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
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  EWHC 1717
(Ch) and  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
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.
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
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
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
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
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  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.