In 2014, in order to address the difficulties that the antitrust authorities had experienced for many years in obtaining actionable information and documents evidencing cartel activities, Congress decided to grant greater powers to the Federal Economic Competition Commission (“FECC”) and to the Federal Institute of Telecommunications (together with the FECC, the “Agencies”) to carry on investigations with grater effectiveness.
Among these new faculties one of the most noteworthy was reinforcing the authority of the Agencies to perform verification visits (a.k.a. dawn raids) without the necessity of having an ex ante authorization from a federal judge, and without first identifying which information exactly they were seeking. Simultaneously, through a Constitutional amendment, it was established that the decisions adopted by Antitrust Agencies might only be challenged through constitutional or “amparo” lawsuits. Also, it was established that any and all intra-procedural decisions of the Agencies might only be challenged after the relevant case was finally resolved, and would have to be done through a legal challenge against the final resolution issued by such Agencies.
Additionally, the new Federal Law on Economic Competition (“FLEC”) granted the Agencies the authority to use any piece of information obtained in the course of their investigation (for example, through a dawn raid), with no exceptions. For example, communications exchanged between the entity under investigation and its external legal counsel were not excluded.
As general rule, in Mexico, the information given to a lawyer by its client is subject to professional secrecy (the duty of the lawyer to keep all information provided by its client as confidential). However, this information is not legally protected and is subject to be discoverable by the governmental authorities (for example, by means of a dawn raid) and may be used in trial as evidence to prove conducts or omissions. This results from the fact that in Mexico no law regulates or recognizes legal privilege as such except, in a limited form, in criminal cases.
This issue became a rather sensible topic recently when the FECC raided the corporate office of an important food distributor in Mexico while investigating cartel practices. During the dawn raid, along with other pieces of information, the FECC took a freshly delivered audit report prepared by the external legal advisors of such company and precisely related to the conducts under investigation.
The company’s legal advisors went to court seeking to prevent the FECC from analyzing and using the information included in such audit report in its investigation, and generally in the administrative trial-like procedure the FECC might subsequently initiate against the company, after the investigation concluded. In order to succeed in these efforts, the lawyers for the company under investigation had to overcome several legal obstacles.
The first one was getting the “amparo” claim filed by the external legal advisors of the company under investigation, admitted by the Specialized Federal District Judge, even if a final resolution from the FECC had not been issued yet, as mandated by the Constitution.
In the first instance the Federal District Judge dismissed the amparo claim. However, upon review, the First Specialized Collegiate Circuit Tribunal (“Circuit Court”) decided, after pondering the right to an effective and impartial administration of justice, set forth in article 17 of the Constitution, with the provision established in article 28, item VII of the Constitution (whereby it is stated that the only final resolutions of the FECC are subject to be challenged by means of an amparo claim), that (i) the external legal advisors of the company had legal standing to start an amparo claim and (ii) that the amparo claim should be admitted.
This founding came from the fact that the amparo claim was filed precisely by the external lawyers of the company and the Circuit Court decided that, in order to prevent the external lawyers from being left in a state of defenselessness regarding their obligation to protect and defend the professional secrecy to which such advisors were bound (as they were not an economic agent under investigation, in the administrative investigation initiated by the FECC), the obligation to wait for the final resolution of the FECC was not applicable and thus the amparo lawsuit should be admitted.
Once the admissibility issues were resolved, the Circuit Court had to determine if Mexican Law protected the communications exchanged between the company and its lawyers in antitrust cases.
As mentioned above, the Mexican legal framework only recognizes the existence of legal privilege in criminal cases. This only reference is set forth in article 16 of the Constitution and establishes that communications exchanged between defense lawyers and their clients, in criminal cases, are not to be extracted, taped, wired, stored or used in any way.
However, there are no laws expressly recognizing the existence of a legal privilege covering the communications exchanged between a lawyer and its client in antitrust cases. Thus, at a first sight such information was not protected from being discovered and used by the FECC.
Notwithstanding the above, while reviewing the case the Circuit Court issued a non-binding interpretative criteria (isolated thesis) titled “Secrecy of the communications between a lawyer and its client. It is applicable for the administrative procedures of responsibility in the area of economic competition;” whereby it established, based on a prior judicial criterion from the Mexican Supreme Court, that legal privilege shall be extended to those communications exchanged between a lawyer and a client facing liability administrative procedures. This, because (i) such administrative procedures are similar in the essence to criminal procedures and therefore, criminal procedural principles shall be applied by analogy, including those relating to due process, non-incrimination, the assistance of a professional defense lawyer and the professional secrecy and (ii) it is an essential condition for the professional secrecy to occur the existence of an strict confidentiality of the information given by the client to the lawyer (as this would be the only way to ensure that a client would provide its lawyer with all information necessary for its defense).
Additionally, the Circuit Court issued second non-binding interpretative criterion titled “Communications between a lawyer and his client under a procedure initiated by the economic competition authorities, shall not be taken into account as a result from the authorities’ verification [visits], except when there is evidence that may implicate the lawyer as a co-participant in the illicit conduct,” where it was established that communications between clients and their independent lawyer are covered by legal privilege unless the latter is considered as a co-participant.
Even though the previously mentioned theses are not legally binding, they serve as a strong interpretative criterion that shall be taken into consideration by the Judiciary in future cases.
Finally, the Circuit Court issued a last non-binding interpretative criterion titled “Communications between a lawyer and its client derived from an economic competition procedure. Effects of granting the amparo when it is concluded that the corresponding authorities extracted information without neither adopting immediately the measures of its storing nor ordering its exclusion from the investigation materials”. Through this thesis, the Circuit Court expressed that, if Agencies do not comply with their obligation to preserve the privileged information as confidential, such authorities must destroy the information and are barred to use such information at any future point. Additionally, it stated that all actions taken by the Agencies as a consequence of having seen and used the privileged information, shall be declared null.
Therefore, in that particular case the Circuit Court found that the legal privilege should be extended to cover the communications exchanged between a client and its “independent lawyer”, and ordered the destruction of all privileged information discovered by the FECC, and overruled all acts of authority deriving from the Agency’s knowledge of privileged information.
Even though this is the first case dealing with legal privilege in antitrust matters in Mexico and considering that the effects of amparo resolutions are personal, it has set a very important precedent in our legal system. Also, this case has given light to a very under developed and under studied field in Mexican law. In summary, this Circuit Court considered that legal privilege shall be extended in antitrust procedures:
- To communications exchanged between the client and its independent lawyer.
- Within “administrative procedures of responsibility” whereby the analogy between the principles of criminal laws and administrative law may be applied.
- When the lawyer is acting as a defense lawyer would do in criminal cases, as strict confidentiality is required in order for the client to be able to communicate with its lawyer all necessary elements, in order to have a proper and professional legal defense.
- Where is no evidence that the independent lawyer acted as co-participant in the anticompetitive conduct under investigation.
This being said, it can be concluded that the legal certainty of privileged information in Mexican antitrust law, is still rather uncertain and needs to be further developed in the future by competent courts. For example, to determine if legal privilege will also be extended to cover in-house counsels, or if it will also cover the communications between lawyers and its clients when an investigation has not been launched yet (i.e. within due diligence procedures or within internal investigations) or even to know if legal privilege will also cover communications between lawyers and its clients in non-prosecutorial procedures (i.e. M&A’s and merger reviews).