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Can the French Competition Authority seize entire email inboxes including legally privileged documents?

    • Competition, EU and Trade
    • Retail
    • Technology, Media and Telecoms

    28-04-2014

    On 11 April 2014, the Versailles Court of Appeal[1] ruled that the French Competition Authority (“FCA”) can lawfully seize entire email boxes during dawn raids, including elements covered by lawyer-client privilege.  The ruling followed a number of appeals by companies that had been subject to unannounced inspections by the FCA in the medical-equipment manufacturing sector.

    The FCA technique for seizing emails

    The difficulties pertaining to the effective protection of documents covered by lawyer-client privilege in the course of FCA inspections, reside in (i) the FCA’s legal rights in conjunction with (ii) the technique used by the FCA to conduct its document seizures. 

    In accordance with article L. 450-4 of the French Commercial Code, the FCA may seize any documents that are, at least in part, useful for the purposes of establishing proof of the practices being investigated.  This means that where an electronic file is partly relevant to an investigation, the FCA may, in principle, seize the entire file and not just the parts that are directly relevant. 

    In relation to email boxes, the FCA claims it is confronted with a technical difficulty.  For the FCA, an email inbox is a single, undividable file which, in order to maintain its integrity and authenticity, must be seized as a whole, in its entirety.  This will inevitably include information that falls outside of the scope of the enquiry as well as elements protected by lawyer-client privilege.  It ought to be noted that the European Commission (the “Commission”) adopts a radically different position, and is able to select and seize only those emails that actually fall within the scope of the investigation and are not covered by lawyer-client privilege.  In order to achieve this, the Commission uses a forensic IT search tool with key words.

    Nevertheless, the FCA’s technique has been repeatedly approved by French judges who consider that lawyer-client privilege is sufficiently protected[2].

    The traditional means of protecting lawyer-client privilege

    Broadly speaking, companies have two legal routes at their disposal in order to, in theory, protect lawyer-client correspondence in the event of unannounced FCA inspections. 

    Firstly, during the course of the inspection, they may call upon a Liberty and Custody Judge (“juge des libertés et de la detention”).  The judge in question will be tasked with ensuring that, based on the seized documents’ titles, they fall within the scope of the order authorising the inspection.  As regards whole email boxes, this does not appear to be particularly efficient. 

    Secondly, post-inspection, a company may lodge an appeal before the Paris Court of Appeal.  It is then up to the company to identify which documents they feel should be covered by lawyer-client privilege.  French judges generally consider that by simply returning such documents to the company, the FCA adequately respects lawyer-client privilege, despite the FCA having had them in its possession in the intervening time.  In practice, however, this does not appear to be a wholly satisfactory solution, especially considering the time that can elapse between the seizure and the return of the legally privileged document, thereby allowing the FCA to read – or at least to have knowledge of - documents covered by legal privilege.

    Recent case law developments

    In the cases at hand, several medical equipment manufacturers had been subject to unannounced FCA inspections in 2010, after which they challenged the validity of the raids, arguing that their defence rights had been violated by the seizure of entire mail boxes which notably included elements covered by legal privilege. 

    The matter reached the French Supreme Court in April 2013[3] which, for the first time in the context of a case pertaining to competition law, stated that the powers of the FCA to seize documents and electronic data provided under article L. 450-4 of the French Commercial Code are limited by the parties’ defence rights.  The Court held that those defence rights dictate that the confidentiality of communications between a lawyer and a client must be respected.  Furthermore, the Supreme Court added that the breach of lawyer-client privilege occurs when documents covered by lawyer-client privilege are seized.

    In relation to documents where there remained some doubt as to whether or not they were legally privileged, the Supreme Court stated that it was for the Court of Appeal to examine the documents and assess whether or not they were covered by legal privilege and so referred the case to another Court of Appeal. 

    It is in this context that, on 23 January 2014, the parties reiterated their arguments for ruling that it was illegal for the FCA to seize entire email boxes.  The Court of Appeal, however, upheld such practices, and merely ruled that certain individual emails should not have been seized and should therefore be returned to the relevant company.

    Assessment on the merits

    The Supreme Court’s 2013 ruling was a step in the right direction and a signal that the protection of lawyer-client privilege may, in due course, become more effective.  The Supreme Court’s statement that the breach of lawyer-client privilege occurs at the moment of the seizure, implies that mere restitution of those documents is not a satisfactory means of repairing the breach.  

    One must acknowledge though that the situation is still far from ideal and requires further judicial and perhaps even legislative attention. 

    Indeed, notwithstanding the fact that this case only relates to documents covered by lawyer-client privilege[4], the ruling by the Versailles Court of Appeals in April 2014 did not find that seizing entire email boxes is illegal. Therefore, the FCA’s power to do so remains perfectly intact, it being specified that the FCA will continue to do so, as it continues to consider email boxes as undividable. 

    Furthermore, the practical effect of annulling the seizures of the documents covered by lawyer-client privilege, is that they are simply returned to the company, as is already case, without any impact on the investigation’s outcome or developments. 

    Conclusion

    Whilst the French Supreme Court’s rulings of 24 April 2013 are an undeniable step in the right direction for which praise must be given as they aim to ensure a greater level of protection for elements covered by lawyer-client privilege, this case fails to tackle the core issues, namely the undividable nature of email inbox files and the FCA’s practice of seizing entire email boxes, a practice which the Commission is able to avoid.  So long as the FCA maintains this practice, the threat to legal privilege will remain very present.    


    [1] Versailles Court of Appeals, 11 April 2014

    [2] For example, French Supreme Court, Criminal Chamber: 11 January 2012, No° 10-87.087, Luxottica France; 12 December 2007, No° 06-81.907, Sita Centre Ouest; 14 December 2011, No° 10-85.293, SNCF

    [3] French Supreme Court, Criminal Chamber, 24 April 2013, No° 12-80.331 Medtronic, No° 12-80.332 Alain Afflelou Franchiseur, No° 12-80.335 Saint-Gobain Isover, No° 12-80.336 Le syndicat national des fabricants d'isolants en laines minérales manufacturées, No° 12-80.346 Biotronik

    [4] It does not extend to elements that belong to employees’ private lives, as those elements do not affect the party’s ability to exercise its defence rights.

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