Sep 21, 2019

Balancing Confidentiality Claims With Due Process Requirements

Introduction

The protection of confidential information plays a pivotal role in any investigation undertaken by a government agency. Competition authorities have extensive access to competitively sensitive information of the enterprises being investigated and this makes it necessary for any confidential information obtained by the authorities during an investigation be accorded due protection. However, certain information might also need to be published or accessed by parties in pursuing their respective right of defence during proceedings. Therefore, one of the key challenges faced by investigating agencies is balancing the need to protect confidential information of the parties vis-à-vis the need to have a transparent and fair investigation.

Treatment of Confidentiality Claims in India

Confidentiality rules and its framework are enshrined in the following provisions: (i) Section 57 of the (Indian) Competition Act, 2002 (‘Act’); (ii) Regulation 35 of the Competition Commission of India (General) Regulations, 2009 (‘General Regulations’); and (iii) Regulations 6 and 6A of the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Leniency Regulations’).

Section 57 of the Act provides that no information relating to any enterprise, which has been sought by the Competition Commission of India (‘CCI’) or the Competition Appellate Tribunal can be disclosed without the prior written permission of the parties, other than in compliance with or for the purposes of the Act, or any other law for the time being in force.

Regulation 35 of the General Regulations provides the mechanism to claim confidentiality over any information provided during the course of an investigation. A request to claim document(s) as confidential can be made in writing to the Director General or CCI. This request can be made only if making the document(s)or part of them public will result in disclosure of trade secrets, destruction/appreciable diminution of the commercial value of any information or can be reasonably expected to cause serious injury. To ascertain whether information is confidential, the Director General or CCI also consider the following factors: (i) extent to which the information is known to outside public; (ii) extent to which the information is known to the employees, suppliers, distributors, and others involved in the enterprise’s business; (iii) the measures taken by the enterprise to guard the secrecy of the information; and (iii) the ease or difficulty with which the information could be acquired or duplicated by others.

CCI, under its leniency regime, also has powers to impose lesser penalties on parties in case they disclose the existence of a cartel[1]. However, the confidentiality rules differ under the leniency regime as compared to the General Regulations. As per Regulation 6 of the Leniency Regulations, CCI or the Director General shall treat as confidential: (i) the identity of the leniency applicant; and (ii) the information, documents and evidence furnished by the leniency applicant as part of its leniency application. The only exceptions are where: (i) a disclosure is required by law; (ii) the applicant has agreed to such disclosure in writing; or (iii) there has been a public disclosure by the applicant.

Treatment of Confidentiality Claims in other Jurisdictions

In the European Union (‘EU’), the European Commission (‘EC’) treats access to information during an investigation as a fundamental procedural requirement in antitrust cases[2]. EC regularly publishes guidance documents on confidentiality claims, including guidance on the kind of information that may be classified as business secrets and other confidential information[3] and provides practical information for an enterprise claiming confidentiality in EU antitrust proceedings.[4] EC has also issued guidance and templates for the use of voluntary ‘confidentiality rings’ for access to file.  A confidentiality ring under EU laws is a negotiated disclosure procedure through which a restricted circle of individuals are given access to confidential information contained in EC's file.[5]

In the United States of America (‘US’), the Antitrust Division of the Department of Justice and the Federal Trade Commission (‘Agencies’) depend on access to sensitive, non-public information from businesses and consumers for conducting antitrust proceedings. No single US federal statute or regulation defines ‘confidential information’ in the antitrust context[6]. Instead, various federal statutes, rules, and policies require that the Agencies treat certain information they obtain as confidential and protect it from disclosure to the public[7].

The restrictions governing the treatment of confidential information in the US continue to apply even after the Agencies have filed a complaint in a federal court or initiated administrative proceedings. Although the Agencies are expressly allowed to use confidential information produced by the investigated parties and third parties in these proceedings, such parties can request that the court grant a protective order to protect confidential information from disclosure beyond individuals identified in the order, upon a showing of ‘good cause’.  In determining whether to issue such orders, the courts consider several factors including the confidentiality interests at issue, the fairness and efficiency of limiting public access to information, and the importance of the litigation to the public.

CCI’s Recent Approach Regarding Confidentiality

CCI has been liberal so far in granting confidentiality requests of the parties where they have been able to demonstrate that the requirements under the Act and General Regulations or Leniency Regulations have been met. Similar to EU, CCI has also recently started the use of a ‘confidentiality ring’ in certain cases. This mechanism provides access to parties’ submissions to the other party’s legal counsel (internal and external) on an undertaking that such information shall not be passed on to any other officials/employees of the other party including its business, sales, and marketing teams. Accordingly, it is ensured that the commercially sensitive information of a party is not used as a tool for gaining any competitive advantage by another party. The Delhi High Court (‘DHC’) in cases involving Telefonaktiebolaget LM Ericsson (publ)[8] (‘Ericsson cases’) has previously ordered the creation of confidentiality clubs, comprising of a specified number of lawyers and expert witnesses. Although in the Ericsson cases, the membership of the confidentiality club was explicitly limited to external counsels, no such differentiation was observed in another DHC order[9], where the term ‘legal representative’ was used.

CCI has also allowed parties in the past to set up bilateral information sharing mechanisms (with limited circulation) in order to expedite the investigation and balance the parties’ right of defence. Further, DHC is currently hearing a set of cases where the extent of CCI’s power to redact information provided by a complainant vis-à-vis an opposite party’s right to defence is being argued[10]. This case is likely to provide more detailed guidance on CCI’s powers to grant access to file to the parties during investigation. We will provide a further update on this, once the case is concluded.

Conclusion

A robust framework for the protection of confidential information enhances the credibility of competition enforcement agencies and reinforces the ability to collect information from the parties they investigate. This proactive approach taken by CCI thus far to protect confidential information while adhering to due process requirements demonstrates that it is in line with best practices currently prevalent across jurisdictions. [1] Section 46 of the Act. [2]https://ec.europa.eu/luxembourg/news/new-guidance-facilitate-access-commission-files_fr [3]This includes information other than business secrets, which may be considered as confidential, insofar as its disclosure would significantly harm an undertaking. [4] https://ec.europa.eu/competition/antitrust/business_secrets_en.pdf [5] https://ec.europa.eu/competition/antitrust/conf_rings.pdf [6] Generally, parties are granted confidentiality over commercial/financial information and privileged information if disclosure of such information would cause harm to the person who submitted the information. [7]https://www.justice.gov/sites/default/files/atr/legacy/2015/04/02/311212.pdf [8] Telefonaktiebolaget LM Ericsson (publ) v. Lava International Ltd. I.A. No. 2192/2016 in CS (OS) 764/2015, dated March 1, 2016 and Telefonktiebolaget LM Ericsson (publ) v. Xiaomi Technology and Ors., CS (Comm.) 434/2016, CC Nos. 60-65/2015, dated October 24, 2017. [9] Mvf 3 Aps & ors. v. M. Sivasamy & ors. CS(OS) No. 599 of 2007 dated 31 August 2012. [10] W.P.(C) 3051/2016 - NTN Corporation vs the Competition Commission of India.

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