Court of First Instance of the European Communities

Before JD Cooke, President, R. Garcia-Valdecasas, I Labucka, M Prek, V Ciuca

Judgment delivered 17 September 2007

The facts

In February 2003, the European Commission carried out an investigation based on the suspicion of anti-competitive practices at the premises of Akzo Nobel Chemicals Limited (“Akzo”) and Akcros Chemicals Limited (“Akcros”) in Eccles, Manchester. Such investigations are carried out pursuant to what is termed “Regulation 17”: procedures and powers given to the European Commission to deal with anti-competitive conduct under the First Council Regulation implementing Articles 81 and 82 of the EC Treaty. Articles 81 and 82 of the EC Treaty deal with anti-competitive behaviour, for example cartels and abuse of a dominant position. During the investigation the Commission took copies of documents. Akzo and Akcros said that certain documents were likely to be covered by legal professional privilege (“LPP”) and would therefore be confidential.

A dispute arose between Akzo and Akcros and the Commission as to whether five documents were subject to LPP. The Commission rejected a request by Akzo and Akcros for the return of the documents and for confirmation by the Commission that all copies of those documents in its possession had been destroyed. Accordingly, Akzo and Akcros referred the matter to the Court of First Instance of the European Communities. Two of the documents were emails, exchanged between Akcros’ general manager and “Mr S”, Akzo’s coordinator for competition law. Mr S was enrolled as an Advocaat of the Netherlands Bar and, at the material time, was a member of Akzo’s legal department, employed on a permanent basis.

A European case called AM & S v Commission1 is authority that, in order to establish privilege, Akzo and Akcros had to show that (i) the communications were made for the purposes of exercising client’s rights of defence and (ii) that the communications emanated from independent lawyers. One of the questions that arose here was what constitutes an “independent lawyer”. Akzo and Akcros contended that AM & S could be interpreted to mean that in-house lawyers were “independent” and that, in the alternative, the law should be widened on this point in any event given that many Member States recognised LPP for the communications of in-house lawyers. The Commission disagreed, stating that properly interpreted AM & S excluded in-house lawyers as “independent” and that there were still a number of Member States where being employed and being a member of the relevant regulatory body (i.e. a bar council or law society) was incompatible.

Issues and Findings

Are in-house lawyers deemed to be “independent” for the purposes of anticompetitive investigations such that their communications are subject to LPP?

No.

Commentary

During the past eighteen months, the construction industry has become more familiar with “dawn raids” to investigate suspected anti-competitive practices. In this context, it is important to know whether or not communications of in-house lawyers (i.e. advice 1 [1982] ECR 1575 on potentially anti-competitive practices) will be covered by LPP.

The question of privilege attaching to communications with in-house lawyers in any case is important, hence the intervention of various international bar councils and law societies in this case. Whilst in the UK most in-house lawyers are bound by the standards set by the Solicitors Regulatory Authority, the Court’s view was that not all Member States had analogous restrictions. Accordingly, in order to prevent abuse of any kind, the European Commission and the European Court will apply a restrictive approach to claims of LPP attaching to internal communications of in-house lawyers.