Akzo Nobel ruling delivers blow to in-house lawyers

Europe’s second-highest court dismissed today a complaint by Dutch chemicals group Akzo Nobel against the European Commission (EC) in a judgment that has serious implications for in-house lawyers.

The Court of First Instance (CFI) agreed that the EC was right in deeming that communication between general counsel and their in-house clients was not privileged information, even if the general counsel were barristers.

The CFI did rule, however, that the EC had infringed confidentiality protocol during a 2003 dawn raid in Manchester when it forced Akzo’s subsidiary Akcros Chemicals to give a “cursory glance” at documents.

The company complained, backed by several lawyers’ organisations, that the documents seized during the 2003 price-fixing investigation were covered by lawyer-client confidentiality.

The applicants argued that two sets of these documents were privileged – one drafted in preparation for seeking the companies’ external lawyers’ advice and the second set comprising drafts of the documents in the first set, plus emails between the companies and their internal lawyers.

A 2003 interim order by the CFI required that both sets of documents were kept in a sealed envelope at the CFI’s registry until today’s final judgment.

An Akzo statement said that the company “is studying the court’s ruling and will issue a response in due course should it be deemed appropriate”.

This is the second major competition judgment issued by the CFI today, following this morning’s ruling on Microsoft [see story], and the second major victory for Europe’s competition regulators.

Macfarlanes competition partner Marc Israel said: “I think together the cases give the Commission a huge boost in confidence. Essentially, it won hands down in both cases although it was criticised for procedural errors in both but the Commission will breathe a huge sigh of relief and learn from those procedural mishaps, an area where it has often slipped up in the past.”

Akzo Nobel is currently attempting to take over UK rival and Freshfields Bruckhaus Deringer client ICI for £8bn. In the takoever, Akzo is being advised by De Brauw Blackstone Westbroek and best friend Slaughter and May, and Sullivan & Cromwell on US aspects.