On 10 October 2012 the OFT published a supplementary consultation on draft revised guidance concerning applications for leniency and “no-action” in cartel cases. The OFT is asking for views on a proposed policy of not requiring that parties applying for leniency waive their right to Legal Professional Privilege (“LPP”). Instead, it is proposing to take advice from independent counsel and/or the courts on whether LPP is available to applicants when it requests certain documents, on a case-by-case basis.
The leniency regime guarantees reduced penalties to applicants as a reward for divulging evidence and cooperating with the OFT’s investigation. LPP, meanwhile, is a form of privilege, which allows parties to hold back certain documents and correspondence that would otherwise have to be disclosed to a third party and/or the courts or authorities in proceedings. LPP protects documents and communications produced in the course of providing legal advice and/or preparing for a court case or regulatory investigation.
The OFT’s new draft leniency guidance was first consulted on this time last year. The OFT confirmed that it was considering adopting a practice of requesting that applicants for leniency waive the benefit of LPP in relation to certain criminal cartel investigations. Following this initial consultation the possibility of requesting mandatory waivers of LPP was left open. The OFT considered that it may wish to require disclosure of certain documents from leniency applicants so it could review them in building criminal cases against alleged wrongdoers, as part of an attempt to bolster its prosecutorial powers under the Enterprise Act 2002. The proposed waiver seemed particularly geared towards obtaining access to the first account given by witnesses detailing their involvement in cartel activity, which is often provided in an interview with solicitors.
However, the OFT is now consulting on not requiring waivers of LPP, even if the case involves a criminal investigation. This comes as a result of some important concerns raised in the original consultation, namely that:
requiring a waiver of LPP could significantly de-incentivise leniency applications, which have been integral towards gathering evidence for bringing cartel cases;
the move could undermine the fundamental right of citizens to LPP (enshrined, for instance, in the European Convention on Human Rights); and
waiving privilege over leniency documents could have serious implications for evidence in related civil proceedings. It may make leniency applicants more vulnerable to private actions for damages.
Alongside the proposed policy of not requesting waivers, the OFT is also inviting comments on a parallel proposal to seek advice from independent counsel (and, where appropriate, guidance from the courts) on whether a leniency applicant’s claims to LPP are merited. This would aim to ensure that whilst not having the option of requesting a waiver of LPP, the OFT could more intensely scrutinise questions of privilege. This would maximise access to documents and ensure that the leniency regime is not watered down.