ECJ Advocate General Supports Status Quo on Legal Professional Privilege
On April 29, 2010, Advocate General Kokott of the European Court of Justice (ECJ)
handed down her opinion in the high-profile appeal brought by Akzo Nobel and its
subsidiary Akcros Chemicals against the September 2007 judgment of the General
Court concerning legal privilege issues. The ECJ is not obliged to follow an
advocate general's opinion, but it usually does.
The General Court's judgment arose out of a dawn raid on Akzo by the European
Commission and disagreements between the commission and Akzo as to whether
certain documents removed by the commission were protected by legal professional
privilege. The General Court considered several issues, but most notably decided
not to change the rule established by the ECJ in its 1982 AM & S judgment under
which intra-company communications with in-house lawyers are not privileged
under EU law (communications with external lawyers from outside the EU are also
not privileged under EU law).
The advocate general recommends that the ECJ uphold the General Court's
finding and therefore dismiss Akzo's appeal. She found that none of the very
wide range of arguments put forward by Akzo and its supporters in the
proceedings (which included the European Company Lawyers Association, the
American Corporate Counsel Association (European Chapter) and the International
Bar Association) were convincing.
In brief, her view is that "an enrolled in-house lawyer, despite his
membership of a Bar or Law Society and the professional ethical obligations
associated with such membership, does not enjoy the same degree of
independence from his employer as a lawyer working in an external law firm
does in relation to his clients. Consequently, an enrolled in-house lawyer is
less able to deal effectively with any conflicts of interest between his
professional obligations and the aims and wishes of his client than an external
Further, she states that "At worst, [if in-house lawyer/company
communications are treated as privileged] the functional departments of an
undertaking may be tempted to misuse the company's or group's internal legal
departments as a place for storing illegal documents such as cartel agreements
and records of meetings between the parties to those cartels and of the modus
operandi of a cartel."
It is notable that in-house lawyer/company communications are privileged
under the laws of some EU Member States (the UK, Ireland, Greece, Portugal,
Poland and the Netherlands). In the context of a dawn raid, if a national
authority conducts the investigation then the rules governing the investigation
are determined by the relevant national law. This means that the position in
relation to privilege may differ depending upon whether it is the national
regulator or the European Commission which conducts the search.
The advocate general, in considering this issue, noted it would simplify
the position if the rules on legal professional privilege were harmonised
throughout the EU. This is a question of legislative policy, but it seems likely
that, assuming the ECJ follows the advocate general's opinion, any future EU
harmonising legislation would not extend legal professional privilege to
in-house lawyer/company communications.
Large UK Fine for Retail Pricing Practices
On April 16, 2010, the UK Office of Fair Trading (OFT) announced total fines of GBP225 million on two
tobacco manufacturers and 10 retailers for retail pricing practices concerning
tobacco products in the UK – the largest total fine imposed by the OFT in a case
under the UK Competition Act 1998. Apart from the sizes of the total and
individual company fines, the case is interesting for several reasons:
- The OFT identified a type of
"hub-and-spoke"/indirect horizontal infringement, explaining in its press
release that each manufacturer had a series of individual arrangements with
each retailer whereby the retail price of a tobacco brand was linked to that
of a competing manufacturer's brand. There is no finding of direct
horizontal collusion between competitors, just this series of vertical
“price-matching” arrangements (giving rise to a coordinated retail price
- Retailer Sainsbury's alerted the OFT and gained complete immunity under
the OFT's leniency programme.
- Three other parties gained fine reductions under the leniency programme
for cooperation during the investigation.
- Six parties (including three of those already benefiting from fine
reductions under the leniency programme) gained reductions for admitting
liability under the OFT's early resolution (settlement) procedure.
- At the time of the Statement of Objections (April 2008) and also when
the early resolution (settlement) of this case was announced (July 2008),
the OFT had identified possible concerns in relation to other related
hub-and-spoke arrangements. These were indirect exchanges of proposed future
retail prices between competitors (which the OFT had described by way of
specific named examples ("[retailer] to [retailer] via [supplier]" or
"[supplier] to [supplier] via [retailer]")). However, these allegations were
not pursued due to lack of evidence.
- The OFT found that the agreements had an anti-competitive object,
therefore it did not need to identify an effect on competition, this being
European Commission Review of EU Public Procurement Rules
On April 19, 2010, the European Commission announced it "is embarking on a
comprehensive evaluation of EU procurement legislation" which will examine its
"effectiveness" and inform the need for a "modernisation" of the rules. It
appears that, although started with little fanfare, this is a full bottom-up
review which will cover the justification for the detailed procurement rules and
how they operate in practice, on the basis of evidence.
Third parties such as public body purchasers in the EU (entities subject to
the rules) and suppliers which deal with such purchasers are able to comment. It
further appears that the commission is unlikely to produce any kind of
conclusions until mid-2011. However, as with all similar reviews, the best time
to comment is early in the process, before positions have been set.
Note: EU public procurement law is a linked specialization to competition law
in the EU, and an area often of interest to our competition law contacts.
Accordingly, the McGuireWoods
EU/UK Competition Law Newsletter reports on the
most significant public procurement developments in the EU.
We publish a newsletter and bulletins on
U.S. antitrust developments, as well as
regular publications on
numerous other topics.