Legal Professional Privilege under European Union Law. The scope of legal professional privilege when antitrust investigations are conducted by the European Commission (“EC”), most notably in relation to merger control, cartels and abuse of market dominance, (“EU LPP”) is very different from that applicable in, e.g., the USA. LPP is under discussion at OECD level and the European Commission’s views on this subject are summarized in its recent note Treatment of legally privileged information in competition proceedings, OECD, 21 November 2018, DAF/COMP/WP3/WD(2018)46. The purpose of this note is to summarize the current EU position.
EU LPP does not emanate from legislation, but has been established by the EU Courts. AM & S v Commission (as further elaborated in Hilti v Commission and Akzo v Commission) set out the principle of confidentiality of communications between a company and an independent external lawyer, subject to two strict conditions.
First, EU LPP only covers communications between a client and an independent external lawyer, i.e., a lawyer who is: (i) registered with the Bar of a European Economic Area member state (the EEA comprises all 28 (soon to be 27) member states of the EU plus Norway, Liechtenstein and Iceland); and (ii) “not bound to the client by a relationship of employment”. Note that EU LPP also covers internal notes which report the text or the content of these communications for the purpose of distributing them within the company.
Second, as established by the AM&S case law, EU LPP only applies to communications that were made “for the purposes and in the interests of the client’s rights of defence.” This covers all communications exchanged after the initiation of administrative proceedings, as well as “earlier written communications which have a relationship to the subject-matter of that procedure”. A distinction therefore exists between privileged communications related to, e.g., a competition investigation and non-privileged general legal advice.
- EU LLP does not apply to communications between in-house lawyers and their internal clients, even where privilege is recognized under the national law of EEA member states (as well as that of third countries, such as the USA);
- EU LPP does not extend to communications with non-EEA-registered external lawyers. While, in practice, the EC has - so far - not sought to obtain disclosure of advice provided by non-EEA-registered external lawyers, in principle it may do so. For safety, non-EEA-registered lawyers may wish to work with EEA-registered lawyers to ensure that sensitive legal advice is fully protected by EU LPP;
- EU LPP does not extend to pre-existing underlying documents, even if they have been selected and copied in response to a request by an independent external lawyer and/or annexed to a protected document;
- Even if they were not exchanged with a lawyer, preparatory documents “drawn up exclusively for the purpose of seeking legal advice from a lawyer” may be protected. The mere fact that a document was discussed with a lawyer is not however sufficient to give it such protection;
- In order to obtain documents, the EC may opt for sending a ‘request for information’ (“RFI”) by formal decision. Non-compliance would subject the company concerned to heavy fines and, in merger cases, could lead to the EC withholding the grant of a clearance unless and until documents that it wishes to see are disclosed to it. Receipt of a ‘request for information’ requires the recipient company to cooperate and, as regards communications between in-house lawyers and their internal clients (which are not privileged under EU LLP), some measure of protection from the risk of privilege waiver: exists[?]. See OECD paper at para 29. Complicated issues can arise when the EC seeks disclosure of documents or data that are not within the geographic jurisdiction of the EAA and are not accessible from it. In practice, the EC has, in some cases, agreed to the withholding of documents originating from, e.g., US lawyers from the same international law firm.
- Inevitably, document requests may require thousands of responsive documents to be identified and potentially disclosed. Those covered by EU LPP will be exempted from the scope of the request. Companies may, especially merger investigations, be required to produce a ‘privilege log’, providing for each document over which the company claims EU LPP, information such as the author and the addressees of the document, as well as a summary and the grounds upon which the company claims protection.
- EU LPP issues may occur during EC inspections, so-called “dawn-raids.” The EC now systematically makes electronic copies of all material found during an inspection. Investigated companies may challenge the seizure of alleged privileged data and request the EC to separate such data from other sets of documents. Such data will not be included in the case file before their status has been determined. When the EC and the investigated company do not agree on whether a paper document should benefit from the EU LPP protection, the ‘sealed envelope procedure’ is used, i.e., a copy of the document for which privilege is claimed is placed in a sealed envelope until resolution of the dispute.
- EU LPP does not prevent companies from disclosing written communications with their lawyers, while reserving privilege vis-à-vis others, if they consider it is in their interest to do so.