The September 17, 2007 decision of the Court of First Instance (“CFI”) in Akzo v. Commission provided an opportunity to revisit and comment on the position enunciated by the European Court of Justice (“ECJ”) in its 1982 judgment in AM&S v. Commission case concerning the treatment of legal privilege in the context of EU competition law investigations.
AM&S recognized the right of companies under investigation to withhold communications between the company and “an independent lawyer entitled to practice his profession in a Member State,” where those communications were exchanged after the initiation of the proceedings or occurred before and had a relationship to the subject-matter of the proceedings. This principle was derived from the right to defense explicitly recognized in Regulation 17, the basic competition law procedural regulation (now replaced by Regulation 1). The formula used by the ECJ made it clear the privilege did not apply to in-house counsel, or to outside lawyers who are members of a third-country bar but not an EU Member State bar. The AM&S judgment sketched out a proceeding for the handling of privilege claims arising in the course of investigations: where a company asserts privilege during an investigation, it must provide “relevant material” demonstrating the eligibility of the document in question but is not required to “reveal the contents” of the document; if the European Commission (“Commission”) is not satisfied, it may make a decision ordering disclosure of the document, which the company can appeal to the CFI. Under the practice developed by the Commission, the contested document is placed in a sealed envelope, and, if the matter cannot be resolved without an appeal, is examined by the CFI.
The AM&S judgment left many questions open, in particular regarding the scope of the privilege. For example, how did the privilege apply to internal materials prepared with a view to seeking legal advice? More narrowly, did it cover internal notes recording the content of advice received? The latter question was answered affirmatively in 1990 in Hilti v. Commission. The fact that it had to be asked at all was an indication of the narrow view of privilege taken by the Commission.
The CFI's Holding
Companies, their lawyers, and the Commission have operated under the AM&S guidelines for 15 years. The Akzo judgment provided an opportunity to reconsider some of the most controversial aspects of AM&S, as well as to fine-tune the details as to its application.
Two of the contested documents consisted of copies of a memo prepared by an executive in the context of a competition law compliance program and addressed to his superior. The memo reflected information-gathering conversations with other employees, conducted with a view to seeking outside legal advice in connection with the compliance program. One of the copies of the memo included handwritten notes referring to contacts with a named outside lawyer. A third document was the handwritten notes of the author of the memo reflecting his discussions with employees, used for preparing the memo.
The question then was whether these materials could qualify for privilege on the basis that they were prepared for the purpose of seeking legal advice. Akzo argued that if exactly the same memos had been addressed to outside counsel rather than another executive in the company, there would have been no doubt that they and the underlying notes were privileged. The Council of the Bars and Law Societies of the European Union, following US practice, argued that the test should be whether the “dominant purpose” of the materials was to seek outside legal advice. The Commission argued that, under the AM&S and Hilti case law, the privilege should be strictly limited to written communications between the company and its outside counsel seeking or giving advice relating to the company's rights of defence, and notes “which do no more than report the text or the content of those communications,” i.e. not including preparatory notes.
The CFI accepted that preparatory documents, “even if they were not exchanged with a lawyer or were not created for the purpose of being sent physically to a lawyer,” may be privileged “provided that they were drawn up exclusively for the purpose of seeking legal advice from a lawyer in the exercise of the rights of defence.” It emphasized that the scope of the privilege, as an exception to the Commission's investigatory powers concerning competition law, must be construed restrictively. The company claiming privilege has the burden of showing that it is “unambiguously clear” that the document concerned was prepared with the sole aim of seeking advice from outside counsel in the exercise of the rights of defence.
Applying this test to the documents at issue, the CFI held that none of them qualified for privilege.
 Case 155/79  ECR 1575.
 Case T-30/89  ECR II-163.
 “Furthermore, even if the adoption of Regulation No 1/2003 and of the Commission Notice on Immunity from fines and reduction of fines in cartel cases may have increased the need for undertakings to examine their conduct and to define legal strategies in respect of competition law with the help of a lawyer who has in-depth knowledge of the particular undertaking and of the market in question, the fact remains that such exercises of self-assessment and strategy definition may be conducted by an outside lawyer in full cooperation with the relevant departments of the undertaking, including its internal legal department. In that context, communications between in-house lawyers and outside lawyers are in principle protected under [the privilege], provided that they are made for the purpose of the undertakings rights of defence. It is therefore clear that the personal scope of that protection, as laid down in AM&S, is not a real obstacle preventing undertakings from seeking the legal advice they need and does not prevent their in-house lawyers from taking part in self-assessment exercises or strategy definition.” (See paragraph 173.)
 The last two documents consisted of an exchange of emails between the executive and an employee of the company's legal department holding the title “coordinator for competition law.” As permitted by Dutch law, he was a member of the Dutch bar. Akzo’s claim that the documents were privileged apparently rested solely on the fact that he was a member of the Dutch bar.