To what extent must a national competition authority grant a damage claimant access to information contained in its file that was provided in the course of a leniency program? The opinion handed down by the Advocate General in Pfleiderer (Competition) [2010] provides guidance, and may – if confirmed by the European Court of Justice (ECJ) – establish a common standard throughout EU member states and even beyond.
In recent years – originating from the US – the so-called private enforcement of competition law has been widely discussed and started gaining ground. Lately, this has also occurred more and more throughout the central and eastern European region (including in non-EU countries). Both the underlying idea and concept are tempting. Besides the classic system of public authorities enforcing competition rules, essentially by imposing fines, the consumers harmed by anticompetitive practices shall directly claim compensation (eg for excessive prices paid as a result of a price cartel) from the cartel’s members in the course of private litigation before national civil courts.
Although the number of private enforcement cases has constantly grown in recent years, many (material and procedural) legal questions still remain unresolved, making the outcome of cartel-related private litigation cases throughout Europe hard to predict and even harder to win. Thus (contrary to the US) such cases are still rare. Among others, one essential reason for this is the usually very limited access to information and documents a potential damage claimant may obtain to determine, establish and ultimately prove the damages that were incurred (eg the amount of excessive prices paid as result of a price cartel).
Comprehensive access to the file of the competition authority(ies), which already established the existence of the respective cartel, would therefore be decisive, but is usually not granted. This applies especially to such (often decisive) information and documents that were brought actively and voluntarily to the attention of the authority by a member of a cartel in exchange for immunity from fines under a leniency program. In such situations, authorities tend to defend their restrictive policy regarding access to the file on the basis that, otherwise (due to the self-incriminating effect such information may have on its provider in subsequent civil proceedings), the attractiveness and thus effectiveness of leniency programs – which have proven to be a very effective means of detecting cartels and enforcing competition rules throughout Europe – could be substantially reduced.
Therefore, for each of the parties involved (ie potential leniency applicants, damage claimants and public authorities), it is a crucial question whether and to what extent competition authorities may or may not have to disclose to potential damage claimants, in preparation for their civil law actions, information that was provided by a leniency applicant under a leniency program. Recently, in December 2010, the Advocate General Mazák issued his opinion in Pfleiderer, dealing with this question.
Pfleiderer
In January 2008, based on Article 81 of the EC Treaty (now Article 101 of the Treaty on the Functioning of the EU (TFEU)), the German Federal Cartel Office (FCO) imposed fines amounting to €62m on three producers of decor paper (and on five individuals) who were found to be responsible for price-fixing agreements and agreements on capacity closure. The decision was, inter alia, based on information and documents received from leniency applicants in the context of the FCO’s leniency program.
Pfleiderer AG (Pfleiderer) is a purchaser of decor paper that had purchased goods worth more than €60m over the previous three years from the undertakings fined by the FCO. To prepare a civil action to recover the damages incurred as a result of the excessive prices paid, it requested access to the FCO’s file, including, inter alia, the leniency applications (corporate statements) and the documents voluntarily transmitted by the leniency applicants. The FCO decided to grant (limited) access to its file, but refused to grant access to information provided under its leniency program.
Pfleiderer appealed against this decision to the Amtsgericht (local court) in Bonn. Ultimately, the court decided to stay the proceedings and referred the case for a preliminary ruling to the ECJ to decide the question of whether parties adversely affected by a cartel may not, for the purpose of bringing civil law claims, be given access to leniency applications or to information and documents voluntarily provided in that connection by leniency applicants, which the national competition authority of a member state has received under a national leniency program (also) intended to enforce Article 101 of TFEU.
Advocate General’s opinion
The Advocate General differentiated between granting access to a leniency application (corporate statement) itself and granting access to other documents voluntarily provided by the leniency applicant.
Where a national competition authority operates a leniency program to ensure the effective application of Article 101 of TFEU, parties adversely affected by a cartel may not, for the purpose of bringing civil law claims, be given access to self-incriminating statements voluntarily provided by leniency applicants, and in which the applicants effectively admit and describe to the authority their participation in an infringement of Article 101 of TFEU, as this could substantially reduce the attractiveness and thus effectiveness of the authority’s leniency program, and, in turn, undermine the effective enforcement by the authority of Article 101 of TFEU. The Advocate General admitted that the denial of such access may create obstacles to or hinder to some extent an allegedly injured party’s fundamental right to an effective remedy and a fair trial guaranteed by the Charter of Fundamental Rights of the EU. However, the Advocate General concluded that the interference with such rights is justified by the legitimate aim of ensuring the effective enforcement of Article 101 of TFEU by national competition authorities and private interests in detecting and punishing cartels.
At the same time, it would run counter to the fundamental right to an effective remedy and a fair trial guaranteed by the Charter of Fundamental Rights of the EU if access to other pre-existing documents submitted by a leniency applicant in the course of a leniency procedure were denied by the national competition authority. However, there is an important limitation. Such access may only be granted to documents if they would assist parties allegedly adversely affected by a cartel in the establishment, for the purposes of a private action for damages, of:
- the existence of an illegal act in breach of Article 101 of TFEU;
- damage to those parties; and
- a causal link between the damage and the breach.
Outlook and consequences
In essence, the Advocate General’s opinion proposes that damage claimants may not obtain access to the leniency application (corporate statement) itself, but rather to other pre-existing documents submitted by a leniency applicant in the course of a leniency procedure. It remains to be seen whether and to what extent the ECJ will follow the suggested approach. If it does, the ruling may have several implications.
First, it may – as part of the EU case law – establish a common (minimum) standard for the scope of the access to a file a damage claimant may demand or receive with regard to information provided by a leniency applicant. This standard would have to be respected by all national competition authorities of the EU member states, at least when applying Article 101 of TFEU. In this regard, it would already foster legal certainty.
Moreover, the influence of the ruling may go even further. Provided the Advocate General’s opinion is confirmed by the ECJ and it is correct that it complies with the Charter of Fundamental Rights of the European Union, which in turn by and large mirrors the principles of the European Convention on Human Rights (ECHR), it appears that the principles elaborated by the Advocate General regarding access to a leniency applicant’s information may also apply with regard to purely national cartel cases that do not relate to Article 101 of TFEU, irrespective of whether they are dealt with by competition authorities of an EU or non-EU member state (as long as the respective country is a signatory state of ECHR).
By Guenter Bauer, partner, and Paul Hesse, associate, Wolf Theiss.
E-mail: guenter.bauer@wolftheiss.com; paul.hesse@wolftheiss.com.
