In the Court of Justice of the European Union’s (CJEU) ruling on 27th February 2014 in the Gas Switchgear Cartel case, the Court reinforced the view that access to, and the use of, leniency documents for private litigation to claim compensation is not an overriding public interest.
The EU Commission, as part of its role as the EU competition law regulator, operates a leniency programme where companies can whistle-blow cartels and other anti-competitive activity in return for immunity or a reduction in fines. The program has proved very successful but operating it fairly is not without its difficulties. One particular difficulty is the position of parties which have suffered loss and damage due to the cartel and whether they have a legal right to access the Commission’s file including the leniency documents and evidence in order to sue the cartelists for compensation for their actions.
In this conflict, the Commission is forced to choose between disclosure of those documents to private litigants thereby potentially undermining the leniency process or, withholding all leniency evidence undermining the EU Commission’s drive to encourage more private actions to allow victims to claim compensation.
Due to the importance of the leniency programme as a major incentive and market self-regulation mechanism, Article 28(2) of Regulation 1/2003 and Regulation 1049/2001 effectively rule on the side of the leniency programme and state that information acquired under the programme should not be disclosed if the disclosure would (among other things) undermine the protection of the commercial interests of the parties and the purpose of investigations.
Gas Switchgear Cartel
On 27 February 2014, the issues were examined before the CJEU. The facts relate to the 2007 gas switchgear cartel case where the Commission fined several companies over €750m for participation in a cartel in the tendering of gas insulated switchgear.
One of the alleged victims of the cartels behaviour sought access to the Commission’s documents relating to the cartel in order to obtain evidence for damages. The Commission in its initial decision refused access. The Commission believed the documents requested fell within the protections of Regulation 1049/2001 on protecting inspections and investigations and there was no overriding public interesting in granting an exemption to the statutory protections.
The alleged victim appealed the Commission’s decision to the General Court who found in their favour. The Court believed that the Commission were not entitled to presume that their documents were covered by the protections and should instead show through analysis in each category of evidence why the protections in Regulation 1049/2001 should apply.
Court of Justice of the European Union
The EU Commission in turn appealed the General Court’s judgment to the CJEU and was successful in its appeal, establishing it was correct in originally withholding the evidence from the alleged victim. The CJEU held that the Commission may presume without carrying out specific investigations or analysis that documents obtained in the cartel proceedings were confidential and should not be disclosed. This lack of disclosure would protect the commercial interests of the parties and protect the integrity of the investigation and leniency process.
In the CJEU’s view, the alleged victim had failed to show why certain documents where not covered by the protections of the Regulation and had also failed to show an overriding public interest as to why those documents should be disclosed. Crucially, the CJEU’s decision helps further reinforce the judicial view that the use of the documents for private litigation to claim compensation is not an overriding public interest.
Aggrieved parties would be better advised to seek out one of the infringers privately and negotiate the release of their evidence in return for accepting nominal damages, a tactic often used to circumvent the protections for the leniency process.