The High Court’s ruling follows the recent seminal decision of the European Court of Justice (ECJ) in Pfleiderer AG v Bundeskartellamt C-360/09 and adds to the growing patchwork of different decisions on disclosure that exist across the European Union. The High Court’s decision will be welcome news to prospective damages claimants, who may be encouraged by the possibility of the disclosure of leniency materials in English courts. On the other hand, the decision is discouraging for competition regulators—for which leniency programmes are important tools in detecting cartels—and for companies that participate in these programmes.
National Grid’s Claim and Request for Disclosure
On 24 January 2007, the Commission issued its decision in the GIS cartel. Pursuant to the decision, 20 companies were found to have infringed the EU antitrust rules (Article 101 Treaty on the functioning of the European Union) on the basis that they had, inter alia, illegally shared markets, allocated quotas and fixed prices for GIS for 16 years. The Commission imposed fines totalling EUR 750 million on these companies.
National Grid subsequently brought a follow-on damages claim in the United Kingdom against ABB, Alstom, Siemens, Areva and various connected companies as suppliers of GIS, all of which were named in the GIS decision. National Grid is the proprietor of and maintains the high-voltage electricity system in England and Wales and operates the system across the United Kingdom. It claimed damages as compensation for paying supra-competitive prices for GIS as a result of the cartel. In order to substantiate its claim, National Grid sought access to a series of commercially sensitive documents that fell into four broad categories and were likely to include leniency materials. These included:
- The confidential version of the Commission’s decision.
- The responses (including any accompanying documents) by investigated companies in the ABB defendant group to the European Commission’s Statement of Objections (SO).
- The responses by the investigated companies in the ABB defendant group to requests for information made by the Commission that explain the meaning of pre-existing documents relating to the operation and/or effects of the cartel, or otherwise provide information on the operation and/or effects of the cartel.
- The responses by investigated companies in the Alstom and Areva defendant groups to requests for information made by the Commission that explain the meaning of pre-existing documents relating to the operation and/or effects of the cartel.
The High Court’s Assessment
Prior to examining the scope of what should be disclosed to National grid, the English High Court appraised the ruling by the ECJ in Pfleiderer. The Pfleiderer ruling arose from a dispute in a German court in which a claimant sought access to the files of the German Federal Cartel Office in support of a damages claim. The Pfleiderer decision held that EU law does not bar access to leniency materials by claimants seeking private damages. Rather, the ECJ held that the national courts and tribunals of each Member State may decide —on a case by case basis—whether leniency documents may be disclosed to claimants, balancing their own national law with the interests protected by EU law.
Post-Pfleiderer, cases decided in national and EU courts have conducted this balancing exercise and reached a variety of outcomes. For instance, in December 2011—six months after Pfleiderer was decided—the General Court of the European Union ruled in CDC Hydrogene Peroxide v Commission T-437/08 that the Commission may be obliged to provide a claimant with access to the index of its file in an underlying cartel investigation. On the other hand, in February 2012, the German court from which the Pfleiderer dispute originated—the Amtsgericht Bonn—ultimately refused to provide a damages claimant access to national leniency submissions held by the Federal Cartel Office in case 51 Gs 53/09.
The High Court’s Analysis: Legitimate Expectations and Proportionality
Against this mixed background, the High Court deemed that the Pfleiderer ruling applied to the Commission’s leniency programme and to national leniency programmes and, accordingly, applied it to National Grid’s request for documents containing leniency materials. The Court endeavoured, however, to move beyond Pfleiderer’s relatively loose parameters and clarify the boundaries of those documents that contain elements of leniency materials and may be subject to disclosure.
In line with Pfleiderer, the High Court performed the “balancing exercise” as advocated by the ECJ, focusing on two principles: the principle of legitimate expectations and the principle of proportionality.
The High Court held that the principle of legitimate expectations, as embodied in the expectation that leniency documents would not be disclosed, did not apply in the present case. The High Court did, however, note that one relevant factor related to the principle of legitimate expectations is whether disclosure would increase the leniency applicants’ exposure to liability as compared to the liability of parties that did not cooperate. The High Court noted that if only ABB had been sued (e.g., on the basis that it was not appealing the decision so there was no reason to delay a trial), that would be a powerful factor against disclosure of leniency materials, even allowing for the fact that ABB might then have been able to make a contribution claim against the other participants in the cartel.
The High Court proceeded to examine the scope of disclosure in terms of proportionality, a tenet that also underpins the English rules on disclosure and inspection. An assessment of proportionality was deemed relevant from the perspectives of i) whether the information is available from other sources and ii) the relevance of the leniency materials to the issues in specie. On the basis of this assessment, the High Court appraised the scope of what should be disclosed in this case. The Court found that to the extent that the information sought from the disclosure was of real assistance, there were no other reasonable means available for National Grid to obtain the information. In terms of relevance, it was noted that a blanket objection to disclosure on the grounds that this might prejudice the Commission’s leniency programme is not acceptable but, equally, it would be wrong to permit disclosure of the entire leniency materials without closer examination.
Documents Ordered to be Disclosed to National Grid
In view of its assessment, the High Court ordered that certain parts of documents be disclosed to National Grid, but not all the documents contained in the four categories listed above:
- As regards the Commission’s confidential decision, the High Court considered each document on a paragraph-by-paragraph basis and held that a number, but not all (32 paragraphs in total), of the redacted passages of the decision should be disclosed.
- As regards the other documents, i.e., the responses by Arriva and ABB to the Commission’s request for information, the High Court held that only very limited passages from a few of those documents should be disclosed. With regard to ABB’s materials, the justification for disclosure appeared to be that the materials disclosed provided mainly explanations concerning documents already in the Commission’s possession that may have already been disclosed to National Grid.
On the other hand, the High Court ruled that under the two-pronged balancing assessment, certain documents should not be disclosed. These included ABB’s responses to the Commission’s SO and certain other parts of documents supplied by Areva. The High Court found that these documents were not of particular relevance to the proceedings at hand and that the interest of protecting information supplied under the leniency programme outweighed the interest of providing disclosure to assist the claim for damages.
Implications of the Judgment
The judgment of the English High Court seems to represent a paradigm example of how the Pfleiderer balancing exercise is undertaken by the English courts. It is noteworthy that the approach to disclosure in the United Kingdom is that requests will be assessed on a case-by-case basis where each individual document is considered paragraph-by-paragraph.
It also demonstrates that applying for leniency post-Pfleiderer to the European Union’s top antitrust regulator is a somewhat unpredictable step in the context of piggyback damages claims. Indeed, the High Court judgment serves to give impetus to the forthcoming EU legislation on disclosure of leniency materials (scheduled for 2012), particularly when read alongside other decisions that reach different positions on disclosure. An important corollary is, therefore, that all companies operating in the European Union would do well to stay abreast of developments in this area, especially if they are considering applying to participate in the leniency programme of the Commission or a national regulator.