2. PROPOSED MODIFICATIONS TO THE PROCEDURAL REGULATION ARTICLE

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1 RESPONSE TO THE EUROPEAN COMMISSION S CONSULTATION ON PROPOSED MODIFICATIONS TO REGULATION 773/2004 AND THE NOTICES ON ACCESS TO THE FILE, LENIENCY, SETTLEMENTS AND COOPERATION WITH NATIONAL COURTS Freshfields Bruckhaus Deringer LLP is a limited liability partnership registered in England and Wales with registered number OC It is authorised and regulated by the Solicitors Regulation Authority. For regulatory information please refer to A list of the members (and of the non-members who are designated as partners) of Freshfields Bruckhaus Deringer LLP is available for inspection at its registered office, 65 Fleet Street, London EC4Y 1HS. Any reference to a partner means a member, or a consultant or employee with equivalent standing and qualifications, of Freshfields Bruckhaus Deringer LLP or any of its affiliated firms or entities. Abu Dhabi Amsterdam Bahrain Beijing Berlin Brussels Cologne Dubai Düsseldorf Frankfurt am Main Hamburg Hanoi Ho Chi Minh City Hong Kong London Madrid Milan Moscow Munich New York Paris Rome Shanghai Singapore Tokyo Vienna Washington

2 INTRODUCTION (1) Freshfields Bruckhaus Deringer LLP welcomes the opportunity to comment on the European Commission s Consultation (the Consultation) on Proposed Modifications to Regulation 773/2004 (the Procedural Regulation) and the Notices on Access to the File (the Access to File Notice), Leniency (the Leniency Notice), Settlements (the Settlement Notice) and Cooperation with National Courts (the Cooperation Notice) in light of the recent Directive on Antitrust Damages Actions. 1 (2) Our comments are based on the firm s considerable practical experience in this field, garnered through advising and representing many major companies and institutions in a wide range of cases. (3) In general, we consider the Commission s proposed amendments to be welcome and our view is that in a number of cases they do no more than sensibly reflect the approach that is already adopted in practice. Our comments below are limited only to those provisions that in our view raise potential concerns. 2. PROPOSED MODIFICATIONS TO THE PROCEDURAL REGULATION ARTICLE 15 (4) We note that the following additional sentence is proposed, as follows: Where settlement discussions have been discontinued with one or more of the parties, such party shall be granted access to the file pursuant to paragraph 1 when a statement of objections has been addressed to it. 2 (5) We consider that it would be of assistance if the Commission clarified what this addition is intended to achieve. It should be made clear whether this sentence means 1 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union. 2 For ease of reference, Article 15(1) states If so requested, the Commission shall grant access to the file to the parties to whom it has addressed a statement of objections. Access shall be granted after the notification of the statement of objections.

3 3 11 that parties engaging in settlement discussions will not obtain access to the file, even if other parties who have received a statement of objections have. If this is indeed the Commission s intention, it is our view that this would restrict the ability of any party that wishes to explore the possibility of achieving a settlement with the Commission to establish adequately what the Commission s case against it is. Otherwise, in our view this additional sentence does not change the current position that access to file will be provided to parties once they have received a statement of objections. ARTICLE 16A (6) We note that the following new Article 16a is proposed: 1. Information obtained pursuant to this Regulation shall only be used for the purposes of judicial or administrative proceedings for the application of Articles 101 and 102 of the Treaty. 2. Access to leniency corporate statements within the meaning of Article 4a(2) or to settlement submissions within the meaning of Article 10a(2) shall be granted only for the purposes of exercising the rights of defence in proceedings before the Commission. Information taken from such statements and submissions may be used by the party having obtained access to the file only where necessary for the exercise of its rights of defence in proceedings before the European Union courts reviewing Commission decisions or before the courts of the Member States in cases that are directly related to the case in which access has been granted, and which concern: (a) the allocation between cartel participants of a fine imposed jointly and severally on them by the Commission; or (b) the review of a decision by which a competition authority of a Member State has found an infringement of Article 101 TFEU. 3. The following categories of information obtained pursuant to this Regulation shall not be used in proceedings before national courts until the

4 4 11 Commission has closed its proceedings against all parties under investigation by adopting a decision pursuant to Article 7, 9 or 10 of Regulation (EC) No 1/2003 or has otherwise terminated its proceedings: (a) information that was prepared by other natural or legal persons specifically for the proceedings of the Commission; and (b) information that the Commission has drawn up and sent to the parties in the course of its proceedings. (7) We note that the new Article 16a(2) provides that access to leniency corporate statements and settlement submissions will be granted in proceedings before the Commission, if rights of defence so require. If access is granted, a party is allowed to take information from those statements and submissions and use it before the EU courts and national courts. We are concerned that this presents a real risk that such information may become public, given the fact that EU proceedings and most national proceedings are public. (8) In our view, Article 16a(2) can be read in two ways, and thus requires clarification. Either: it narrows the scope of the circumstances in which leniency and settlement materials can be used, because not only do the proceedings have to relate to rights of defence, but they also have to relate to one or both of 16a(2)(a) or 16a(2)(b); or it can be read as suggesting that corporate statements or settlement submissions can be used in other circumstances, namely in cases before national courts, if these cases concern (i) the allocation of the fine for which two or more undertakings were held jointly and severally liable, and/or (ii) the review of a decision of a national competition authority (NCA) in related cases. If this reading is correct, it is of real concern for the following reasons: first, litigation in relation to the allocation of the fine may result in the public disclosure of information from corporate statements or settlement submissions, given that in certain jurisdictions such

5 5 11 proceedings are generally public with very limited scope to request confidential treatment; second, Article 16a(2)(b) lacks clarity and may cause legal uncertainty. The provision seems to suggest that if access to the file has been granted by the Commission for the purposes of exercising a party s rights of defence, leniency statements and settlement submissions may be used in other (related) court proceedings against a decision of an NCA. This is likely to give rise to legal uncertainty as leniency applicants/settlement applicants will have no assurance that third parties who obtained access to the file may not use this information in the exercise of their rights of defence in national proceedings, which presents a risk of such information becoming public; and third, without adequate procedural safeguards in place, neither leniency applicants, settling parties, nor the Commission will have control over how information obtained through access to file is used. It is the parties themselves who have been granted access to the file who will determine whether the information obtained through access to file is relevant for the purposes of exercising their rights of defence. In our view this is concerning, as there is a risk that confidential information may be disseminated without adequate controls. We would recommend that the Commission makes it clear as to what it would deem as adequate controls and safeguards which would need to be in place for the protection of such information. 3. PROPOSED MODIFICATIONS TO THE ACCESS TO FILE NOTICE PARAGRAPH 9 (9) We note that it is proposed that paragraph 9 be amended to read as follows:

6 6 11 In the course of competition investigations, the Commission may obtain a number of documents, some of which may, following a more detailed examination, prove to be unrelated to the subject matter of the case in question. Such documents may be returned to the undertaking from which they have been obtained. Upon return, these documents will no longer constitute part of the file. (10) We are concerned with the Commission s suggestion that unrelated materials may be returned to the undertaking (emphasis added). Specifically, we do not consider that, as a matter of law, the Commission has the power to take unrelated materials in the first place. Documents seized or otherwise obtained by the Commission during a competition investigation must have a reasonable nexus to the subject matter of the investigation. 3 We would recommend that, in order to increase certainty and clarity, paragraph 9 should instead be amended to read: As soon as such documents are identified as unrelated to the subject matter of the Commission s investigation,, they must be returned forthwith to the undertaking from which they have been obtained. They shall not be used and/or relied upon by the Commission or any party for any purpose and must be removed from the Commission s file. 4. PROPOSED MODIFICATIONS TO THE LENIENCY NOTICE PARAGRAPH 34 (11) We note the proposal to amend paragraph 34 to read as follows: In accordance with the Commission Notice on rules for access to the Commission file, access to the file is only granted to the addressees of a statement of objections on the condition that the information thereby obtained may only be used for the purposes of judicial or administrative proceedings 3 See National Panasonic (UK) Ltd v Commission (136/79) [1980] ECR 2033, 3 CMLR 497; Joined Cases T-289/11, T-290/11 and T-521/11, Deutsche Bahn and others v Commission and C-583/13P Deutsche Bahn and Others v Commission (judgment pending).

7 7 11 for the application of the Union competition rules. Any failure during the proceedings to comply with the provisions of Regulation (EC) No 773/2004 on the use of information obtained through access to the file may be regarded as lack of cooperation within the meaning of points (12) and (27) of this Notice. Under certain circumstances it is subject to penalties to be laid down under national law. Moreover, if any such use is made after the Commission has already adopted a prohibition decision in the proceedings, the Commission may, in addition to applicable penalties under national law, in any legal proceedings before the Union Courts, ask the Court to increase the fine in respect of the responsible undertaking. Should any of the above limitations to the use of information be breached, at any point in time, with the involvement of an outside counsel, the Commission may report the incident to the bar of that counsel, with a view to disciplinary action. (12) We consider that, for clarity and certainty, the Commission should state that for the purposes of judicial or administrative proceedings for the application of Union competition rules does not include private damages actions. NEW PARAGRAPH 35A (13) We note that a new paragraph 35a is proposed to be added: In line with paragraph 26a of the Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 101 and 102 of the Treaty, the Commission will not at any time transmit leniency corporate statements to national courts for use in actions for damages for breaches of those Treaty provisions. (14) We are concerned that any extracts, paraphrasing or summaries of leniency corporate statements should also be protected to the same extent as the leniency corporate statements themselves. Therefore, we would recommend that paragraph 35a should be amended to read:

8 8 11 will not at any time transmit leniency corporate statements, or extracts, summaries of such statements, or any other documents, which substantially reproduce material elements of the leniency corporate statements, and/or any other documents containing such information (for example, the Statement of Objections or the final decision of the Commission),. 5. PROPOSED MODIFICATIONS TO THE SETTLEMENT NOTICE PARAGRAPH 22 (15) In relation to the proposal that paragraph 22 be amended to read as follows: Settlement submissions cannot be withdrawn unilaterally by the parties which have provided them. The statement of objections would be deemed to have endorsed the settlement submissions if it reflects their contents on the issues mentioned in point 20(a). Additionally, for a final decision to be deemed to have reflected the settlement submissions, it should not impose a fine which exceeds the maximum amount indicated therein. (16) We have concerns that this provision appears to suggest that a party that makes settlement submissions but then withdraws from the settlement process later due to, for example, what it considers to be unfair and/or discriminatory treatment by the Commission, cannot then withdraw its settlement submissions. This would be contrary to the party s ability to exercise its rights of defence. (17) Furthermore, we do not consider that the Commission should be the sole arbiter in deciding whether or not the statement of objections reflects submissions made by a party for the purposes of settlement without that party being able to make representations in that regard and/or withdraw submissions it has made to the Commission. PARAGRAPH 39 (18) We note the proposal to amend paragraph 39 to read as follows:

9 9 11 In line with paragraph 26a of the Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 101 and 102 of the Treaty, the Commission will not at any time transmit settlement submissions to national courts for use in actions for damages for breaches of those Treaty provisions. (19) We are concerned that any extracts, documents paraphrasing or summaries of settlement submissions should also be protected. Therefore, for the purposes of certainty and clarity we would recommend that paragraph 39 be amended to read: will not at any time transmit settlement submissions, extracts or summaries of such submissions, or any other documents, which substantially reproduce material elements of the settlement submissions, and/or any other documents containing such information (for example, the Statement of Objections or the final decision of the Commission),. 6. PROPOSED MODIFICATIONS TO THE COOPERATION NOTICE NEW PARAGRAPH 26A (20) We note that a new paragraph 26a is proposed to be added: For that purpose, the Commission will not at any time transmit the following information to national courts for use in actions for damages for breaches of Article 101 or 102 of the Treaty: leniency corporate statements, within the meaning of Article 4a(2) of Regulation (EC) No 773/2004; and settlement submissions, within the meaning of Article 10a(2) of Regulation (EC) No 773/2004. This paragraph is without prejudice to the situation referred to in Article 6(7) of Directive 2014/104/EU. (21) We are concerned that any extracts, documents paraphrasing or summaries of leniency corporate statements and settlement submissions should also be protected.

10 10 11 Therefore, for the purposes of certainty and clarity we would recommend that paragraph 26a should be amended to read: leniency corporate statements, within the meaning of Article 4a(2) of Regulation (EC) No 773/2004 or extracts, or summaries of such statements or any other documents, which substantially reproduce material elements of the leniency corporate statements, and/or any other documents containing such information (for example, the Statement of Objections or the final decision of the Commission); and settlement submissions, within the meaning of Article 10a(2) of Regulation (EC) No 773/2004 or extracts, or summaries of such submissions, or any other documents, which substantially reproduce material elements of the settlement submissions, and/or any other documents containing such information (for example, the Statement of Objections or the final decision of the Commission). NEW PARAGRAPH 26B (22) We note that a new paragraph 26b is proposed to be added: As regards other types of information, the Commission will not transmit the following to the national courts for use in actions for damages for breaches of Article 101 or 102 of the Treaty, before it has closed its proceedings against all investigated parties by adopting a decision referred to in Article 7, 9 or 10 of Regulation (EC) No 1/2003 or before it has otherwise terminated its administrative procedure: information that was prepared by a natural or legal person specifically for the proceedings of the Commission; and information that the Commission has drawn up and sent to the parties in the course of its proceedings. When it is asked to transmit the said information to national courts for other purposes than the use in actions for damages for breaches of Article 101 or

11 of the Treaty, the Commission will in principle apply the limitation in time mentioned in the first subparagraph, in order to protect its pending investigations. (23) In our view, pre-existing documents provided by the parties to the Commission as annexes to leniency statements, settlement submissions or replies to requests for information should be included as a third type of information which will not be transmitted to the national courts for use in actions for damages. While such documents formally are not prepared for the proceedings as they are preexisting, they form part of a party s submissions to the Commission for use specifically in Commission proceedings and thus merit an express separate clarification. (24) We would recommend that the provision in the second bullet above should be expressly stated to cover: any requests for information sent by the Commission; and the statement of objections. (25) We would recommend that a Statement of Objections should, in fact, be exempted from disclosure altogether as per new paragraph 26a, given that the Statement of Objections is a strictly confidential document intended solely for the parties to the proceedings and which is, in a case that proceeds to an infringement decision, then replaced by that final infringement decision. Freshfields Bruckhaus Deringer LLP 27 March 2015