Back to black? Back to black?
The AG’s statements in the recently published Opinion (C-2/23) have now shed light on the CJEU’s possible direction for how to deal with this ongoing hot topic. AG Szpunar’s statements in the recently published Opinion (C-2/23
) have now shed light on the CJEU’s possible direction for how to deal with this ongoing hot topic.
- For a brief overview and before a more in-depth analysis, the following takeaways in a nutshell:
- The AG gives its blessing to the Austrian provision that allows sending blacklisted documents to the criminal investigation authority.He first addresses the scope of applicability of Directive 2014/104/EU (Damages Directive) and Directive 2019/1 (ECN+ Directive
):
Both Directives do not apply to matters of intranational administrative exchange between the National Competition Authority and the Prosecuting Authority. Therefore, the scope of ‘blacklist-protection’ has to be measured against EU primary law.
- Regarding access to the file of the parties in criminal proceedings, he considers the ECN+ Directive applicable. The Damages Directive is not applicable, however, because the proceedings in question do not include a competition law enforcement element. Complete access is required to protect the accused parties’ fundamental procedural rights, and cannot be restricted. However, this is not the case for civil parties (who do not enjoy the same level of need for protection) where consequently – according to AG Szpunar – a restriction of access to file can be justified.
- With regard to the protected documents, he clearly rejects an extensive interpretation of the term blacklisted documents. According to him, leniency statements’ annexes constitute ‘grey-list’ documents.
Background
A Never-Ending Story: The Austrian Construction Cartel
The Austrian construction cartel is one of the biggest cartels that has been revealed by the Austrian Federal Competition Authority (FCA). The involved companies were held liable for having the objective of minimising/eliminating competition by fixing prices, dividing up markets, and exchanging competition-sensitive information – for example about how future bids would be approached (for more, see the FCA’s FAQ). The fines imposed (see this blog post for a summary of fines up to December 2023) are substantial and follow-on damages claims are being prepared. This mainly concerns injured parties from the public sectors (such as municipalities) across Austria.
However, the involvement of a leniency applicant often leads to walking on eggshells in private enforcement due to the perceived need to protect leniency applicants. This conflict is most evident in the area of disclosure of evidence. It is important to protect the leniency applicant as well as the leniency program, which is an important tool for the competition authorities. Legal situation in Austria: Addition of blacklisted documents to Criminal File
The construction cartel keeps not only the FCA and Cartel Court busy, but also the criminal investigatory authority. The Public Prosecutor’s Office is conducting parallel investigations in relation to illegal agreements in procurement procedures. (under Section 168b(1) Austrian Criminal Code
). The PPO requested the file from the competition authority as it contains valuable information that could be used in criminal proceedings. This request was made in accordance with the duty of reciprocal assistance between authorities, which is outlined in Article 22 of Federal Constitution Act
and Section 76 Austrian Criminal Procedure Code
, as well as the case law of the Supreme Court. The requested documents were thus – lawfully – added to the investigation file of the PPO. Backdoor-Access to Protected Documents?From this point onwards, these documents were principally accessible to parties involved in the criminal proceedings. The accused must be allowed unrestricted file access. The principle of completeness of the file also stipulates that (in principle) no parts of the file may be excluded from inspection, which can be derived from ECtHR case-law
.
In criminal proceedings in Austria, there is the possibility for injured parties to join the proceedings as private parties to assert their claims. In the course of an adhesion process, the criminal court can decide on these claims jointly. In general, this group is also entitled to a fairly extensive access to the file.
In the case at hand, the accused parties asked the PPO to remove the leniency files from the file. In order to achieve this, they have invoked Article 6(6) (2014/104) of the Damages Directive and Article 31(3) (2019/1) of the ECN+ Directive
the absolute protection for documents on the so-called “black-list”. They argued that this would be undermined by exposing these documents as part of a criminal file to the access rights of parties to criminal proceedings. In this regard, they also argued that this situation would place the leniency requester in a worse legal position than other (non cooperating) accused parties. The PPO and the court of first instution (in this case, the Regional Court for Criminal Matters in Vienna) did not comply with this request. The Austrian Supreme Court has asked preliminary questions.
The Austrian Supreme Court assumes the EU directives “clearly provide broader protection for leniency statements, settlement submissions and other similar documents” (Request for Preliminary Ruling C-2/23 para 20). The Austrian Supreme Court assumes that the EU directives ‘clearly provide for a broader protection of leniency statements and settlement submissions’ (Request for preliminary ruling C-2/23, para 20) and are not limited to competition proceedings. This is based on Article 13(4) ECN+ Directive which states that national provisions are only allowed to go so far as they do not compromise the effective application of competition laws (para 25). They turned to the CJEU for clarification on how far this premise extends. In particular, the question was posed of whether the protection of ‘black-list’ documents can be considered absolute, meaning that it would also extend to mutual administrative assistance.In case such further-reaching protection is denied, the referring court asks whether parties – either persons under investigation or civil parties to the proceedings – can be excluded permanently from access to (at least parts of) the investigative file.
Another question aimed to clarify where the scope of protected documents has its limits. As the leniency application usually includes documents that should explain, substantiate and prove the correctness or conclusiveness of its content, the referring court wants to know if these documents (the annexes of the leniency statement) are also covered by the protection regime.
The opinion
Scope of Application of the Directives in the Context of Criminal Proceedings
To answer these questions, it must first be assessed whether the two Directives are applicable at all.
As to the scope of application of the Damages Directive, due to its Article 1 para 2, it is applicable in ‘damages actions’. The CJEU stated in Repsol
that the Damages Directive only applies to claims resulting from competition law violations (cf. para 41). The fact that the claims are not brought before civil courts, but rather criminal courts, does not change their civil law nature because they have – from the point of view of the civil parties – the characteristics a proceeding for damages. (cf. para 79). The current situation could theoretically fall under the Damages Directive. According to Article 2, paragraph 4, there must be a connection to competition law. This prerequisite is not met in Austria because the criminal proceedings do not aim to enforce competition law (cf. para. 84). The ‘issue’ in question – the inclusion of blacklisted files into the PPO case file – must also be denied. The PPO cannot be considered a claimant who requests disclosure for damages actions or as a court that orders disclosure of documents by an NCA. (cf. para 45). In this context, he clarifies the relationship between Damages Directive and ECN+ Directive. The former is regarded lex specialis for the latter, which is more general (cf. para 85). Even if the Damages Directive does not apply, it must be determined whether the lex generis has legal basis in the matter at hand. The Damages Directive provides a similar protection for blacklisted documents (cf. para 51). To determine the applicability of the Directive, it is necessary to differentiate between the Directive as a whole and the provision that aims to harmonize protection for the leniency requester (namely Art. 31(3) and (4)). The former only applies when EU competition laws are involved, but the latter (to be effective) also covers matters that only concern domestic competition laws (cf. para 53). The ECN+ Directive applies to the issue of third-party access to evidence, as it does no require a specific nature of the proceeding. ECN+ Directive has no effect on purely domestic mutual aid between authorities. It was designed to govern information exchange between NCAs of Member States to strengthen and facilitate cooperation (cf. para. 61). Both Directives do NOT apply to intranational mutual assistance. Restriction of access to documents on the blacklist could undermine Article 101 TFEU, which is a competition law. The AG therefore applies the standard of EU Primary Law when assessing whether access to blacklist documentation is legal. The Directive’s protection regime (para 69) contains the requirements for the EU primary law conformity with regard to blacklist protection. The requirements for the EU primary law conformity with regard to blacklist protection can in turn be read from the Directive’s protection regime (para 69).
Black, grey, white: Where to draw the line?
The referring court also wanted to know if annexes to the leniency application also fall within the scope of the ‘blacklist-protection’. According to AG Szpunar’s opinion, the answer is no. According to him, annexes must be treated as grey list documents because they are’specifically prepared’ for proceedings brought by NCA and do not fall under the definitions of ‘leniency statements’ and’settlement submissions’. These documents are not protected to the same extent as blacklisted documents (cf. para. 109; see another blogpost for more information on the delimitation and protection of the protected documents). He cites the reasoning of the CJEU in Evonik Degussa
to support his argument. In this case, the protection was only for blacklisted documents. He states that leniency declarations (as well settlement submissions) must be interpreted strictly because otherwise it would undermine an individual’s right to damages (cf. para 112).
–
Favoured parties of Access to Files and the Question of Permanent exclusion
Article 31(3) ECN+ allows the disclosure of blacklisted document only if its content is necessary for those parties to the relevant proceedings to exercise the rights of defence. The AG clarifies in this regard that the term “relevant proceedings” is not limited to only competition law procedures. In this case, he invokes the fundamental rights of people under investigation enshrined by the ECHR. This grants a comprehensive – and only in rare instances limited – right to access all evidence that the law-enforcement authority possesses. The nature of the documents (in this case the ‘blacklist-characteristic’) cannot, according to the ECtHR (in Mirilachvili vs Russia
, 11th December 2008, para 206), constitute a reason for non-disclosure per se. The latter can be justified only if the disclosure of the documents requested would harm the rights of another person or an important public concern (cf. para 91). The protection is also intended to protect leniency applicants from disclosure. The refusal to disclose can therefore be justified by public interests but must still be assessed on a case-by-case basis (cf. para. 97).
This allows for a differentiated treatment of the parties who are favoured when it comes to access to files. Due to the procedural fundamental rights described and the public interest in public enforcement, a provision that grants access to blacklisted files for accused parties in a criminal proceeding is compliant with EU law. This is not the case for civil parties who are involved in criminal proceedings. According to the AG, this is not the case for civil parties who are not under investigation (cf para 87). This is, according to the AG, clearly not the case for civil parties, who are not under investigation (cf para 87).[…] Conclusion
The struggle is (and remains) real when it comes to weighing up the rights of the accused against the interests of (effective) public enforcement and the associated protection of the leniency applicant. The distinction between private parties, and accused persons, is quite comprehensible. This is due to the established ECtHR cases. The AG’s opinion is that the narrow interpretation of blacklisted document will be upheld. However, the scope of protection for EU law is a new territory. It therefore remains to be seen whether the CJEU will follow the Advocate General’s opinion, particularly whether it will adopt his differentiated approach in distinguishing between civil and accused parties.
Nevertheless, it strikes a sour note that – at least in cases with criminal relevance – there is a great deal of uncertainty concerning the disclosure of leniency documents which potential leniency applicants will have to take into account.
