On 10 October 2012, the Office of Fair Trading (“OFT”) launched a supplementary consultation in relation to its new draft guidance on the use of legal professional privilege (“LPP”) waivers in leniency applications. Following criticism of its proposed use of LPP waivers in response to its initial consultation (the “Initial Guidance”), the OFT in this new supplementary consultation is seeking views on removing the requirement of LPP waivers from leniency applicants as a condition of leniency.
The Initial Guidance
The Initial Guidance stated that LPP waivers would not be required in civil investigations. However, the Initial Guidance controversially stated that in order for leniency applicants to undertake their duty to fully cooperate with a situation, the OFT may need the applicants to waive LPP in respect of certain documents in criminal investigations. In particular, this waiver would mainly occur in relation to ‘first witness account material’. The Initial Guidance clarified the obligation by stating that a scenario could occur whereby the OFT are advised disclosure of documents is necessary to ensure criminal investigations can be undertaken successfully. In these situations full disclosure of the document would be required and a redacted copy would not suffice. Legal counsel were encouraged in the Initial Guidance to keep all documents which are likely to be needed in a criminal investigation separate from low risk documents.
Even though the OFT within the Initial Guidance states that disclosure of documents will not be required “as a matter of course”, the introduction of this new guidance has caused much controversy.
Arguably, LPP is a fundamental right that should not be fettered in any way. Whilst it is true that the OFT’s approach to evidence needs to satisfy the court, this approach would be to the detriment of the applicants’ right to obtain advice. In addition, the European Court of Human Rights in the case Niemitz v Germany suggested that a restriction of professional secrecy may be incompatible with Article 6 of the European Convention on Human Rights (“ECHR”). It is likely that compatibility with the ECHR would be tested in case law should the LPP waiver be incorporated into the OFT’s final guidance.
The main change included in the OFT’s supplementary guidance is the removal of the requirement of a waiver of LPP. The suggested new text states “the OFT will not as a condition of leniency require waivers of LPP over any relevant information in either civil or criminal cases”. Although this seems to be a U-turn on the part of the OFT, this will be subject to a more thorough examination of documents purporting to be covered by LPP in the way of a review by independent counsel, who will be instructed and selected by the OFT, with disclosure instructions sent to the leniency applicant after the review. If the parties do not cooperate and fail to disclose documents to the independent counsel, this could result in the removal of the leniency application based on the requirement for parties’ “complete and continuous cooperation”.
The proposed changes fall considerably short of the strict approach adopted under the Initial Guidance. Instead of a compulsory LPP waiver the OFT are proposing a stricter approach to reviewing LPP documents. The proposals would seem to satisfy critics of the Initial Guidance by upholding the right to LPP. However, there may still be some criticism of this new approach as it will remove the ability of litigants to hide documents behind the safety of LPP and instead the documents will face the scrutiny of “independent” counsel.
Within the consultation the OFT makes it clear that the supplementary consultation should not be seen as committing the OFT on a particular stance in relation to LPP. However, views in the initial consultation along with those received in the supplementary consultation will be considered when releasing the OFT’s final guidance. The OFT’s main concern is to ensure there is a system “capable of bringing effective prosecutions and respecting the rights of interested parties”, and it may be difficult to strike the correct balance between these usually conflicting interests. If the proposals contained in the supplementary consultation are incorporated into the OFT’s new guidance, only experience will tell how drastic the implications of the independent counsel will be to claiming LPP in future. It is likely, however, that it will be more difficult than at present.
The supplementary consultation closes on 14 November 2012.