It Is Always Darkest Before The Dawn: Litigating Access To Cartel Leniency Documents In The EU

Once confined to US class actions, litigation by plaintiffs seeking to gain access to leniency documents in order to bolster their cartel damages claims has spread to European courts. These efforts have enjoyed a measure of success, both before national judges and the EU courts in Luxembourg. However, recent developments indicate that this success may be short-lived. Ultimately, legislation is required to ensure legal certainty and a level-playing field throughout the EU, and to safeguard the EU and national leniency programmes as a vital public enforcement tool against cartels; one without which plaintiffs could not bring any cartel damages claims in the first place. The recent Commission proposal for a directive approximating Member States' liability regimes for breach of antitrust law could restore legal certainty on this crucial topic.

It All Started in America

US class actions litigants have long sought to get their hands on leniency documents. Statements by leniency applicants admitting to facts can be particularly persuasive evidence in a civil trial, particularly in the early stages where plaintiffs' representatives are trying to gain class certification and to survive motions to dismiss their claims. To address this threat, applicants under the US DOJ antitrust leniency programme have had recourse to a largely paperless process.

US plaintiffs therefore sought access to EU investigation materials, as a potentially much richer source of incriminating documents. While the European Commission quickly accepted to turn the leniency application procedure into a paperless process, EU cartel proceedings are essentially conducted in writing. Information extracted from leniency statements is incorporated in Commission Statements of Objections (SO) and in the ultimate fining decisions, and can also be used in Commission written Requests for Information (RFI). The cartel defendants may also want to refer to this information when responding to RFIs or to the SO.

The European Commission reacted by writing to or intervening as amicus curiae before US courts to oppose plaintiffs' motions to compel discovery of leniency documents [see Endnote 1]. With one notable exception in the Vitamins litigation, the Commission has been broadly successful in preventing the disclosure of leniency documents through the use of US pre-trial discovery.

Significantly, the Commission was not content to intervene with US courts to prevent the disclosure of leniency documents, it sought to promote the adoption of a legislative solution. On 6 April 2006, then Director General of DG Competition Philip Lowe wrote to the US Antitrust Modernization Commission, to ask whether specific measures could be considered "to limit the impact of US discovery rules on the European Commission's ability to detect and punish cartel behaviour". In the same cover letter to DG COMP's submission to the Commission, Director General Lowe argues that "(t)he very fact that the US courts address these issues on a case-by-case basis" creates an inherent risk and "(t)he resulting uncertainty might in itself be sufficient to have a chilling effect on the EC Leniency programme".

In its submission to the Modernization Commission, DG COMP took a firm stand, asserting that "European rules protect the confidentiality and prevent disclosure of submissions that have been specifically produced within the context of a leniency application. DG Competition strongly believes that the fact that US courts might regard such submissions as discoverable harms the effective enforcement of EC competition law" [see Endnote 2].

To European practitioners, these statements, while highly reassuring as to DG COMP's principle stance to protect the leniency process, begged the question: Are European rules as uncompromisingly protective as asserted by DG COMP in the US and if that is not the case, why does the Commission not seek to protect leniency documents through legislation, as it recommended should be done in the US? After all, there had been indications from the EU courts that matters might not be as clear as DG COMP would like them to be [see Endnote 3].

And then there was Pfleiderer

The crucial importance of the question was confirmed by the judgment of the Court of Justice of the EU in Pfleiderer. A customer of German decorative paper producers found to have engaged in cartel activities by decision of the Bundeskartellamt sought to obtain access to the Bundeskartellamt's file to strengthen its damages claim against the producers. Under German procedural rules, by extension of criminal procedure rules, lawyers for the victims of cartel behaviour can request the prosecuting authority, i.e. the Bundeskartellamt, for access to that authority's file. The Bundeskartellamt granted that request but refused access to all leniency documents. Upon appeal by Pfleiderer, the Amtsgericht Bonn disagreed with the Bundeskartellamt and considered that Pfleiderer was entitled to access under German rules. The Amtsgericht did however agree, upon urging by the Bundeskartellamt, to refer preliminary questions to the Court of Justice, to make sure that access under German rules would not fall foul of EU rules, and in particular of Regulation 1/2003, which contains a number of provisions restricting access to the file in competition proceedings.

Advocate General Mazak considered that the German court's question required the Court of Justice "to weigh and balance the possibly diverging interests of ensuring the efficacy of leniency programmes established for the purpose of detecting, punishing and ultimately deterring the formation of illegal cartels pursuant to Article 101 TFEU, with the right of any individual to claim damages for harm suffered as a result of these cartels". [See Endnote 4.] He argued that the case-law of the EU Courts on public access to documents held by the institutions was of little help in carrying out this balancing, since applying this case-law "could incorrectly limit what appears to be a more extensive right of access to evidence by an allegedly injured party such as Pfleiderer for the purpose of establishing a civil claim before the courts under (the relevant German criminal procedure rules)" [see Endnote 5]. He also noted that the Bundeskartellamt's investigation into the decorative paper cartel was over, so that access to the leniency documents could not harm the investigation in that particular case. "The issue remains, however, whether access to the category of documents voluntarily communicated in the context of a leniency programme, could undermine in general the investigative process relating to infringements of Article 101 TFEU and thus the enforcement of these provisions by the Bundeskartellamt and other national competition authorities in accordance with the powers and duties accorded to them pursuant to Regulation No 1/2003." [See Endnote 6.]

The Advocate General answers this question in the affirmative: "the disclosure by a national competition authority of all the information and documents submitted to it by a leniency applicant could seriously undermine the attractiveness and thus the effectiveness of that authority's leniency programme as potential leniency applicants may perceive that they will find themselves in a less favourable position in actions for civil damages, due to the self-incriminating statements and evidence which they are required to present to the authority, than the other cartel members which do apply for leniency[...]. A cartel member may therefore abstain from applying for leniency altogether or alternatively be less forthcoming with a competition authority during the leniency procedure" [see Endnote 7].

The Advocate General concedes that EU law has not established "any de jure hierarchy or order of priority between public enforcement of EU competition law and private actions for damages" but considers "the role of the Commission and national competition authorities is [...] of far greater importance than private actions for damages in ensuring compliance with Articles 101 and 102 TFEU" [see Endnote 8]. He notes further that victims of cartels also benefit from effective leniency programmes and concludes that "disclosure to civil litigants of the contents of voluntary self-incriminating statements made by leniency applicants" should not be granted [see Endnote 9]. As regards pre-existing documentary evidence submitted by a leniency applicant, however, the Advocate General considers that access to this information can be granted to plaintiffs [see Endnote 10].

The opinion of the Advocate General thus mirrors the position defended by the European Commission in US civil damages cases. However, the Grand Chamber of the Court of Justice of the EU chose not to take a clear-cut position, holding that it would be "in the absence of binding regulation under European Union law on the subject, for Member States to establish and apply national rules on the right of access, by persons adversely affected by a cartel, to documents relating to leniency procedures" [see Endnote 11].

The Court acknowledged both the usefulness of leniency programmes as an enforcement tool and the risk that would-be leniency applicants would be deterred from applying for leniency by the possibility that leniency could be disclosed to plaintiffs seeking to bring a damages claim [see Endnote 12].

However, it also reaffirmed the right of victims of anticompetitive behaviour to seek compensation for losses suffered as a result of such behaviour [see Endnote 13]. In doing so, it repeated the mantra that actions for damages participate to the deterrence of anticompetitive conduct and therefore "can make a significant contribution to the maintenance of effective competition in the European Union" [see Endnote 14]. That last assertion, clearly inspired by US concepts such as those behind the Supreme Court's Hanover Shoe [see Endnote 15] and Illinois Brick [see Endnote 16]...

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