Landmark European Court of Justice Judgment on Legal Professional
On Sept. 14, 2010, the EU’s highest court (the European Court of Justice (ECJ))
confirmed in a case involving Akzo Nobel that, in the field of EU competition
law investigations by the European Commission, internal company communications
with in-house lawyers are not covered by legal professional privilege. This
means that for the purposes of such investigations, these types of
communications cannot automatically be withheld from the commission.
Several practical points to remember when considering this case:
- The judgment does not change the law on this point, which had originally
been established by the ECJ in 1982.
- Advice from non-European Economic Area (EEA;
which includes the EU) qualified external lawyers is also not privileged.
- It remains the case that internal documents prepared by a company "for
the exclusive purpose of seeking legal advice from [an
external EEA-qualified] lawyer" are privileged.
- Internal company documents reporting (without comment) an external EEA-qualified
lawyer’s privileged advice are privileged.
- The position in relation to investigations carried out by national
competition authorities in the EU can be different.
European General Court Provides Confirmation of Abuse of Dominance
On Sept. 9, 2010, the European General Court (the EU’s first instance review
court, from which final appeals are made to the ECJ) handed down a judgment
concerning abuse of dominance by reverse vending machine manufacturer Tomra.
The court, upholding a decision of the European Commission, first confirmed
that in order for there to be an abuse of dominance, it is enough that the
practice in question tends to restrict competition or is capable of having that
effect. It is not necessary for a practice to have an actual effect on
competition. It then held that the exclusivity agreements, discount schemes, and
retroactive rebates entered into by Tomra with various supermarket chain
customers in the EU were abusive, and justified the EUR24 million fine imposed
by the commission.
The case also emphasizes the importance of internal documents in EU
competition investigations, the court stating that “. . . [Tomra’s] internal
correspondence allowed the Commission to place [Tomra’s] practices in context
and to substantiate its own assessment of those practices.”
Margin Squeeze Analysis in the EU
On Sept. 2, 2010, an Advocate General (AG) at the ECJ (advising the EJC as to
its final judgment) gave his opinion in a margin squeeze case involving
telecommunications company TeliaSonera.
Margin squeeze can arise where the price charged for an upstream input by a
dominant company which is also active downstream using that input does not allow
its downstream competitors sufficient scope to run a profitable business. In the
AG’s view, this can only be abusive where the upstream dominant operator has a
regulatory obligation to supply the input in question to downstream competitors.
If not, the margin squeeze must be addressed as a type of refusal to deal. It
remains to be seen whether the court will adopt this analysis and therefore
confirm this as EU law, but the ECJ usually follows its AG’s opinions.
Joint UK OFT and CC Merger Guidelines
On Sept. 16, 2010, the Office of Fair Trading (OFT) and the Competition
Commission (CC) published updated joint merger guidelines covering their
analysis of mergers under UK merger control law. The guidelines set out the
questions the CC and OFT will consider when reviewing mergers, how they define a
“relevant merger situation,” what is meant by a “substantial lessening of
competition” (SLC), and the criteria and methodology used when assessing
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