Competing concerns - private litigant access to leniency materials

Friday 4 May 2012

Author: Simon Ladd

First published in NZ Lawyer, 4 May 2012.

The Commerce Commission's leniency and co-operation policies, which offer immunity or reduced penalties to parties that admit breaches of the Commerce Act 1986 and assist the Commission, are critically important weapons in its armoury. More than any other strategy, these policies have lead to the detection and disruption of anti-competitive cartels.

However, two recent European cases highlight a dilemma for parties seeking the benefits of leniency or co-operation: the risk that third parties, the alleged victims of the cartels, will obtain the information they provide to the regulator and use that information in private proceedings against them. That dilemma in turn creates a significant concern for the regulator: that the threat of disclosure of such information will deter leniency and co-operation applicants.

The European Court of Justice (ECJ) considered the competing concerns in Pfleiderer AG v Bundeskartellamt (Case C-360/09 14 June 2011), and the English High Court has done so in two related decisions, National Grid Electricity Transmission Plc v ABB Ltd [2011] EWHC 1717 (Ch) and [2012] EWHC 869 (Ch).


Pfleiderer concerned a price fixing cartel among the three largest European producers of "decor" paper, which is used for surface treatment of engineered wood. The German regulator obtained information through its leniency programme and imposed fines of €62 million on the cartel participants.

Pfleiderer AG was a manufacturer of engineered wood and had purchased goods worth €60 million from the three decor paper producers. It wanted to bring a follow-on action, and made two applications for access to the regulator's file. The regulator provided only a version of its decision that had identifying information removed, and refused to provide any other confidential information.

Pfleiderer appealed. The German appellate Court referred a question to the ECJ: did the relevant provisions of Community competition law prevent affected parties from obtaining documents submitted or created in the context of a leniency programme?

The ECJ held that there was no Community provision that governed the question, so it was a matter for the national courts to determine in accordance with their own procedure, on a case-by-case basis. Contrary to the views of the European Commission's Advocate-General, who considered that disclosure would disincentivise leniency applications, the Court considered that documents provided in applications should be available, and that the procedure for obtaining them should be no less advantageous to an applicant than the procedure governing similar domestic claims.

The ECJ further held that the national courts should decide applications for access by weighing two conflicting policy considerations: protecting the effectiveness of leniency programmes in uncovering and prosecuting cartel offences, and the right of individual litigants to compensation for loss. Potential applicants for leniency could be deterred if documents and evidence relevant to the applications were likely to be disclosed afterwards. However, given the secretive nature of cartels, it might be difficult for a potential claimant to formulate a claim without reference to those documents.

National Grid

The English High Court applied Pfleiderer in National Grid. The case was a follow-on action brought after the European Commission imposed fines in excess of €750 million on participants in a cartel for gas insulated switchgear.

Four companies were defendants in the civil action: ABB, Siemens, Alstom, and Areva. ABB, Siemens, and Areva had applied to the Commission for leniency. In the course of the applications, each group had provided documents to the Commission and each was entitled to access to documents provided by the others.

National Grid sought those documents in the English civil proceeding but French law prevented Alstom and Areva from disclosing them. National Grid then applied to the Court for orders that they disclose the confidential version of the Commission's decision and materials provided to the Commission during its investigation.

The defendants submitted that disclosure would defeat the legitimate expectation of non-disclosure that they had when submitting the information. The Court disagreed that such an expectation had any bearing; the Commission's leniency notices made it clear that a grant of immunity or leniency did not preclude civil law liability. Further, the same argument had been rejected by the ECJ in Pfleiderer.

The Court did note that it would be a "powerful factor against disclosure" if disclosure would increase one party's liability disproportionately to that of the others, but that was not a risk on the facts. Nor could there be a perception that leniency applicants in future would be at a disadvantage as against those who did not co-operate; first, the terms of the judgment would dispel any such perception, and second, if that was a decisive consideration, there could never be disclosure. That result would be contrary to the approach adopted by the ECJ, so could not be accepted.

Applying the ECJ's balancing test, the Court took into account the gravity and duration of the infringement, the scale of the fines imposed, and the seriousness of the conduct, and emphasised that disclosure had to be proportionate both in terms of whether the information was available from other sources and the relevance of the material sought. The Court held that, in that case, the interest in disclosure was greater than the interest in promoting leniency programmes.

New Zealand

In New Zealand, an application for disclosure by the Commerce Commission may be made in two procedural contexts. First, an application could be made directly to the Commission under the Official Information Act 1986 (OIA). Secondly, an application could be made to the Court under either of High Court Rules 8.20 or 8.21, which govern pre-commencement discovery and non-party discovery once proceedings have commenced. The thresholds for disclosure are slightly different under the OIA and the Rules, but it is likely that the Ombudsman (if the Commission declined to disclose) or Court would conduct a balancing exercise similar to that in Pfleiderer and National Grid.

Section 69 of the Evidence Act 2006, gives the Court an overriding discretion in relation to confidential documents. The discretion is to be exercised by weighing factors such as the public interest in the disclosure and the interest in maintaining activities that rely on the free flow of information. Similarly, under section 9(2)(ba) of the OIA, prejudice to the continued supply of confidential information, where that supply is in the public interest, is a relevant factor to weigh against the interest in disclosure (and this provision is sometimes relied on by the Commission when it decides to withhold information).

That highlights an issue that does not appear to have been considered in Pfleiderer or National Grid, the extent to which public interest immunity might prevent disclosure. The immunity could arise by analogy with the recognised public interest immunity protecting informants, and appears to be recognised in the Commission's Cartel Leniency Policy and Process Guidelines (12 April 2011), which states that it will not waive any privilege held in information provided by leniency applicants in the event of an application by a third party for disclosure.

It remains to be seen whether the New Zealand Courts will take the approach in Pfleiderer and National Grid. From this distance, the European concern for the ability of private litigants to formulate their claims without leniency and/or co-operation materials appears overstated, and may reflect different discovery procedures in Europe (compare the New Zealand High Court's more cautious approach to private litigant access, albeit in a different procedural context, when determining Schenker's application for access to the Court's files in Commerce Commission v Air New Zealand Ltd [2012] NZHC 271). It will usually be the case that there is sufficient public information (e.g., the facts surrounding a regulator's investigation) for the private litigant to formulate a claim that will inevitably be refined following discovery. Although the competing concerns will be considered on a case-by-case basis, the starting point is therefore more likely to favour protecting the leniency or co-operation process and non-disclosure. 


This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

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  • Simon Ladd

    Partner Auckland
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