Monti seeking help from US Supreme Court over cartel cases

By Peter Chapman

Date: 29/04/04

THE European Commission has warned the US Supreme Court it is "profoundly concerned" by a lower court ruling it alleges could strike a hammer blow to the way it handles competition and trade cases.

The EU executive's warning concerns a 40-year old law, known as Section 1782, that allows United States courts to make documents available to foreign tribunals.

The law was cited by a lower court which said chip company AMD could be granted access or "discovery" of confidential material from a past US lawsuit against rival Intel.

Under the law, AMD would have to pass on this information to the Commission for use in its anti-trust case against Intel, brought by AMD.

At first glance, the ruling seems to help the Commission by granting it access to key documents that could help it to take a decision in its probe.

However, the Commission has issued a submission in the Supreme Court arguing that the ruling should be struck down.

It warns that the ruling would set a damaging precedent that could force the EU executive to rethink the way it handles complaints from aggrieved companies.

European Voice has seen a copy of the hard-hitting submission and spoken to the attorneys from the Washington law firm representing the Commission in the case, Sidley Austin, Brown & Wood.

In summarising the Commission's arguments, Richard Weiner, head of the firm's Brussels international trade practice, said the ruling, if it is upheld, could lead to a deluge of tactical complaints to the EU executive from companies who want to see the business secrets of their rivals.

Under-staffed Commission departments, he says, would end up a "a pawn in a commercial battle-royal, like this one between marketplace competitors".

Worse, he warns, the ruling could help to undo a special "leniency programme" designed to encourage "whistleblowers" to hand over cartel secrets to Brussels, with the promise of smaller fines or a total let-off.

That is because, if the US courts deem that the Commission is a tribunal for the purposes of the law, the EU executive could come under pressure to hand over relevant documents to American courts, too.

"The great concern," said Weiner, "is that - if it is a tribunal - documents submitted to the Commission could be subject to discovery and that in the absence of confidentiality, whistleblowers might be less likely to come forward . . . the justices [judges in the case] were quite concerned about this eventuality."

Monti's spokeswoman Amelia Torres sought to play down the importance of the case.

However, the Commission's "friend of the court" submission before the US' highest court, reveals a starker assessment.

"Deeming the Commission a tribunal . . . not only facilitates circumvention of the EU's considered policies on access to information, but also may cause a co-equal competition authority to waste precious time and resources on unfounded competition complaints.

"Indeed, those consequences are so grave that the Commission could be forced to rethink the very structure and future existence of the complaint procedure under European law," it states.

On the leniency programme, it warns the ruling "will have adverse collateral consequences".

It says the Commission has needed, in the past, to invoke "the law enforcement investigative privilege in civil actions in the US to protect from disclosure documents that it gathers in its anti-trust law enforcement capacity".

But "if the Commission were deemed a "tribunal" in the competition context, it could find itself no longer able to guarantee the confidentiality of those leniency programme confessions by, inter alia, resort to the law enforcement privilege wherever necessary.

"Companies make delicate balancing judgements in deciding to come forward under the leniency programme and any enhanced risk of public disclosure of their confessions will deter participation," it adds.

Finally, it warns that the impact of the ruling could be felt in similar ways in other areas where the Commission investigates corporate behaviour.

"For example, private industry complaints can also trigger Commission investigations in the international trade arena, such as in anti-dumping and anti-subsidy enforcement," the Commission's lawyers argue.

The case continues.

The European Commission is concerned over a 40-year old United States law (known as Section 1782) that allows US courts to make documents available to foreign tribunals. The Commission fears the law could affect the way it handles competition and trade cases.