In the EU, neither Regulation 1/2003 nor its predecessor Regulation 17 contain a provision dealing with LPP. However, in AM&S Ltd v Commission the CJEU provided for such protection and defined the conditions under which it is available. These conditions have been further developed in subsequent judgments.
According to settled case law, LPP only applies where the communication involves an external lawyer entitled to practice the legal profession in one of the EU Member States. (AM&S, paragraphs 20 to 24). As such, LPP does not apply to communication between the company and an in-house lawyer. The EU courts revisited the question of LPP in Hilti. It found that LPP still applies where internal communications simply report the content of legal advice received from external legal advisers (Hilti, paragraph 18).
LPP was also considered in Akzo. In particular, Akzo sought protection for documents that were prepared for the purposes of seeking legal advice from a lawyer, in the exercise of the rights of defence. These documents were not themselves communications with a lawyer. They were not created for the purpose of being sent physically to a lawyer (as in AM&S), nor did they report the contents of communications with a lawyer (as in Hilti). The General Court held that LPP should in principle attach to such “preparatory documents”, but it did not accept Akzo’s claim for LPP concerning the particular documents in question (Akzo paragraph 123). Akzo appealed this judgment to the Court of Justice on a separate issue, namely whether LPP could attach to communications with in-house counsel. The Court of Justice rejected Akzo’s appeal, relying on the proposition that a lawyer is not independent if bound to his or her client by a relationship of employment (Akzo, Court of Justice Judgment, paragraphs 40 to 51). This is the case even if the lawyer is enrolled with a Bar and thus subject to certain professional and ethical obligations.
In her opinion on the Akzo case, Advocate General Kokott provided some elements, which were generally endorsed by the Court of Justice, to conclude that in-house lawyers bound by a relationship of employment cannot be deemed to be “independent lawyers”. First, the in-house counsel is economically dependent on their employer, who provides most of the counsel’s income in the form of salary, even if there is a protection against dismissal. Second, in-house counsel cannot ignore the company’s commercial strategy. This affects the counsels’ ability to exercise professional independence. Third, in-house lawyers are “structurally, hierarchically and functionally” dependent and integrated to their employer. Finally, in-house lawyers may be required to carry out other tasks for the company, reinforcing the close ties with the company (Akzo Opinion, paragraphs 61 to 71).
In November 2018, the Organisation for Economic Co-operation and Development (“OECD”) held a discussion on the treatment of privileged information in competition proceedings. In its position paper, the European Commission clarified that in practice it may extend LPP to communications with independent lawyers qualified in jurisdictions other than the EU upon the request of a company.
LPP is more broad in the USA than in the EU. First, the USA has a more liberal conception of attorney-client privilege, as it may also cover communication with in-house lawyers who are active members of a national bar. It is necessary to fulfil the following four conditions for the privilege to apply: the party asserting LPP must be a client; the communication must include advice of a lawyer; the communication must be intended to be confidential; and the communication must be made to seek or provide legal advice. Second, the US also includes work product privilege, which originated in the 1947 Supreme Court case, Hickman v. Taylor. Accordingly, a party cannot be compelled to disclose written or oral materials prepared by or for an attorney in anticipation of litigation or in preparation for trial (Hickman v. Taylor, paragraphs 510 to 511).
In the USA, different courts rely on differing standards as regards the application of LPP to foreign lawyers. For example, a Federal Court recognised the privilege for a French in-house lawyer, based on a “functional equivalence” standard. However, other courts have rejected this approach. Perhaps as a result of this lack of clarity, the US federal competition agencies do not tend to challenge LPP based solely on the fact that the communication comes from a foreign lawyer or foreign in-house counsel. However, they scrutinise whether the other conditions of LPP are fulfilled.
National competition authorities do not need to follow the principle of LPP as developed at EU level. Indeed, the Court of Justice confirmed that this rule applies only to competition proceedings run by the European Commission under Regulation 1/2003 (Akzo, paragraphs 102 and 105). Therefore, national LPP rules will continue to apply where investigations are undertaken by national competition authorities themselves. The LPP framework has changed over the last decade, at the national level. For example, in July 2021, a Spanish regulation entered into force that expressly recognizes LPP for in-house lawyers. Belgium has granted LPP to in-house counsel even when they are not enrolled at the Bar, but subject to their membership of the Belgian Association of Corporate Counsel. Similar development has occurred in other Member States such as The Netherlands, Hungary, Portugal, and Finland. At EEA level (including the UK under the Withdrawal Agreement), 16 Member States provide LPP for in-house counsel, while 14 refuse it.