In its Akzo Nobel judgement, issued on 17 September 2007, the European Court of First Instance has re-affirmed the long-standing rule that EC law does not confer legal privilege protection on communications between in-house lawyers and their internal clients (For further analysis of the implications of this case please click here). This can be contrasted with the position under UK law which recognises legal privilege as attaching to communications with both in-house and external lawyers.

While Akzo Nobel arose in the context of a competition investigation carried out by the European Commission (a so-called "dawn raid"), legal privilege, and the differing treatment of it under EC and UK law, can have an impact on M&A transactions which are the subject of either EC or UK merger control. Broadly, UK merger control will apply where the UK thresholds are met by the merging parties and EC merger control will apply where the EC Merger Regulation thresholds are met by the merging parties. Both EC and UK merger rules place extensive disclosure requirements on merging parties, and legal privilege, if correctly engineered, can be a useful tool to mitigate the disclosure risk. In particular, the continued lack of recognition of in-house legal privilege at the EC level (and therefore in relation to mergers that meet the EC thresholds) necessitates careful consideration at the early planning stage of any proposed merger.