National Grid – shining Pfleiderer’s light on access to EU leniency documents

Christopher Brown

A while ago I blogged on an important development in the General Court relating to the ability of victims of cartels and other anti-competitive practices to get their hands on relevant evidence enabling them to prove that they had suffered loss as a result of such unlawful conduct.  The CDC case involved a request under the EU freedom of information regime.  Whilst that is one way to request information in the hands of the EU institutions, another way is to seek disclosure of such material from the defendants to a damages action, to the extent that it is in their possession.  Often highly pertinent information will be contained in leniency statements and accompanying materials submitted by cartelists to the competition authority, in return for which they can receive up to total immunity from financial penalties.  Competition authorities are, naturally, reluctant to hand such information and documents over to third parties, for fear of jeopardising their leniency regimes, which are crucial to the success of their cartel-busting strategies; on the other hand, such information can be very important for victims in proving that they have suffered loss.  So how to reconcile these competing interests?

In a recent case, Pfleiderer Case C-360/09, the Court ruled that EU Law does not prohibit access to leniency documents by third parties seeking damages. Access should be determined according to national law, which must weigh the interests arguing in favour and against a disclosure of documents received under leniency.  In National Grid Electricity Transmission v ABB and Others [2012] EWHC 869 (Ch) the English High Court (Roth J) was required to consider the Pfleiderer judgment in the context of an application by the Claimant for disclosure of certain documents in the possession of the Defendants (all of whom were members of, or affiliated to members of, the Gas Insulated Switchgear cartel condemned by the Commission some six years ago).

The documents in respect of which disclosure was sought (copies of which were in the possession of the relevant defendants) were (i) the confidential version of the Decision and (ii) certain responses to the Commission’s SO and certain requests for information issued by it.  It was common ground that the documents in question would or might contain leniency materials submitted to the Commission in the course of its investigation.

The three issues for resolution by the court were as follows:

(a)    Whether Pfleiderer applied to disclosure of leniency materials in the context of a decision of the EU Commission (Pfleiderer itself having concerned materials submitted to the German Bundeskartellamt, a national competition authority, as part of an investigation conducted by it into suspected breaches of Article 101 TFEU).

(b)    Whether the national court had jurisdiction to determine an application for disclosure of such documents or whether such requests could only be made to the Commission pursuant to Article 15(1) of Regulation 1/2003, OJ 2003 L1/1.

(c)    If the national court does have such jurisdiction, what the factors were which it should take into account for the purposes of paras 30-31 of Pfleiderer.

The Commission was invited to provide its input into these questions, which it did by way of written observations pursuant to Article 15(3) of Regulation 1/2003; as the judge (Roth J) noted, this was the first time that the Commission has intervened in this way in the English courts.

The Court’s conclusions were as follows:

(a)    The application of the Pfleiderer judgment was not limited to national leniency programmes but rather encompassed the Commission’s own programme as well.  The Court pointed out that the ECJ’s reasoning was expressed in general terms, and the Bundeskartellamt’s programme in that case was concerned with the enforcement of EU law (there, Article 101 TFEU), just as the Commission’s programme is.  Furthermore, “[a]lthough the Commission may be well placed to consider the effect of disclosure on its leniency programme, that does not mean that it should be the arbiter of disclosure since it can present its views to the national court, as it indeed has done in the present case” (para 26). Finally, the judge accorded weight to the fact that the Commission itself had not suggested that there was any policy reason to give Pfleiderer a more restricted application.

(b)    The Court was in no doubt that it did have jurisdiction to determine the disclosure application: “there is nothing in Regulation 1/2003 that even remotely suggests that the court is precluded from applying its national procedures for access to documents” (para 28).  Again, the Commission had not suggested differently in its observations.  The judge added that the contrary would be highly undesirable: he pointed to the fact that if every application for disclosure of leniency documents had to be referred to the Commission, that would place a significant burden on the Commission and, with the possibility of appeals against the Commission’s decisions, might lead to substantial delay (para 29).

(c)    As for the factors to be taken into account by the national court, the judge expressly recognised the difficulty of conducting the balancing exercise referred to in Pfleiderer “weighing the interest in disclosure as against the need to protect an effective leniency programme.  This is not an easy exercise because the conditions that apply on the two sides are of a very different character” (para 30).  The factors taken into account here, however, were:

  • That the claimant was not seeking access to full leniency statements but rather to extracts from those statements incorporated into the confidential version of the Decision and replies to the SO and requests for information/explanations.
  • That disclosure would not increase the immunity/leniency applicants’ exposure to liability compared with liability of parties that did not cooperate.
  • That, although there may be “some deterrent effect” on potential leniency applicants as regards other cartels as yet uncovered on the basis that subsequent disclosure applications may be made against them, that had to be set against the gravity and duration of the infringement and consequent scale of the penalties imposed here: if any party were to decide not to seek immunity on the basis of the risk of a later disclosure order being made, that would be a big risk to take in light of the chance of another party seeking immunity in its place, thereby exposing the first undertaking to a large fine and full civil liability in any case.
  • That proportionality pointed in favour of disclosure (subject to what is said below), based on the facts that (i) the information sought was not available from other sources, such as ‘pre-existing’ documents, which by their nature are limited in number and whose meaning is often opaque, and (ii) the leniency materials were (again, subject to what is said below) likely to be relevant.

The Court (at para 34) expressly rejected arguments made by the Defendants that they had some form of legitimate expectation that the leniency materials would be protected from disclosure.  Both the 2002 and 2006 versions of the Commission’s Leniency Notice made clear that the grant of immunity did not protect the applicant from the civil law consequences of its infringement of Article 101.  Moreover, the CJEU in Pfleiderer had expressly rejected Mazak AG’s view in that case that immunity applicants had such a legitimate expectation.

The twist in the tale, however, was that the mere fact that the documents would be “relevant” for the purposes of disclosure in an ordinary case was not enough in the circumstances here: it was instead necessary for the Court to consider whether the documents were “of such potential relevance that specific disclosure should be ordered” (para 52).  In those circumstances, the judge decided as follows (para 55):

“before determining an application under the Pfleiderer test where relevance, or potential relevance, is in issue, unless the decision is obvious I consider that it is appropriate for the court to inspect the documents and consider them individually before reaching a decision.”

Following his consideration of the documents, the judge ordered partial disclosure of them.

Comment

The judgment in National Grid is an important contribution to the post-Pfleiderer jurisprudence at national level.  Whilst the task for the court will always be fact-specific, Pfleiderer had left open a number of issues, including – fundamentally – whether it applied to document submitted under the Commission’s leniency programme or was restricted to national programmes. That particular question has been answered emphatically.  When it came to the balancing exercise, the judge was conscious of the difficult task he faced.  It is submitted that he was right to decide to inspect the documents first and take a view on the extent of their relevance rather than order that they be handed over to the claimant on the basis that they were “relevant” for ordinary disclosure purposes.  Whilst it may not be ideal for the judge to be reviewing documents and deciding on relevance without one of the parties itself being able to see the documents (and therefore be able to assess whether the judge has come to a defensible decision in respect of each document), it is a practical solution which both is well established in domestic law and accords with the Pfleiderer judgment’s emphasis on a case-by-case analysis.  This judgment is an important contribution to the case law and ought to aid other courts in considering applications for disclosure raising similar issues across the EU.

One thought on “National Grid – shining Pfleiderer’s light on access to EU leniency documents

  1. Pingback: Reform of UK competition law- Part 2: facilitating private redress « Chillin'Competition

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