Media Briefing Note: Judgment in Landmark Legal Privilege Case: Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (c-550/07 p) - Implications for Financial Services Regulation

LONDON, 16 September 2010 - The Court of Justice of the European Union ("CJEU") on Tuesday gave its ruling in a landmark case on legal professional privilege under EU law, which has far-reaching implications for in-house lawyers across the European Union and more generally for the European Commission's (the "Commission") investigative powers.

The case concerns a long-running dispute involving Akzo Nobel about whether communications with in-house lawyers should be protected by legal professional privilege under EU law and, as such, whether they can be withheld from disclosure in a competition investigation. 

However, the case may also have wider implications in the financial services sector if the Commission proposals on the powers of the proposed European Securities and Markets Authority (“ESMA”) come to fruition. 

Last week the EU Finance Ministers endorsed the political consensus which had been reached with the Commission and the Parliament on 2 September to create new financial authorities to oversee the EU’s banking, insurance and investment sectors. One of the proposals is that a new European authority for the securities industry, ESMA, would have direct regulatory authority over credit rating agencies. Provisions in the draft regulation which set out ESMA’s proposed powers include, in Article 23(c) the power to carry out on-site inspections. In carrying out these on-site inspections ESMA would have the power to examine records, take copies, ask for oral explanations and conduct interviews – all of which are very similar to the European Commission’s powers when it carries out competition investigations. 

So far, the debate about the extent of legal professional privilege under EU law has been limited to cases in which the European Commission has exercised its powers to carry out on-site inspections in competition cases. However, if as appears likely, other EU bodies, in this case ESMA, are to be given similar powers, then questions on the extent of legal professional privilege under EU law will become relevant not just in the competition sphere but also to investigations conducted by ESMA.

Consequently, the judgment of the Court of Justice of the European Union in the Akzo Nobel case has implications outside the sphere of competition law enforcement – particularly for credit rating agencies. 

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