U.S. Privilege Following Akzo Nobel v. European Commission

Lawyers who have been paying attention to such things might recall the predicted fallout from the decision in Akzo Chemicals Ltd v. European Commission, Case C-550/07-P (September 14, 2010). In Akzo, the ECJ held that internal communications between in-house counsel and their companies’ employees are not privileged in European competition law cases. Applying a 1980’s-era rule reserving attorney-client privilege to communications with outside legal counsel who are members of the bar, the ECJ held that communications emanating from Dutch in-house counsel were not protected in E.U. antitrust investigations. (See AM & S Europe v. European Commission, Case C-155/79 (May 18, 1982).

From the moment that decision issued, legal experts predicted dire days for corporate counsels’ ability to provide confidential advice on competition matters. The prevailing criticism from the legal and business communities has been based on a fear of waiving the attorney-client privilege (either accidentally, or by practical necessity stemming from the realities of global business communication). Some private practitioners have asked whether even communications with U.S. outside counsel could be deemed nonprivileged. Under one theory, U.S. courts might hold that an attorney waived any privilege attendant to those communications that he or she disclosed in an E.U. proceeding. Thus, it is claimed that agencies such as the FTC could use the information disclosed in Europe against the attorney’s client in a U.S proceeding. In another possible scenario, a U.S. court could find that there was never a privilege in the first place: because, after Akzo, an in-house attorney has no reasonable expectation of confidentiality in Europe, it would be impossible to establish a necessary element of attorney-client privilege (i.e., that he or she made the communication in confidence).

These theories have yet to be borne out in U.S. courts. To the contrary, at least one court has rejected this waiver argument, and held instead that a foreign in-house counsel’s communications with a U.S.-licensed general counsel were privileged because he had acted as the general counsel’s agent. Gucci Am., Inc. v. Guess?, Inc., 271 F.R.D. 58, 71 (S.D.N.Y. 2010). In fact, most modern authorities take the view that disclosure must be voluntary to effect a waiver. Accordingly, a target seeking to defend its privilege after a compelled foreign disclosure could argue that the disclosure was “involuntary,” and thus should not result in waiver. After all, European authorities would likely receive the disclosed materials either through seizure in a raid or by administrative order under threat of sanctions or other legal repercussions. In such cases (which in practice might represent all cases), the privilege holder could credibly claim that it did not intend to disclose its communications, but in fact vigorously opposed the disclosure.

This appears to be the legal basis underpinning the provisions found in recent cooperation agreements between, and guidelines adopted by, competition authorities. For example, the U.S. antitrust agencies and the E.U. collaborated on best practices for merger reviews and agreed upon the following advice to industry participants:

As the rules governing legal professional privilege are different in the E.U. and the U.S., in particular with regard to in-house lawyers, the agencies will accept a stipulation in parties’ waivers given to DG Competition that excludes from the scope of the waiver evidence that is properly identified by the parties as and qualifies for the in-house counsel privilege under U.S. law.

October 2011 U.S.-E.U. Merger Working Group Best Practices on Cooperation in Merger Investigations, p.6 n.10. Similarly, the Updated Model Waiver of Confidentiality for International Civil Matters, introduced in 2013 by the FTC in conjunction with the Department of Justice’s Antitrust Division, and updated in 2015, contains the following recommended provision:

It is … understood that FTC/DOJ will not seek from [non-U.S. competition authority] information that is protected by U.S. legal privilege. To the extent possible, [entity] will clearly identify to [non-U.S. competition authority] information that would be subject to U.S. legal privilege. If the FTC/DOJ receives information from [non-U.S. competition authority] that [entity] claims as privileged in the U.S., it is understood that the FTC/DOJ will treat such information as inadvertently produced privileged information. (emphasis added).

This advice still stands. Of course, corporate counsel should account for the fact that inconsistent privilege rules may apply where both the FTC and the European Commission are conducting parallel investigations. But this alone should not suggest that the FTC intends to disturb longstanding U.S. application of the attorney-client privilege, even where a company might produce arguably privileged material in a DG Comp investigation. In fact, the FTC does not use international process to seek even privileged materials produced voluntarily to EU authorities, such as those included in productions by third-party complainants. In short: whatever Akzo’s effect on privilege and communication in global businesses, it’s business as usual at the FTC.