EU: No wAI out - Competition Policy Brief confirms legal professional privilege does not extend to in-house lawyers

The evaluation of Council Regulation (EC) No 1/2003 sparked the discussion on whether legal professional privilege (“LPP”) should be extended to cover in-house lawyer’s advice instead of (only) covering external, independent lawyer’s advice.

Nowadays, there is a lot that in-house counsel can create and manage with AI, but the protection of LPP is not one of them. You will still need external (real-life) EU-qualified lawyers to ensure that legal advice to your business on EU competition law matters is protected from scrutiny by the European Commission and other national competition authorities.

Refresher on LPP in relation to competition law investigations

We have all been there, discussions on privileged communication with the competition authorities during an on-site inspection or in relation to a request for information. LPP protects the following categories of documents from being included in the investigation’s file, which means that the Commission cannot review and use such information in their investigation.

1. Written communication between an independent, EU-qualified lawyer and his/her client for the purpose of the client’s rights of defence;
2. Summaries or reports of such attorney-client privileged communication circulated within the company;
3. Documents that are created for the purpose of legal advice from an external (EU-qualified) lawyer in the exercise of the rights of defence.

The second and third categories can frequently lead to discussions with competition authorities as it is not always clear if the internal communication relates to attorney-client communication or whether documents were created for the purpose of seeking external legal advice. We therefore always recommend that this is clearly indicated in the relevant correspondence or documents. 

The Competition Policy Brief provides a helpful overview indicating which member states do and do not recognise in-house LPP. This table shows that in-house LPP is more of an exception than a rule within the European Union.

Competition Policy Brief sees no reason whatsoever to expand the scope of LPP

It is not much of a surprise that the Policy Brief does not side with stakeholders who argue that LPP should be extended to in-house lawyers. Such a shift would significantly hamper how the Commission currently conducts its investigations and how it gathers evidence, as is shown by recent sanction decisions that rely on internal evidence, including in-house legal advice.

The authors’ main concerns about extending LPP to in-house lawyers are the following:

• In-house lawyers are not fully independent ‘by the very nature’ of the employment relationship;
• The proximity of in-house counsel to the business is a ‘double-edged sword’ in terms of ensuring compliance. While it does allow for in-depth understanding of the business, it may preclude a candid assessment of compliance and opposition to unlawful conduct that could have commercial benefits;
• There is no indication nor evidence that such an extension enhances compliance with competition laws;
• Defining the precise scope of LPP protection for in-house counsel will be challenging in a way that avoids abuse to conceal or even facilitate wrong-doing; and
• Extending LPP to in-house lawyers will be challenging to manage during investigations, as it will be difficult to distinguish their provision of legal advice from other types of communication.

The Competition Policy Brief therefore concludes that ‘extending LPP to in-house lawyers would likely hamper the effective enforcement of EU competition rules to the detriment of consumers and businesses, without any apparent benefit in terms of increased compliance’.

Where do we go from here?

The Policy Brief is a good and important reminder for in-house lawyers that, in most EU jurisdictions, their legal advice to the business is not protected from scrutiny by competition authorities. It can even be the first place to look when a company is under investigation. Not only is their advice to the company fully disclosable in an investigation, but even the soundest compliance advice can be used as evidence against the company if not followed.

In conclusion, this Policy Brief does not change anything in relation to current practice, and it is still important to consider seeking external lawyers’ advice when dealing with potentially sensitive competition law matters or coordinating communication and defense strategy during an investigation.

For more information or further guidance in this area, please contact Pauline Kuipers and Tialda Beetstra.

Ensure your team understands legal privilege during dawn raids. Our eLearning course on dawn raid investigations includes a module specifically on legal privilege and how to handle privileged documents during inspections. Find out more here.

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