On 8 July 2013, the UK’s Office of Fair Trading (OFT) published its final revised Guide to applications for leniency and no-action in cartel cases. The Guide, which took effect on publication, follows two consultations on the draft revisions, the second of which specifically addressed the issue of waiver of legal privilege in leniency applications (covered in paragraphs 3.15 to 3.23 of the Guide).
The OFT has announced that it will no longer require leniency applicants in cartel cases to waive legal privilege under any circumstances. The existing policy is that while waivers are not required in civil competition investigations, they may be in certain circumstances in criminal cases. Applicants may still be asked if they are willing to waive legal privilege, but a refusal to do so will not have any adverse consequences for the leniency application.
The decision not to insist on waiver of legal privilege has been made primarily due to concerns that any requirement would act as a disincentive to potential leniency applicants. In particular, if applicants feel unable to make full and frank disclosure to their legal advisers then it is difficult for them to obtain proper advice in order to make an informed decision about action to take in relation to any cartel activity, especially given that leniency is not usually confirmed until late in the process.
The OFT has also taken into account that many other competition authorities, such as the European Commission and the United States Department of Justice Antitrust Division, do not require waiver as a condition of leniency, and the fact that the Government has confirmed that waiver of legal privilege will not be a condition of the proposed Deferred Prosecution Agreements.
While this change has been overwhelmingly welcomed, the introduction of a new independent counsel to which applicants may be required to submit material over which they are claiming privilege for assessment as to whether that claim is justified, is more controversial.
Critics have pointed out that the disclosure of materials to the independent counsel could result in a waiver of legal privilege over those documents in some jurisdictions, in particular the US. The OFT did not consider these concerns relevant because they deal with considerations outside of the UK legal framework. It remains to be seen whether companies, especially those with wide-ranging international interests, will consider this risk significant enough to deter them from taking part in the leniency process. There are also concerns that an appeal by a leniency applicant against a decision of the independent counsel that privilege does not apply may adversely affect the OFT’s view as to whether the applicant is complying with its obligation of continuous and complete cooperation under the leniency programme. The OFT has said that this will be dealt with on a case by case basis.
Despite these concerns, the decision by the OFT to change its policy and cease to require leniency applicants to waive legal privilege in both civil and criminal proceedings is a significant step forward, and demonstrates the results that robust responses to official consultations can achieve.
The OFT has also published two new Quick Guides to cartels and leniency, one for businesses and one for individuals.