PROTECTION OF CONFIDENTIAL INFORMATION WHEN NATIONAL COURTS ENFORCE EU COMPETITION LAW

It should come as no surprise the negative impact that on consumers have the non-observance of the EU legal framework on Competition Law. Infringement of these rules might increase prices, reduce the amount of products to be sold, slow down innovation, drop quality and choice for consumers, amongst many other setbacks for the market as a whole. Victims of the violation of this set of rules are entitled to claim compensation for damages before national courts for the harm caused to them by the infringement of those provisions. 

Nevertheless, and as a result of such a redress mechanism, the main information holders involved in a given proceeding may see themselves exposed and unprotected against the disclosure of that information regarded as ‘confidential’. As pointed out by the OECD, “access to the case file and protection of confidential information are two competing aspects of competition law enforcement”. And as such they both need to be taken care of. In order for parties to properly exercise their right of defense, these will need to have access to the file at some point. This allows them to scrutinize the merits on which the court or agency adopted its judgment or decision. However, access to the file ends where protection of confidential information begins. Thus, unless necessary for the exercise of right of defense confidential information should in principle not be disclosed.

What information items can be found in a case file? They include, to name but a few: the Statement of Objections, replies to requests of information, complaints, documents obtained as a result of dawn raids, documents pertaining to the public domain or even contributions to the case made by other agencies from a different EU Member State.

On account of this, last July 20th the European Commission published a Communication (2020/C 242/01) setting out the necessary guidance for national courts when handling disclosure of confidential information in proceedings for the private enforcement of EU Competition law. 

As a matter of fact, access to the file already became relevant in the private arena when the Damages Directive came into force. This relevance boiled down to the hypothetical reluctance of the parties to a proceeding to disclose some information when they have entered into a leniency agreement or into a settlement procedure. However, this hurdle was already overcome by the Damages Directive which clearly confirmed that leniency statements and settlement submissions can never be disclosed. 

Despite allaying some doubts, the Directive did not get to clarify all the remaining questions surrounding disclosure of information. The purpose of the Commission when adopting its Communication on the protection of confidential information was, precisely, shedding some light on these blurred points.

The Communication takes stock of all the comments made by Antitrust stakeholders in the public consultation launched by the Commission itself just a year ago. The outcome of such a consultation mostly highlighted the need for further clarification as far as the disclosure of evidence is concerned. This was especially due to the growing number of damages claims arising from the infringement of Competition law rules since the Damages Directive was transposed into national law in the different Member States of the EU.

That is why the Communication has been adopted in a timely manner since Member States were beginning to find themselves between a rock and a hard place whenever their courts have had to take a stand on the disclosure of evidence. The bottom line is that Member States are compelled not only to ensure that national courts are sufficiently empowered to order the disclosure of evidence but also to ensure that national courts have at their disposal effective measures to protect such confidential information.

That is why this July the Commission stressed in its press release that national courts need to “strike the right balance between the claimants’ right to access information and the right of information owners to protect confidential information”.

The selection of the appropriate tool to protect confidential information, however, is inevitably conditional upon the rules applicable in each domestic jurisdiction. At any rate, national courts may also request parties to a proceeding to seek an agreement on the measures to protect confidential information.

The Damages Directive already introduced few measures that might commonly work across the EU to protect information such as the possibility of redacting documents, conducting hearings in camera, restricting the persons allowed to see the evidence and/or instructing experts to produce summaries. Some aspects have been elaborated on by the Communication.

As far as ‘redacting’ is concerned, the Communication acknowledges that, although the confidential information is removed from the documents, redacting continues to be an effective tool provided that the information disclosed suffices for the exercise of the rights of the party requesting disclosure.

As for ‘confidentiality rings’, the Communication develops the idea of disclosing the confidential information solely to a group of people who actually needs to be aware of such an information. Quantitative data is allegedly better protected by means of confidentiality rings. Information such as revenues, prices or margins are tricky to be summarized and because of that it turns to be more effective if the whole data is handed to a confidentiality ring. Plus, confidentiality rings make also a viable and useful solution since they usually are organized electronically without the need of a physical presence of its members.

In addition to these options, the Communication provides further insights into the ‘appointment of experts’ that are knowledgeable about condensing information and cherry-picking the necessary items to be disclosed. There are jurisdictions that do acknowledge the possibility of appointing external experts to perform activities such as accounting, finance or even competition law itself. In many cases it is the external expert itself who determines whether or not the information amounts to the category of confidential.

The Communication also makes a distinction between the need to protect confidential information before and after the publication of the judgment, during appeal proceedings or in the case of requests for access to court’s records.

It is noteworthy to stress the clash between the ‘principle of open justice’ with the disclosure of confidential information. On account of it, the Communication alludes to the possibility of safeguarding sensitive information by holding in camarathose parts of a hearing when confidential information has to be brought forward. It is also of a high interest the dichotomy between the ‘right of appeal’ of the parties and the accuracy of the version of the judgment to be notified to the parties. 

It is safe to say that case-law will shed some light on all these issues in a near future. National Courts will definitely rely on the Communication to protect confidential information. However, it will be quite appealing, both to scholars and practitioners, to see how each domestic jurisdiction will balance all the elements at stake without compromising their standard practice observed at court and without exposing confidential information.

Miguel Verdeguer Segarra, Ph.D., Lawyer & Economist at Legal Notes

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