The European Court of Justice ("ECJ") has confirmed that communications between in-house lawyers and their employer do not attract legal professional privilege ("LPP") for the purposes of a European Commission competition investigation.

The Decision

The case in question involved Akzo Nobel Chemicals Limited ("Akzo"). The company had been the subject of an investigation by the European Commission ("the Commission") into alleged anti-competitive behaviour and, as part of the investigation, the Commission had requisitioned items of correspondence (including handwritten notes and emails) between an Akzo in-house lawyer and other employees. Akzo objected to their release, arguing that LPP attached to these documents. The ECJ, however, held that LPP did not apply.

LPP is a legal principle in both Scots and English Law, which is designed to protect lawyer/client communications. In the context of a competition investigation (whether by the EU or UK authorities), the authorities cannot require you to disclose communications which are subject to LPP.

Communications with in-house lawyers, however, have always been more vulnerable following the earlier ECJ case of AM&S Europe v. European Commission. This earlier case held that for LPP to attach: (1) the communications must be connected to the client's right of defence and (2) the communications must be between the client and an independent lawyer.

The ECJ simply reconfirmed this in Akzo, stating that in-house lawyers are not considered fully independent because they are subject to their employer's commercial strategies (by being economically dependent on the company as their employer). In addition, the ECJ noted that in-house lawyers, as employees, may carry out tasks outwith the provision of legal services which further affect their independence (for example, the in-house lawyer in Akzo was also the company's 'competition law co-ordinator').

What to Note

The main point to note is that businesses can be made to disclose communications between in-house lawyers and others in the context of a European Commission competition investigation. It is important to note that the Akzo decision does not change the law in this area - it simply reaffirms it. Accordingly, if your disclosure practices are already compliant with the law then they will still be compliant.

A further, important, point for UK businesses to note is that whilst the decision in Akzo means that communications between in-house lawyers and employees in the context of an EC competition investigation are not legally privileged, this principle does not extend to OFT investigations. Communications with in-house counsel will still attract LPP in the context of an OFT investigation under the UK competition rules.

Finally, the ECJ's scepticism in Akzo as to the independence of in-house lawyers, and the potential that this raises for LPP to be eroded further in the future, will no doubt be of some worry to businesses and in-house lawyers alike.

The case of Akzo Nobel Chemicals Limited and Akcros Chemicals Limited v. Commission of the European Communities can be found here.