case C-550/07 P, Akzo Nobel Chemicals Ltd v European Commission.
(3) Case 155/79, AM&S, [1982] ECR 1575.
(4) Speech of January 20 2011 by MTJP van Oers.
(5) See Article 22(2) of Regulation 1/2003, OJ 2003, L1/1.
(6) See Article 20(5) of Regulation 1/2003, OJ 2003, L1/1.
(7) Procedure in relation to the Inspection and Copying of Analogue and Digital Data and Documents, August 16 2010.
(8) See Cases T-125/03 and T-253/03, Akzo Nobel Chemicals Ltd, [2007] ECR II-03525, in which the General Court ruled that during a dawn raid a company may refuse to allow European Commission officials to look at documents which the company considers confidential. Disputed documents should be placed in a sealed envelope. The contents of the documents should not be read by the European Commission until:
- it has adopted a decision allowing for disclosure of the information, which the undertaking can appeal to the General Court; and
- the limitation period for bringing an action against this decision has expired.
This procedure is also mentioned in the European Commission's draft Best Practices on the Conduct of Proceedings Concerning Articles 101 and 102 the Treaty on the Functioning of the European Union.
(9) Competition Authority officials use search terms to identify the digital data they will copy. An overview of the search terms used will be provided to the company. In addition, the authority provides the company with an overview of the digital data sets. The company subsequently has 10 working days to identify the data it considers to be covered by legal professional privilege.
(10) Speech of January 20 2011 by MTJP van Oers. In the European Commission's legal professional privilege dispute procedure the commission's decision allowing for the disclosure of the information can be appealed before the General Court.