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Decision of a German court in the Pfleiderer case protects confidentiality of leniency applications in cartel prosecutio

John Cassels


Belgium, Germany, United Kingdom

Decision of a German court in the Pfleiderer case protects confidentiality of leniency applications in cartel prosecution

Decision of a German court in the Pfleiderer case protects confidentiality of leniency applications in cartel prosecution

On 18 January 2012, the local court of Bonn dismissed a cartel victim's request for access to self-incriminating documents voluntarily submitted to the Bundeskartellamt, the German Federal Cartel Office, as part of leniency applications submitted by members of a paper cartel. The Court´s decision is final and not appealable.

This is the first time that a national court(1) ruled on a request for disclosure of leniency applications, a matter that has important consequences for the EU public policy relating to cartel prosecution.  The German court's decision in the Pfleiderer case reflects the European Commission's stance that such disclosure would discourage leniency applications and thereby substantially undermine competition regulators' ability to detect, prove and punish unlawful cartel activity.  Cartel victims' claims for damages supplement antitrust enforcement; however, their success depends on the finding of infringements in the first place.

In 2008, the Bundeskartellamt imposed fines totalling EUR 62 million on several manufacturers of decor paper for their involvement in price-fixing and capacity closure.  Pfleiderer, the cartelists' customer, requested access to Bundeskartellamt's files under paragraph 406(e) of the German Code of Criminal Procedure to prepare its action for damages against the cartel participants.  The Bundeskartellamt dismissed Pfleiderer's request to maintain the attractiveness of its leniency programme to potential whistleblowers. 

Pfleiderer appealed the Bundeskartellamt's decision before the local court of Bonn, which referred the matter to the Court of Justice of the European Union (CJEU) for its opinion on whether EU law prohibits the disclosure of leniency applications to victims of unlawful cartel activity.  The CJEU held  that in the absence of binding EU rules on the subject, such disclosure is not prohibited.  It declined to specify what category of documents submitted by whistleblowers may be disclosed, leaving it to national courts to balance victims' right to an effective remedy and a fair trial(3) against the need to protect leniency applications from disclosure in the interest of effective cartel prosecution.

Having operated this balancing act, the local court of Bonn confirmed the Bundeskartellamt's decision on the basis that the disclosure of data submitted as part of leniency applications would "jeopardize the purpose of the investigation" (paragraph 406(e) of the German Code of Criminal Procedure).

However, the Court also stated that other information contained in the authorities' files may have to be disclosed to interested third parties.  This, in addition to the ruling of the General Court such that the Commission is obliged to grant access to the index of its file relating to a specific cartel case,(4) illustrates the need for a diligent analysis of the legal situation of (potential) leniency applicants as well as victims of cartel activities.

A related issue was debated before a New York judge in December 2011, who dismissed a request for disclosure of the confidential version of the European Commission air-cargo cartel decision (containing confidential corporate data) in a multi-district damages action to safeguard sovereign interests and public policies of the EU. 

These issues have also prompted legislative intervention at EU and national levels: the German Federal Ministry of Economics has suggested that the German Act against Restraints of Competition should be amended in order to protect information submitted by leniency applicants.  Similarly, the European Commission intends to adopt similar legislation (whether in the form of soft law such as notices, which are not binding on national courts, or hard law) to prevent divergent, case-by-case decisions of national competition authorities on whether and to what extent submissions in leniency applications should be protected against disclosure.

1. Similar issues were raised before the English courts in National Grid's damages claim as well as the switchgear case.
2. See Case C-360/09 Pfleiderer AG v Bundeskartellamt, 14 June 2011.
3. See Case C-453/99 Courage and Crehan ECR I-6297.
4. Case T 437/08 - CDC Hydrogene Peroxide Cartel Damage Claims v Commission  ECR II-0000.12 December 2011.

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