In Akzo Nobel Chemicals Ltd (Akzo) and Akcros Chemicals Ltd (Akcros) v Commission of the European Communities, the Court of First Instance (CFI) clarified the extent to which the Commission can view or remove documents, which are alleged to be subject to legal privilege. The CFI ruled that, where the undertaking being investigated claims that a document is confidential due to legal privilege, the Commission cannot look at the document and even a “mere cursory look” could constitute a breach of this principle. Therefore, if there is a dispute as to privilege, the Commission should not read the documents until the company has had the opportunity to ask the CFI to determine the issue.

More importantly, the CFI has upheld the Commission’s Decision that documents seized during a Commission investigation would only be protected by legal professional privilege where they emanated from independent lawyers, as opposed to in-house lawyers. To be independent the lawyer should not be bound to his client by a relationship of employment, regardless of whether the lawyer is a member of a bar or law society or subject to professional ethics or disciplinary proceedings. The CFI has thus confirmed previous case law (AM & S v Commission [1982] ECR 1575).

Additionally, the judgement makes it clear that the application of legal professional privilege is a limit on the Commission’s powers of investigation and as such it needs to be strictly interpreted.

These findings come following the action by Akzo and Akcros to annul the Commission’s Decision, which allowed the Commission to conduct an on the spot investigation at Akzo and Akcros’s premises, in order to obtain evidence of anti-competitive practice. During this investigation, the Commission reviewed various documents, some of which Akzo and Akcros claimed to be subject to legal privilege. As the Commission contested the confidentiality of the documents, Akzo and Akcros were forced to allow one of the Commission officials to briefly examine the documents. When the official could not reach a final conclusion on the spot, the documents were copied and taken away in sealed envelopes. Some of these documents were, however, later considered by the Commission not to be confidential and were therefore examined in full without a hearing at the CFI.

Although the CFI found in this case that the documents in question were not in fact subject to legal privilege due to their nature and therefore rejected the action for annulment, it held that the Commission had infringed the correct procedure on two counts. Firstly, by forcing Akzo and Akcros to allow a brief examination of the documents, despite the claim to legal privilege. Secondly, by not allowing the companies the opportunity to contest the rejection of their claim before reading some of the documents.

This case confirms that in relation to Commission competition investigations, communications between in-house counsel and their internal clients will not be protected by legal professional privilege, unless the document simply reports a communication with an external lawyer or falls within the category of preparatory documents that is accepted that they could be protected by the privilege. This position is different than the situation in the UK. The CFI has, however, made it clear that where there is a dispute as to privilege, the Commission should not read the disputed documents until the undertaking has had the opportunity of asking the Court to determine the issue. The Commission cannot demand that it be given a cursory look at documents where this would inevitably lead to the contents of the documents being disclosed. The CFI does make the point however, that the Commission can discourage undertakings from disputing the application of legal professional privilege as a delaying tactic by the imposition of periodic penalties under Article 23(1) of Regulation 1/2003, or by treating the undertaking’s conduct as an aggravating factor in relation to its calculation of any fine to be imposed in a final decision.