Main findings
The Akzo Nobel case (C-550/07P) concerned a dispute over the duty to disclose certain correspondence between Akzo Nobel's managing director and the company's Dutch in-house lawyer, to EU and UK competition officials in the course of a surprise cartel investigation.
Akzo Nobel and Akros argued that the documents should be protected by legal professional privilege on the grounds that the Dutch in-house lawyer is a member of the Netherlands bar and is bound by the same code of professional conduct and subject to the same discipline as an external lawyer.
The ECJ rejected this argument and, following the line of reasoning it took in AM & S v Commission (C-155/79), it found that in order to benefit from legal professional privilege:
• the exchange with the lawyer must be connected with the client's rights of defence;
• the exchange must emanate from an 'independent lawyer'; and
• in order to qualify as an 'independent lawyer' the lawyer must not be bound to the client by a relationship of employment.
The ECJ's view is that an in-house lawyer, even if enrolled with a Bar or Law Society and subject to its professional ethical obligations, does not enjoy the same degree of independence from his employer as a lawyer in an external law firm does in relation to a client. In reaching this conclusion, the ECJ took into account that there was no overall trend towards recognising in-house professional privilege in national legal systems within the EU which would justify overturning the position established in AM & S v Commission.
Implications
Following the ruling, in EU competition cases run by the European Commission companies will continue only to be able to claim privilege for correspondence concerning the rights of defence in competition cases with external legal advisers.
This principle applies equally where national competition authorities, including the UK Office of Fair Trading (OFT) are assisting the European Commission in an investigation. Importantly, however, it does not apply to:
• investigations run by the OFT (whether under EU or UK competition law); or
• investigations conducted by the OFT on behalf of the European Commission.
In those cases the wider UK rules of privilege apply – including protection for in-house legal communications within the principles of legal advice and litigation privilege.
Several European law societies and bar associations intervened in this case, arguing for a change in the law. By rejecting so emphatically a series of arguments that the law should be recast in the light of developments in compliance practice, cartel law and the role of the in-house lawyer, this judgment brings to an end for the time being the prospects that any such change will be achieved through the courts. It remains to be seen whether the campaign will now be taken to the European legislature.
For more information on legal issues that effect entrepreneurs, please contact Graham Stedman (
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