Access to the record and competition enforcement policy November 2017

By STUART STRACHAN, Published in Competition Law

This article explains the latest case to be decided by the Competition Tribunal relating to a respondent firm's access to information in the Commission's record.

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Disputes about access to the Competition Commission's record in cartel cases – which may include access to documents relating to a firm's leniency application under the Corporate Leniency Policy (CLP) – may seem relatively dull and procedural. However, the implications of these disputes are far-reaching.

On the one hand, providing a litigant with access to the record results in greater visibility of the case which it has to meet and, therefore, promotes a respondent's right to fair trial.

On the other hand, if a damages claimant, such as a customer, is able to obtain access to the Commission's record, it may use the information in the record as evidence in suing the leniency applicant and other cooperating firms for damages. Similarly, if the National Prosecuting Authority is able to obtain access to the record, it may assist them in prosecuting those individuals involved in cartel conduct. Finally, if a co-respondent firm obtains access to the leniency application and related documents, it may "pick holes" in the CLP application, thereby jeopardising the CLP applicant's chance of obtaining full immunity.

Granting access in such circumstances may chill a firm's incentive to apply for leniency or otherwise cooperate with the Commission and, therefore, undermine the CLP's effectiveness.

If, through case precedent, the principle is established that it is possible to obtain relatively full access to the Commission's record through a simple and cost effective request, this may disincentivise CLP applicants and other cooperating firms from fully disclosing their participation in cartel conduct, and from providing the evidence which the Commission needs to establish the contravention.

In light of these implications, the questions whether access should be granted, who gets access and the extent of access are pertinent in shaping the effectiveness of the CLP, which is the Commission's most effective and important tool in fighting cartel conduct.

The Commission and Competition Tribunal are, therefore, in an unenviable position of having to strike a delicate balance between multiple conflicting priorities, such as a respondent firm's right to a fair trial, the effectiveness of the civil and criminal enforcement measures contained in the Competition Act, safe guarding the effectiveness of the CLP, and facilitating the Commission's prosecution of cartel conduct.

In the most recent decided case on this issue, WBHO Construction Limited (WBHO) made an interlocutory application to the Tribunal for an order declaring documents linked to Group Five Construction Limited's CLP application, claimed as legally privileged by the Commission, as not legally privileged and, therefore, discoverable (WBHO Construction (Pty) Ltd v Competition Commission; Group Five Construction Ltd CR162Oct15/ARI187Dec16). WBHO challenged the Commission's claim of legal privilege with respect to the annexures attached to Group Five's CLP application and the transcript of the first meeting between the Commission and Group Five.

This case is another scene in the play around the issue of "access" to the file.

Summary of the Tribunal's approach

The Tribunal, the Competition Appeal Court and the Supreme Court of Appeal have previously dealt with the legal privilege of CLP applications and related documents in Arcelormittal South Africa (The Competition Commission of South Africa v Arcelormittal South Africa [2013] 1 CPLR 1 (SCA)). Here, the SCA held that the inquiry into whether litigation privilege attaches to documents is "fact-bound" as to whether the information was created or obtained for purposes of contemplated litigation.

The parties in the WBHO case acknowledged that the question of legal privilege was ultimately a question of fact, however, the parties differed on whether the Commission had sufficiently justified its claim for privilege in this case.

The Annexures

The Commission argued that the annexures to the CLP application were not severable from the CLP application, as "the annexures were internal discussions within Group Five in preparation of the drafting of the leniency application and therefore are subject to litigation privilege".

WHBO, on the other hand, argued that the annexures were created before Group Five had applied for leniency and, therefore, the Commission could not have contemplated litigation at that stage. In line with this argument, WBHO submitted that litigation does not necessarily follow a CLP application, and that the annexures could not be considered legally privileged.

The Tribunal was, however, unconvinced and stated that "no argument was led as to how the CLP annexures were severable from the leniency application itself merely because they were generated before the leniency application was filed by Group Five with the Commission". The Tribunal found no reason to doubt the Commission's explanation, particularly given the close proximity between the creation of the annexures and the filing of Group Five's CLP application.

The Tribunal further found that WBHO had placed undue emphasis on the generation and author of the annexures, in line with what the SCA had previously held in Arcelormittal South Africa; that is, privilege attaches to the person under whose authority the document is produced, and not its author.

The Tribunal therefore held that the annexures, even though produced by Group Five before the filing of the CLP, were privileged in the hands of the Commission since they were produced for the Commission's use under the CLP.

The Transcript

The Commission submitted that the transcript of the first meeting between the Commission and Group Five was generated in contemplation of litigation and was, therefore, subject to privilege. In response, WBHO argued that the meeting was held some five years before the referral was made to the Tribunal and that litigation could not have been contemplated at that time.

The Tribunal again disagreed with WBHO's submissions, and held that the passing of time did not mean that litigation was never contemplated at the time of the first meeting between the Commission and Group Five. The Tribunal further noted that there may be many factors delaying the Commission's referral, and these should not detract from the fact that litigation can be contemplated long before a matter is heard.

The Tribunal therefore held that the Commission was within its rights to claim privilege over the transcript of the first meeting between the Commission and Group Five.

Implications

The test for legal privilege is fact-bound and remains to be assessed on a case-by-case basis. However, it is clear that, whilst looking at the facts of each case, the Tribunal will also have to take into account broader policy considerations. When the Tribunal answers the questions of whether access should be granted, who gets access and the extent of access, it will be mindful of the impact that their decisions have on a respondent firm's right to a fair trial, the effectiveness of the civil and criminal enforcement measures contained in the Competition Act to safe guard the effectiveness of the CLP, and facilitate the Commission's prosecution of cartel conduct.

From the Tribunal's approach to WBHO's application, it appears that compelling argument would be required to overcome the Commission's claim of privilege. This approach is somewhat indicative of the Tribunal taking an arrow approach to access, atleast in respect of a CLP application and its corresponding documentation. This approach would fall in favour of ensuring that the CLP applicants feel comfortable to make full disclosure, whether by application, annexures or by meeting, without having to be concerned about the information being relinquished at the request of an applicant.

It is worth noting that, to date, all case law on this issue has been created in the context of respondent firms to referral proceedings seeking to gain access to the Commission's record. In these cases, it has been deliberate in opposing requests to access its records. Time will tell whether the Commission will adopt the same approach when approached by third parties wishing to claim damages from respondent firms.

Strachan is a Candidate Attorney in the Antitrust, Competition and Marketing practice group of Fasten Martineau (South Africa). The article was supervised by Neil Mackenzie, a Partner.

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