In a recent judgment,1 the European Court of Justice (ECJ) expanded the scope of Legal Professional Privilege (LPP) in the EU, recognizing that it is not limited to advice given for the purpose of defense but covers all communications between European Economic Area (EEA)-qualified external lawyers and their clients. This will have major consequences for EU competition investigations, including under the Digital Markets Act (DMA).
In this case, LPP was considered in the context of an EU Directive against tax avoidance and evasion, which introduced an obligation for intermediaries to report any potentially aggressive, tax-planning cross-border tax arrangements to the competent authorities. While lawyers bound by LPP were exempt from the reporting obligation, they were obliged to notify any other intermediaries that they cannot comply with the reporting obligation and give reasons why. The ECJ found this notification obligation inconsistent with Article 7 of the EU Charter of Fundamental Rights (which protects communications between lawyers and their clients) because it necessarily entails the consequence that those other intermediaries become aware of the identity of the notifying lawyer-intermediary of his or her assessment that the arrangement at issue is reportable, and of his or her having been consulted in connection with the arrangement.
This marks an expansion from previous case law under which LPP covered written communications i) between a client and an external lawyer qualified to practice in the EEA, and ii) connected to the client's rights of defense (in relation to an open investigation or to the subject matter of an anticipated investigation). In this judgment, the ECJ essentially struck out the second condition.
Following this judgment, clients can be confident that all their communications with an EEA-qualified external counsel are fully protected in the context of EU competition investigations and authorities cannot access them, seize them, or compel their production.
[1] Judgment of the European Court of Justice in Case C‑694/20 – Orde van Vlaamse Balies and Others, December 8, 2022, available here.
