Con­fi­den­tial­ity claims scru­ti­nised

Sim­ple claims with­out proof will not pro­tect doc­u­men­ta­tion

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - SHAWN VAN DER MEULEN & SARAH MCGIB­BON

THE pro­tec­tion of com­pa­nies’ con­fi­den­tial in­for­ma­tion and doc­u­ments that are sub­mit­ted to the Com­pe­ti­tion Com­mis­sion and Com­pe­ti­tion Tri­bunal is ex­tremely im­por­tant. Com­pa­nies are of­ten called upon to pro­vide con­fi­den­tial in­for­ma­tion re­lat­ing to their strate­gic op­er­a­tions which they would not want in the hands of the pub­lic or com­peti­tors. This is par­tic­u­larly rel­e­vant in the case of ap­pli­ca­tions by com­pa­nies for im­mu­nity for car­tel con­duct in terms of the com­mis­sion’s cor­po­rate le­niency pol­icy.

The Com­pe­ti­tion Act, No 89 of 1998 pro­vides for a con­fi­den­tial­ity regime in terms of which in­for­ma­tion may be sub­mit­ted to the com­pe­ti­tion au­thor­i­ties on a con­fi­den­tial ba­sis and which pro­tects such in­for­ma­tion from dis­clo­sure to the pub­lic or other par­ties.

The prac­tice when sub­mit­ting con­fi­den­tial in­for­ma­tion in the past was to claim in­for­ma­tion as con­fi­den­tial us­ing broadly-framed and generic state­ments about the harm that would be caused by the dis­clo­sure of the in­for­ma­tion. It was of­ten the prac­tice that en­tire bun­dles of doc­u­ments were claimed as con­fi­den­tial with­out iden­ti­fy­ing the in­di­vid­ual doc­u­ments com­pris­ing the bun­dles or the spe­cific eco­nomic value at­tached to them.

How­ever, there has re­cently been a shift in the courts’ ap­proach to con­fi­den­tial­ity claims fol­low­ing the Supreme Court of Ap­peal’s judg­ment in Com­pe­ti­tion Com­mis­sion v ArcelorMit­tal SA Ltd and Oth­ers. Fol­low­ing this de­ci­sion, it will no longer be ac­cept­able for par­ties to claim in­for­ma­tion as con­fi­den­tial by way of gen­eral state­ments of the harm that would be caused by dis­clo­sure.

Par­ties will there­fore need to spend more time and re­sources on pre­par­ing proper con­fi­den­tial­ity claims when sub­mit­ting con­fi­den­tial in­for­ma­tion to the com­pe­ti­tion au­thor­i­ties.

The Com­pe­ti­tion Act de­fines “con- fi­den­tial in­for­ma­tion” as “trade, busi­ness or in­dus­trial in­for­ma­tion that be­longs to a firm, has a par­tic­u­lar eco­nomic value, and is not gen­er­ally avail­able to or known by oth­ers”.

Un­der sec­tion 44(1)(a) of the Com­pe­ti­tion Act, a per­son sub­mit­ting in­for­ma­tion to the com­mis­sion or tri­bunal may iden­tify in­for­ma­tion that it be­lieves to be con­fi­den­tial. The com­mis­sion is bound by such a con­fi­den­tial­ity claim but may at any time re­fer the claim to the tri­bunal to de­ter­mine whether the in­for­ma­tion is, in fact, “con­fi­den­tial in­for­ma­tion”. Any per­son seek­ing ac­cess to in­for­ma­tion that has been claimed as con­fi­den­tial may also ap­ply to the tri­bunal for a de­ter­mi­na­tion of whether the in­for­ma­tion is “con­fi­den­tial in­for­ma­tion”.

Sec­tion 45 of the Com­pe­ti­tion Act reg­u­lates the dis­clo­sure of con­fi­den­tial in­for­ma­tion. From the time in­for­ma­tion comes into the pos­ses­sion of the com­mis­sion or tri­bunal un­til a fi­nal de­ter­mi­na­tion has been made con­cern­ing it, both must treat as con­fi­den­tial any in­for­ma­tion that is the sub­ject of a con­fi­den­tial­ity claim.

There­fore, the fact that in­for­ma­tion sub­mit­ted to the com­mis­sion was claimed as con­fi­den­tial does not ab­so­lutely pro­tect it from dis­clo­sure. Third par­ties such as other re­spon­dents in com­plaint re­fer­ral pro­ceed­ings or the com­mis­sion it­self may ap­ply to the tri­bunal for a de­ter­mi­na­tion as to whether the in­for­ma­tion claimed as con­fi­den­tial con­sti­tutes “con­fi­den­tial in­for­ma­tion” un­der the act.

The Supreme Court of Ap­peal’s de­ci­sion in ArcelorMit­tal has ef­fec­tively in­di­cated that the pre­vi­ous prac­tice of par­ties claim­ing con­fi­den­tial­ity un­der broadly-framed con­fi­den­tial­ity claims is no longer ac­cept­able.

In this case, the com­mis­sion ini­ti­ated com­plaints in 2008 against mem­bers of a steel in­dus­try car­tel. Fol­low­ing the ini­ti­a­tion of the com­plaints, Scaw SA (Pty) Ltd sub­mit­ted a le­niency ap­pli­ca­tion to the com­mis­sion un­der the com­mis­sion’s cor­po­rate le­niency pol­icy. Scaw was granted con­di­tional im­mu­nity from prose­cu­tion, af­ter which (and at the com­mis­sion’s re­quest) Scaw sub­mit­ted nu­mer­ous doc­u­ments and at­tended sev­eral con­sul­ta­tions with the com­mis­sion con­cern­ing the com­plaints and prose­cu­tion of the other car­tel mem­bers.

There­after the com­mis­sion re­ferred a com­plaint against other car­tel mem­bers to the tri­bunal. Two re­spon­dents, ArcelorMit­tal and Cape Gate (Pty) Ltd, re­quested copies of Scaw’s le­niency ap­pli­ca­tion and, in the case of ArcelorMit­tal, the com­mis­sion’s record. The com­mis­sion re­fused the re­quest on the grounds that th­ese doc­u­ments (in par­tic­u­lar, Scaw’s le­niency ap­pli­ca­tion) were pro­tected from dis­clo­sure by virtue of the “lit­i­ga­tion priv­i­lege” which at­tached to them. ArcelorMit­tal and Cape Gate then ap­plied to the tri­bunal for an or­der di­rect­ing the com­mis­sion to pro­duce th­ese doc­u­ments. The tri­bunal dis­missed th­ese ap­pli­ca­tions, ex­cept for lim­ited dis­clo­sure of cer­tain doc­u­ments.

ArcelorMit­tal and Cape Gate ap­pealed the tri­bunal’s de­ci­sion to the Com­pe­ti­tion Ap­peal Court, which up­held Scaw’s con­tention that the doc­u­ments were pro­tected from dis­clo­sure, but by virtue of Scaw’s claim of con­fi­den­tial­ity, and not lit­i­ga­tion priv­i­lege, re­lat­ing to the le­niency ap­pli­ca­tion doc­u­ments.

The Com­pe­ti­tion Ap­peal Court did not de­cide the ap­peals by ArcelorMit­tal and Cape Gate as to whether the le­niency ap­pli­ca­tion doc­u­ments were priv­i­leged. The Com­pe­ti­tion Ap­peal Court re­mit­ted the mat­ter to the Tri­bunal to de­cide whether the doc­u­ments were pro­tected by Scaw’s claim of con­fi­den­tial­ity. How­ever, ArcelorMit­tal and Cape Gate ap­pealed the Com­pe­ti­tion Ap­peal Court’s de­ci­sion to the

The com­mis­sion may at any time … re­fer the claim to the tri­bunal to de­ter­mine whether the in­for­ma­tion is, in fact, ‘con­fi­den­tial’

Supreme Court of Ap­peal to de­cide the ques­tion of whether Scaw’s le­niency ap­pli­ca­tion was priv­i­leged.

The court found that the com­mis­sion had waived its lit­i­ga­tion priv­i­lege over Scaw’s le­niency ap­pli­ca­tion, prin­ci­pally be­cause the com­mis­sion had made spe­cific ref­er­ences in its re­fer­ral af­fi­davit to facts as­serted in the le­niency ap­pli­ca­tion.

It was there­fore nec­es­sary for the Supreme Court of Ap­peal to con­sider Scaw’s con­tention that its le­niency ap­pli­ca­tion was nev­er­the­less pro­tected from dis­clo­sure to ArcelorMit­tal and Cape Gate by its con­fi­den­tial­ity claim.

The Supreme Court of Ap­peal found that the Com­pe­ti­tion Ap­peal Court was cor­rect in re­mit­ting the case to the tri­bunal to de­cide whether Scaw’s doc­u­ments are con­fi­den­tial and there­fore did not de­cide this is­sue. The court did how­ever make a num­ber of im­por­tant ob­ser­va­tions in this re­gard.

It iden­ti­fied two dif­fer­ent cat­e­gories of in­for­ma­tion sub­mit­ted in a le­niency ap­pli­ca­tion that are con­fi­den­tial. First, the court in­di­cated that all in­for­ma­tion sub­mit­ted as part of the cor­po­rate le­niency process is gen­er­ally con­fi­den­tial by virtue of the con­fi­den­tial na­ture of the le­niency process it­self. Sec­ond, there is in­for­ma­tion which is claimed as “con­fi­den­tial in­for­ma­tion” in terms of sec­tion 44 of the Com­pe­ti­tion Act.

There­fore, where in­for­ma­tion sub­mit­ted as part of a le­niency ap­pli­ca­tion is re­garded as gen­er­ally con­fi­den­tial be­tween the com­mis­sion and the le­niency ap­pli­cant, such con­fi­den­tial­ity may fall away once the mat­ter is re­ferred to the tri­bunal if the in­for- ma­tion has not been claimed as “con­fi­den­tial in­for­ma­tion” in terms of Sec­tion 44 of the Com­pe­ti­tion Act. No­tion­ally, third par­ties may then be granted ac­cess to those doc­u­ments if the com­mis­sion is sub­se­quently deemed to have waived its lit­i­ga­tion priv­i­lege in re­spect of those le­niency doc­u­ments.

The Supreme Court of Ap­peal also noted its doubts as to whether Scaw’s con­fi­den­tial­ity claims in this case would sat­isfy the re­quire­ments of the Com­pe­ti­tion Act. Scaw had made no at­tempt to align the in­for­ma­tion it claimed as con­fi­den­tial with the def­i­ni­tion of “con­fi­den­tial in­for­ma­tion” in the Com­pe­ti­tion Act; it merely as­serted con­fi­den­tial­ity over the doc­u­ments in very broad terms and de­scribed the con­se­quences of the dis­clo­sure of the in­for­ma­tion, and not the na­ture and eco­nomic value of the in­for­ma­tion.

The Supreme Court of Ap­peal noted that the mere as­ser­tion that in­for­ma­tion is con­fi­den­tial does not make it con­fi­den­tial for pur­poses of the Com­pe­ti­tion Act.

There­fore, the court found that Scaw’s le­niency ap­pli­ca­tion must be dis­closed to the re­spon­dents in the mat­ter, in­clud­ing ArcelorMit­tal and Cape Gate, sub­ject to a find­ing by the tri­bunal on the con­fi­den­tial­ity of the in­for­ma­tion in terms of Scaw’s con­fi­den­tial­ity claim. The com­mis­sion was fur­ther or­dered to dis­close its record to ArcelorMit­tal sub­ject to any claim that parts thereof are “re­stricted in­for­ma­tion”.

This judg­ment high­lights the im­por­tance of par­ties prop­erly claim­ing in­for­ma­tion as con­fi­den­tial.



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