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09 May 2019
All violations of attorney-client privilege are illegal, but the specific consequences will depend on the nature of the privileged information and the violation's potential effect on the plaintiff's defence strategy.
In certain circumstances, a violation of attorney-client privilege can lead to a prohibition on prosecution due to procedural corruption.
In May 2016 the Federal Economic Competition Commission (COFECE) conducted a dawn raid on a company which was subject to a cartel investigation. During the raid, the COFECE:
The company brought an amparo trial (ie, a federal trial in which the complainant alleges a violation of its constitutional rights by an authority) against the COFECE, claiming:
The company's action failed at first instance. However, in December 2017 the First Tribunal declared that the COFECE had violated attorney-client privilege and ordered it to:
The COFECE subsequently declared that the privileged information had not been formally included in the investigation file. Therefore, none of its actions during the investigation should be deemed invalid. On the basis of this statement, the first judge specialised in economic competition, broadcasting and telecoms declared that the COFECE had strictly complied with all of the abovementioned orders. Thus, the company had to appeal before the First Tribunal.
In December 2019 the First Tribunal considered that:
Given the above, the First Tribunal issued an order prohibiting the plaintiff's prosecution.
What are the possible effects of attorney-client privilege violations?
During this judicial procedure, the First Tribunal declared that attorney-client privilege is recognised in the Constitution. Therefore, materials which are protected by attorney-client privilege cannot be used by the authorities in antitrust investigations under any circumstances. As a result, a violation of attorney-client privilege may have the following effects:
Will all attorney-client privilege violations lead to a prohibition on prosecution?
Most attorney-client privilege violations will not lead to a prohibition on prosecution.
A prohibition on prosecution may arise when:
Unless the courts are convinced that the disclosure of privileged information will impede a prosecuted agent from having a proper defence, a procedure is unlikely to be deemed to have been corrupted. Such assessment and determination will be decided on a case-by-case basis.
What should practitioners consider when competition authorities seize privileged information?
In case of a seizure of information protected by attorney-client privilege, an amparo trial should be brought directly by an attorney with a right of inviolability of the information.
If a claim is brought by the investigated agent, the courts will likely wait until the procedure has finished to decide whether there has been a violation of attorney-client privilege (under the Constitution, as a general rule, any legal claim against the COFECE or the Federal Institute of Telecommunications is inadmissible if it is not against a final decision).
Further, for a challenge to be admissible, claimants must identify information that has been seized by an authority. For this purpose, claimants should:
If a claimant cannot provide a copy of privileged information that was taken by an authority, the courts will likely dismiss their claim.
What should competition authorities do if they find privileged information?
Based on the present case, when a claim of a potential violation of privilege arises, the competition authority at issue will have to prove that it implemented all reasonable safeguards to prevent its investigators from seeing the privileged information. In the absence of such proof, the courts will assume that the privileged information was seen and used by the investigation team.
In this regard, the competition authorities should establish clear and transparent protocols that allow them to comfortably prove before the courts that no persons involved in an investigation could access privileged information. Such protocols are common in other jurisdictions and are part of best international practices regarding procedural fairness.
There are some models which have been successful in balancing authorities' duties to investigate illicit practices and the rights of investigated agents. One option could be to undertake an onsite review of any information during a raid. Another option would be to appoint an independent third party to review whether information is privileged and in need of protection. In both cases, the information must be reviewed by personnel who are not involved in the investigation so there is no risk of it being tainted.
Competition authorities must consider the fact that the protection of attorney-client privilege is a mechanism not only of procedural fairness, but also for protecting the integrity of antitrust investigations.
The combination of an absence of protocols and the seizure of privileged information could corrupt an investigation and result in the competition authority being prohibited from prosecuting the investigated party. Therefore, guaranteeing the inviolability of privileged communications will prevent public resources from being wasted on investigations that are later found to have been illicit.
For further information on this topic please contact Lucía Ojeda Cárdenas or Ernesto Álvarez Castilloat SAI Consultores SC by telephone (+52 55 59 85 6618) or email (email@example.com or firstname.lastname@example.org). The SAI Consultores website can be accessed at www.sai.com.mx.
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