Confidentiality and competition files

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A court allows a member of a regional parliament to access confidential documents in a cartel investigation.

Confidentiality and competition files
February 8, 2021

In its judgment of December 15, 2020, the Valencia Regional High Court (“TSJV”) provided a new interpretation on the handling of confidential information included in the file in the framework of an antitrust investigation. The TSJV stated that denying access to the file to a member of a regional parliament (“MP”) violates her fundamental right to participate in public affairs and access to public office under article 23 of the Spanish Constitution.

This judgment is of special interest since it takes a controversial stance on access to confidential documents in competition sanctioning proceedings, which are subject to a legal duty of secrecy; and has significant implications regarding the integrity and security of confidential information submitted by companies in antitrust investigations.

The denial of access to the file and the appeal by the regional MP

On September 26, 2019, the Valencia Competition Authority initiated a sanctioning proceeding (SAN 1/2019, the final decision is available, in Spanish, here) to investigate an alleged anticompetitive conduct contrary to article 1(1) of the Law 15/2007, for the Defense of Competition (“LDC”),consisting on a bid rigging cartel in the audiovisual sector.

On January 17, 2020, a regional MP requested a full copy of the file according to article 12 of the Valencia regional parliamentary regulation (the “Parliamentary Regulation”). This provision allows MPs to “obtain any hard or electronic copies of data, reports and administrative documents of Valencia regional authorities held by them or by any of their bodies, offices, agencies or public enterprises.”

On May 18, 2020, the Head of the Sustainable Economy, Productive Sectors, Trade and Employment Department of the Valencian Government -to which the Valencia Competition Authority reports-(the “Head of the Regional Department”) issued a decision denying the MP’s request, arguing that transferring the documents on file would be contrary to articles 42 and 43 of the LDC, which govern the duty of secrecy and the processing of confidential information.

The purpose of these provisions is (i) securing the constitutional rights of any interested parties in the investigations and third party rights (particularly the right of defense and the claimants’ legal protection); and (ii) ensuring non-disclosure of sensitive information provided in compliance with the obligation to cooperate and an effective processing of the files by the competent authorities.

The MP appealed the decision to the TSJV by means of the special proceedings to protect fundamental rights. She argued that denying access to the documents violated the fundamental right to participate in public office under article 23(2) of the Spanish Constitution.

The TSJV judgment

Based on a previous judgment in a similar fraud prevention case, the TSJV found that there must be a systematic interpretation to reconcile the LDC confidentiality provisions with the Parliamentary Regulation, “not the other way around.” The TSJV held that, in the absence of a legal provision limiting the right of the MP to access information, MPs can only “be denied access to requested documents if there are sufficient legal grounds, since it is not an unfettered right.”

According to the TSJV, in this case there are not sufficient legal grounds since the Regional Department did not prove that any secret data or documents were declared confidential in the context of the sanctioning proceeding. It does not suffice to refer to articles 42 and 43 LDC or to merely declare that there was a formal confidentiality statement if it is not submitted as evidence to the court, as in the case at hand.

The TSJV clarifies that “even if competition authorities had classified any data or documents as confidential during the proceedings […] it is the competent body or authority who must decide on granting or denying access to the file after assessing the relevant legal grounds.” Under article 12(4) of the Parliamentary Regulation, the competent body is the Valencia Parliamentary Board, at the request of the Regional Government. Article 12(4) provides that “if any data, reports or documents requested by MPs affect the core of fundamental rights or freedoms, the Board, at the request of the Government, may prevent public access to the proceedings, allowing MPs to take notes without obtaining any copies or being assisted by advisors.”

The TSJV argues that a decision declaring the confidentiality of documents in the context of sanctioning proceedings does not constitute sufficient grounds to deny an MP access to those documents. According to the TSJV, this is because article 12(4) of the Parliamentary Regulation limits the MP’s access to the documents and to taking notes, with no option of making copies nor of being accompanied by advisors, when the requested data affect constitutionally recognized fundamental rights, thus providing sufficient guarantees to protect the fundamental rights of the parties to the proceedings, and therefore the right of access by the MP must prevail over the duty of secrecy and the confidentiality requirements applicable to the documents on file.

The TSJV firmly concludes that denying access to the documents was a violation of article 23 of the Constitution since the denial by the Head of the Regional Department was neither based on the specific circumstances of the case, nor any evidence that the information was confidential.

The TSJV also found that the Spanish Markets and Competition Commission (CNMC) Guidelines on processing confidential information and personal data in competition law proceedings did not apply to this case. These Guidelines provide that access to any information include in the file is restricted, but the TSJV found that the Guidelines were not applicable because they are non-binding instruments, and do not address access requests by MPs performing their duties either.

Possible negative outcomes of the judgment for competition investigations

Though the TSJV points out that the MP does not have an unfettered right to access the file, it paradoxically considers that a right provided in a regional Parliamentary Regulation supersedes de facto the LDC safeguards regarding the processing of confidential information obtained in a sanctioning proceeding.

In particular, articles 42 and 43 LDC clearly require all parties conducting the sanctioning proceedings to guarantee the secrecy and confidentiality of the information on file. Granting unrestricted access to an MP without securing these confidentiality requirements undermines the LDC safeguards. Even more so if there are less restrictive and more protective ways to grant access to the documents, e.g. with redacted copies. In any case, administrative activity can be always controlled and reviewed because public officials have access to both the resolutions adopted in a sanctioning proceeding and their judicial review.

The TSJV’s stance could affect other regions or even the national scope, since the Regulation of the Congress of Deputies (Reglamento del Congreso de los Diputados)has a very similar provision to article 12 of the Valencia Parliamentary Regulation, which has significant implications for any procedures conducted by the CNMC at national level.

From this perspective, the judgment jeopardizes the integrity of competition authorities’ investigations, increasing the risk of leaks and disclosure. Besides, public officials having access to files during ongoing proceedings could lead to political interference in sanctioning proceedings, which could compromise the independence of competition authorities.

Also, the lack of security regarding the treatment of confidential information provided during an investigation and the risk that that information could be accessed by any MP (purely due to their position, without justifying their legitimate interest and with no guarantees as to the future use of the information), as the TSJV seems to accept, could deter companies from cooperating with competition authorities in investigations, e.g., under the leniency program.

Although no further details of the case are available, it is expected that the judgment at issue will be appealed to the Supreme Court by the Head of the Regional Department, and that it will be the Supreme Court the one adopting a definite position towards this matter.

February 8, 2021