EU Competition Law: EU Court Refuses Privilege for In-house Lawyers’ Communications

Sullivan & Cromwell LLP - September 16, 2010

On September 14, 2010, the Court of Justice of the European Union (the “ECJ”) issued its long-awaited judgment on an appeal by Akzo Nobel Chemicals and its subsidiary Akrcos Chemicals from a decision of the EU Commission to deny legal professional privilege for communications between an Akzo Nobel employee and a lawyer in the company’s legal department. The Court dismissed the appeal and found that there was no reason to modify the current rules on legal professional privilege in EU competition law investigations by extending privilege to communications between in-house lawyers and other company employees. The Court’s judgment reaffirms a 1982 determination of the ECJ, AM&S Europe v. Commission, Case 155/79, that communications between company employees and the company’s in-house lawyers generally are not subject to legal professional privilege in Commission investigations because, in the ECJ’s view, in-house lawyers are insufficiently “independent” advisors to avoid or harmonize conflicts of interest between their professional obligations and the objectives of their employers.

As a result of the Court’s judgment, communications between company employees and the company’s in-house lawyers will continue to be discoverable in EU competition law investigations unless they are limited to reporting legal advice from an external lawyer entitled to practise in the EU or have been prepared for the sole purpose of obtaining legal advice from external counsel.