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Disclosure of confidential version of European Commission decision in follow-on claim

29 December 2014

In relation to a follow-on private damages action arising from an air freight cartel, the High Court recognised that when a European Commission cartel decision is disclosed, the ‘Pergan’ principle gives certain protections to non-addressees of the decision against whom no finding has been made but who are nevertheless mentioned in it. However, the court held that it was not obliged to follow the EC procedure, when publishing the non-confidential version of its decision, of redacting any reference to such non-addressees. Instead the court ordered the decision be disclosed without the so-called ‘Pergan’ redactions, but imposed a confidentiality ring and barred the claimants from using the unredacted decision to commence further proceedings (Emerald Supplies Ltd v British Airways plc & Air Canada & 17 ors [2014] EWHC 3513 (Ch)) 

Application for disclosure of European Commission air freight cartel decision

This decision arose in a follow-on action concerning alleged loss resulting from an air freight cartel. In November 2010 the European Commission (EC) made a decision (the Decision) finding that the addressees of the Decision (which included British Airways (BA)) had breached article 101 of the Treaty on the Functioning of the European Union and article 53 of the European Economic Area Agreement by colluding to overcharge for air freight. The claimants, who were customers of air freight services, issued an application to inspect the Decision.

The EC has not yet issued the non-confidential version of its Decision. The EC prepares these non-confidential versions by redacting (i) material prepared as part of any leniency applications, (ii) material over which legal professional privilege was claimed and (iii) materials protected from inspection by the principle identified in Pergan Hilfsstoffe Fur Industrielle Prozesse GmbH v Commission [2007] ECR II-4225 (Pergan). The “Pergan redactions” are intended to protect the presumption of innocence, trade secrets and the confidentiality of non-addressees of the Decision, against whom no finding has been made. This protection is achieved by redacting any references in the EC’s decision to such non-addressees. This case was about whether the English courts were obliged to follow the EC’s redaction policy to protect Pergan rights.

The court first ordered that the defendants and other concerned parties (such as other addressees of the Decision joined as Part 20 defendants and non-addressees of the Decision who were concerned non-parties to these proceedings) prepare a redacted version between them. The result was a heavily redacted Decision which the court held was “completely useless because so much has been redacted”. This led to the present application.

Peter Smith J was particularly persuaded of the need to take action as “[d]espite the Decision having been issued merely 4 years ago the Commission has been unable to agree what part or parts of the Decision should be made public”. The court found that the EC had taken no steps to speed up the process or to indicate when the process of preparing the Commission’s own redacted version of the Decision would be finished. The court concluded that the EC had left it to the court to decide the appropriate measures.

Peter Smith J rejected the claimants’ application that he himself should read the unredacted Decision and decide which parts should be redacted. The court did not have the resources, information or background knowledge to undertake such a task.

Confidentiality ring

There was an inequality between the parties, with some having access to the unredacted Decision (by virtue of being addressees of it) and others not. Peter Smith J stated that disclosure of the Decision into a confidentiality ring, combined with a bar on the claimants using the Decision to commence other proceedings, would allow the dispute to proceed on an equal arms basis while still providing adequate protection of Pergan rights.

The court recognised that Pergan means that it would be contrary to a non-addressee’s entitlement to the presumption of innocence and legitimate interest in protecting professional secrecy for its name to be disclosed in a decision it had not had the opportunity to dispute. However, in all manner of cases, a party’s confidential business is regularly protected by a confidentiality ring and Pergan did not create a different class of protection. The judge found that there had been a “fundamental failure” of the EC redaction process and that the court was not bound to follow the EC’s procedure in applying Pergan, so long as the court devised procedures with the same effect. He described the redaction process as a “hopeless exercise”.

The court therefore ordered that an un-redacted Decision, minus leniency materials and material for which legal professional privilege was claimed (but not redacted for Pergan principle material), be disclosed to all parties, subject to a confidentiality ring and subject to the bar on the claimants mentioned above.

COMMENT

Disclosure into a confidentiality ring is a significant departure from the procedure envisaged by the Pergan decision. In a confidentiality ring, the court order establishes arrangements for confidential, unredacted, versions of documents (in this case the Decision) to be provided to representatives of the parties and their external counsel and solicitors. It provides that the parties may disclose confidential documents and information only to the named advisers. The named advisers in the confidentiality ring must give an undertaking not to disclose the confidential versions of the documents to anyone outside the confidentiality ring, and to use the confidential information only for the purposes of the proceedings.

While confidentiality rings have often been used to protect confidential information and trade secrets, the disclosure of the Decision also raises questions of the protection of the entitlement of the non-addressees to the presumption of innocence. The non-addressees could not participate in the EC process and did not have an opportunity to address any references to them in the Decision. It is understandable that non-addressees of an EC Decision would object to potential references to their involvement being disclosed to claimants or potential claimants, or any erosion of the protection of the presumption of innocence. However, the restraint on the claimants using the unredacted Decision to bring further actions should provide some comfort.

There is, of course, a risk that the confidentiality ring will not be respected, especially where there are large numbers of parties, which is often the case in claims of this sort. However, to assume that the order will be flouted is a counsel of despair. The court is entitled to assume that its orders will be complied with. The fact that someone might breach an order cannot be an argument against making it.

This case is currently under appeal; Allen & Overy LLP is acting for one of the appellants.