Monti fears cover-up by in-house lawyers

Date: 25/01/01

By Peter Chapman

Competition Commissioner Mario Monti is telling EU firms that their in-house lawyers must be prepared to divulge potentially damning information to his anti-cartel investigators.

The warning comes as the employers' lobby UNICE steps up its campaign to give corporate attorneys the same rights on lawyer-client confidentiality or 'professional privilege' as their counterparts working in private law firms.

Monti argues that in-house lawyers could be ordered by their bosses to cover up their anti-competitive tracks before Commission watchdogs launch surprise inspections on their offices.

Although he insists he is not accusing all corporate lawyers of breaking the law, Monti says giving them professional privilege would protect the few who are guilty and would hamper his investigative efforts.

"Because in-house lawyers are not independent and have to follow the instructions given to them by the management of a company, they can be used as an instrument to commit infringements and conceal documentation on such infringements," the Commissioner declared in a letter to Hans-Olaf Henkel of UNICE's German affiliate. "Granting them a privilege could lead to the creation of real sanctuary within companies and would hinder the efficiency of investigations."

Under EU rules, the relationship between outside counsel and their clients is subject to a code silmilar to the confidentiality that exists between a patient and doctor. But industry groups claim that denying the same rights to in-house lawyers undermines firms' ability to obtain sound legal advice.

"As an executive I must be able to rely on my own in-house counsel's professional secrecy," said Henkel. "I cannot live with a situation where I must be wary when consulting my very [own] in-house counsel because his legal opinions may be used against me or he may have to give evidence against me."

Business lobbies also claim that Monti's plans to reform competition rules mean they will have to rely even more on their staff counsel, making privilege more crucial.

The competition chief wants to scrap the system in which firms petition the Commission to waive EU anti-trust rules for agreements that are considered to have little effect on competition. The reforms are aimed at cutting down on paperwork, but they would place greater responsibility on in-house lawyers to give sound advice to their bosses.

Granting these lawyers professional privilege, proponents say, would make it easier for companies to meet their obligations under EU law without fearing that outsiders could snoop on their internal discussions.

But Monti rejects this, claiming that legal privilege is unlikely ever to be an issue in this relatively uncontroversial area of EU competition law.

Competition Commissioner Mario Monti is telling EU firms that their in-house lawyers must be prepared to divulge potentially damning information to his anti-cartel investigators.