Confidentiality claims scrutinised
Simple claims without proof will not protect documentation
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.
CONFIDENTIAL MAY BE ONLY A WORD