The Advocate General has confirmed that legal professional privilege does not protect communications between in house lawyers and their employers in EU competition investigations.

Background

The EU law principles relating to legal professional privilege were developed by the European Court of Justice (ECJ) in the AM&S case. The ECJ held that privilege for written communications between lawyers and clients only applied if the following conditions were met:

  • The communications in question were made for the purposes and in the interests of the client’s rights of defence.
  • The communications must be with an independent lawyer, that is, someone not bound to the client by a relationship of employment.

The second condition precluded legal professional privilege applying to communications between in house lawyers and their client employers.

Facts

The case concerned Akzo Nobel Chemicals Limited and Akcros Chemicals Limited. The European Commission began an investigation into an alleged cartel in the plastic additives market. It raided the UK premises of Akzo and Akcros. The companies objected to the Commission taking two particular sets of documents arguing that they were covered by legal professional privilege. Two of the documents were emails exchanged between Akcro’s general manager and Akzo’s in house lawyer. The Commission kept these emails in a sealed envelope and the court was asked to determine whether they were covered by legal professional privilege. The Commission’s investigation continued in the meantime and it eventually fined 24 plastics additives producers a total of €173,860,400. Akcros Chemicals Limited was amongst the companies fined, as were several companies in the Akzo Nobel Group although not Akzo Nobel Chemicals Limited. The Commission did not rely on the disputed emails in imposing the fines.

The question of legal professional privilege was referred to the Court of Justice of the European Union (CJEU).

Decision

The Advocate General gave her preliminary opinion to guide the CJEU in reaching its decision. She said that legal professional privilege did not extend to communications between in house lawyers and their client employers for the purpose of EU competition investigations.

Her reasoning was that in house lawyers were not independent lawyers as required by the second condition in AM&S because they were in a relationship of employment with the client. They were economically dependent on their employer and had a stronger personal identification with them. In addition, there was a danger that an in house lawyer would encounter conflicts of interest between their professional obligations and the aims and wishes of his/her employer. This would make it more difficult to effectively oppose any abuses of legal professional privilege.

“Such abuse may for example consist in handing over evidence and information to an undertaking’s legal department under cover of a request for legal advice, for the sole or primary purpose of preventing the competition authorities from gaining access to the evidence or information. At worst the functional departments of an undertaking may be tempted to misuse the company’s internal legal department as a place for storing illegal documents such as cartel agreements and records of meeting between parties to those cartels..”

It made no difference that in house lawyers were members of national professional bodies, as this did not guarantee any independence from their employers. Neither did it make any difference that the Regulation modernising European competition proceedings (1/2003) created a greater need for internal legal advice to prevent competition breaches and put in place compliance programmes. This was not a reason to extend legal professional privilege to this advice.

The Advocate General also felt that the fact that legal professional privilege did not extend to communications with in house lawyers in EU competition proceedings but did cover these communications in some national competition investigations did not lead to unnecessary uncertainty or make it less attractive to seek legal advice in house. She believed that if the existing rule in AM&S was to be changed that would have to be done using legislation.

The Advocate General’s view was also that the existing rule did not breach the principle of equality between in house and independent lawyers (because in her view the two were actually different) or make it excessively difficult for in house lawyers to do their job.

Comment

At this stage, this is just an opinion on the law. The CJEU is not bound by it but does tend to follow these opinions in most cases. The CJEU’s judgment will follow in a few months.  

Further reading  

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