High Court tests the limits of confidentiality in EC infringement decisions

The European Commission came in for some stern criticism from the High Court this week, in a case which looks set to test the boundaries of confidentiality in EC infringement decisions: see Emerald Supplies v BA [2014] EWHC 3515 (Ch).

The background is the 2010 EC decision fining BA and eleven other airlines a total of €800m for operating a global cartel for air freight services. Hundreds of claimants are seeking damages, and they sought disclosure of a copy of the decision – which, remarkably, has not yet been made public by the EC.

The problem is that the decision apparently contains comments alluding to potential wrongdoing of various airlines which those airlines were unable to appeal – – either because they were not addressees of the decision, or because the offending passages were not essential to the operative part of the decision and therefore could not be challenged on appeal. Relying on the case of Pergan Hilfsstoffe Fur Industrielle Prozesse GmbH v Commission [2007] ECR II-4225, those airlines argued that disclosing such references would breach the EU “presumption of innocence”, and that it should not be permitted.

Whether Pergan does require all such references to be withheld is a complex question. The judge in Emerald (Peter Smith J) was initially prepared to accept that Pergan does impose such a requirement. Eventually, however, exasperated by the practical difficulties such a rule would create, he changed his mind.

The judge’s first order (made in April) was for affected parties to agree on redactions to protect the so-called “Pergan rights”. This resulted in a document so comprehensively redacted that it was useless to the claimants. The claimants then suggested that the judge himself carry out the redactions necessary to protect confidentiality, but he considered the task to be simply impossible in the circumstances. Instead, he ordered the disclosure of the decision – unredacted except for ‘leniency materials’ and material subject to legal professional privilege – to a confidentiality ring comprising the claimants and the Part 20 defendants (a group which includes various airlines, including non-addressee airlines who have not seen the decision).

The disclosure will be subject only to the condition that the claimants were barred from using the decision to commence proceedings without the permission of the court. That restraint, the judge thought, allays all legitimate Pergan concerns: namely, that the decision could contain observations or findings that any airline had not had an opportunity to deal with; that the decision contained material that would cause damage if it went into the public domain; and that the decision might identify other people against whom claims could be brought. Through a confidentiality ring subject to that condition, the judge thought, all the parties – the claimants, BA, and the Part 20 defendants alike – would enjoy an equality of arms in prosecuting and defending the action.

Complaining that the EC had failed to comply with the duty of sincere co-operation between the Union and Member States (Article 4(3) of the TEU), the judge rejected the submission that his approach would rob any future decision on redaction by the EC of any practical effect – placing great emphasis on a letter by the EC to the Court in which the Commission appeared to be content for the Court to decide the question.

These types of issues will arise in many cases, including cases where the EC has published a public version of the decision (since there will still be a question as to whether addressees of the decision should be required to disclose the confidential version of the decision in the context of a private damages claim). However, the fact that there was no public decision in this case undoubtedly made the judge’s job more difficult. It is difficult to disagree with his criticisms of the EC’s “one speed molasses like approach” to redacting its decisions, which he said was “completely unacceptable” (paragraph 3 and 27). The appropriateness of the Judge’s decision will be for the Court of Appeal to decide in the coming months: recognising the importance of his decision, he has granted permission to appeal.

1 Comment

Filed under Abuse, Agreements, Damages, Procedure

One response to “High Court tests the limits of confidentiality in EC infringement decisions

  1. Pingback: What’s the plot? Conspiracy and 19th Century comic opera (again) | Competition Bulletin