Australian cartel immunity applicants ordered to disclose privileged internal investigation materials to defendants

24 May 2021

By co-operating with the prosecution, an applicant for immunity in respect of alleged cartel conduct effectively waived its legal professional privilege in internal records of interviews of its employees, and must produce those records to the defendants, according to the Federal Court of Australia in a recent case.

Unless the decision is appealed, defendants are now entitled to access the immunity applicant's internal investigation material – which includes the earliest accounts of the conduct that caused the applicant to seek immunity – a ruling that could considerably complicate future internal investigations where immunity might be sought.

In this case, the Commonwealth Director of Public Prosecutions (CDPP) had requested or "required" the immunity applicant to provide this information, as part of the immunity obligation to co-operate with the CDPP and Australian Competition and Consumer Commission (ACCC).

Ongoing co-operation in providing information is a standard condition of the grant of conditional immunity in all ACCC cases.  The CDPP grant of conditional immunity contains conditions that the applicant must provide "full, frank and truthful disclosure and co-operation to the ACCC (including by withholding nothing of relevance) throughout the course of…. any subsequent legal proceedings commenced by the ACCC and/or the CDPP in respect of that disclosed cartel conduct".

The Court ruled that the immunity applicant had effectively waived privilege in response to this "request", by arranging for its lawyers to orally disclose or read out the substance or gist of the relevant interview records to the CDPP.

The Court dismissed the immunity applicant's protest that its actions were not voluntary but effectively "compelled" by the CDPP in order to avoid a risk of losing conditional immunity.

There had been a conscious election by the immunity applicant to co-operate to reveal the investigation materials rather than to risk the loss of immunity, according to the Court.  That election effectively waived the privilege which otherwise applied.

Must the proffer be disclosed as well?

There were some other useful rulings in the decision.  In this case the Court also ruled that by making a proffer at the outset to the ACCC in support of the application for immunity, the immunity applicant had not waived privilege in the interview notes of its employees.

This finding was based on the conclusion that the proffer was a high level overview of the events and the possible legal implications, and the proffer had not "involved any particular facts or information being attributed to an account of events provided by one of the employees during the interviews".

The Court also ruled that no privilege was lost merely by the immunity applicant causing an investigation to be undertaken for the purposes of providing legal advice and obtaining legal advice, and on the basis of that advice seeking a grant of immunity.

The effect on future immunity applications over cartel conduct

Lessons from this case for future immunity applications underscore the likelihood of the prospect that such material may be required to be produced if immunity is sought and granted.  Those materials are clearly likely to be ordered to be produced at a later date, if the CDPP or ACCC takes enforcement action against the other parties implicated in the conduct and the defendants seek the material.

While the ACCC immunity policy is to protect any disclosure of an immunity application to the extent it can and subject to the law, the ACCC and CDPP recognise the ability of the court to order the production of that material to other parties.

The tension between the obligation to co-operate confidentially with the ACCC and CDPP on the one hand, and the CDPP's obligations to disclose all relevant information which it can obtain to the defence on the other, exists in almost every immunity matter.

In this case, it was significant that the immunity applicant understood, when it co-operated to disclose the substance of its own investigation, its disclosure would be passed on to the parties facing prosecution.

Consequently the decision in this case to disclose the material for that purpose went beyond those situations where privileged information is disclosed for a more limited and controlled purpose without resulting in a waiver of the privilege claim altogether.

The Court ruling means the decision for any organisation to conduct future internal investigations, and how to do so in the most effective manner is complex.  The case is also a reminder of the difficulties inherent in balancing the pros and cons of corporations seeking immunity from any Federal law enforcement agency.

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