The CAT reigns in confidentiality rings: a closer look at the new Practice Direction on confidential information
The Competition Appeal Tribunal (CAT) has issued a practice direction dealing with the management of confidential information: Practice Direction 1/2024 (Disclosure – Management of Confidential Information) (the “Practice Direction”). Issued on 4 January 2024, the Practice Direction applies to all cases with their first case management conference after this date.
Confidentiality rings are a common feature of modern competition litigation. They restrict access to documents containing sensitive information to specific individuals such as legal advisors or experts. The authorities make clear that, as an exception to the normal principle of open justice, they must be limited to the narrowest extent possible and they require careful scrutiny by the courts: See, for example Infederation Ltd v Google LLC  EWHC 657 (Ch) and the authorities considered by Mr Justice Roth at paragraphs 27 to 42.
Despite this, confidentiality rings have been growing in complexity. Many cases now employ multiple tiers of confidentiality rings, with an increasing number of documents falling into the most restricted categories. In the Practice Direction, the CAT observes that as a result confidentiality rings have become more onerous to manage. Further, there has been a corresponding decline in compliance with Rule 101(1) of the CAT Rules, which requires claims – or more accurately, requests – for confidential treatment of a document to specify both the nature of the sensitivity of the document and the adverse effect of disclosure.
The Practice Direction addresses these issues by reminding parties of the existing provisions in the CAT Rules with respect to confidentiality. It also outlines the Tribunal’s expectations as to the approach which parties should take to managing confidentiality in proceedings in the CAT.
The basic rule
Under rule 102 of the CAT Rules, a party receiving a document may only use it for the purposes of the proceedings, and not for any collateral purpose such as in day-to-day business decision-making or strategic planning. The Practice Direction treats this principle as the starting point for determining whether a confidentiality ring is necessary. For most documents, Rule 102 essentially functions as an “outer” confidentiality ring. Lawyers should advise their clients of this restriction and the importance the CAT places on it.
The Practice Direction recognizes that, despite this express prohibition, there is still a risk that documents may unconsciously be used for collateral purposes. Parties’ legal representative will need to take this risk into account when deciding “what disclosure particular client representatives can or should see” and whether further protection may be required.
Whilst the additional protections offered by a confidentiality ring will need to be justified, the CAT is prepared to consider bolstering the protections afforded by Rule 102 where appropriate.
Certain documents will be sufficiently sensitive that disclosure may lead to “direct and material adverse consequences” with regard to the public interest, legitimate business interests, or the private interests of an individual. The CAT recognises that further protections may be warranted in these cases and will consider ordering a confidentiality ring where appropriate.
The CAT will consider a range of factors, with a particular emphasis on the nature of the case and the particular sensitivity of the information in the documents to be disclosed.
For example, claims for damages may raise issues of commercial sensitivity as between the parties which give rise to competition concerns, such as information on commercial strategy, costs or margins. In such cases, the CAT may consider that additional protection is required for such information. However, in collective proceedings commercial sensitivity is unlikely to be a basis for withholding disclosure to a class representative (but it may be necessary to identify documents which should not be distributed more widely, such as to class members).
The Practice Direction is largely silent as to what material the CAT is likely to consider to be sensitive. It seems likely that sensitivity will be tied to the risk of direct and material adverse consequences of disclosure. The Practice Direction indicate that the CAT would not normally consider the following types of information to be sensitive:
- data that is more than five years old;
- information that is “unspecific or general in expression”; or
- aspirational statements lacking “particular strategic or tactical content”.
Under the Practice Direction, both parties are expected to give early consideration to confidentiality and determine whether additional protections are necessary. If they are, it is expected that the parties will have agreed a confidentiality protocol before the first CMC setting out: the nature and extent of the sensitive information which the parties anticipate disclosing; how claims to confidentiality will be made and justified; how those claims will be challenged; the details of any confidentiality rings the parties have put in place (or propose); and a mechanism for reviewing the management of confidential information at trial.
Importantly, the Practice Direction envisages that the parties will keep claims to confidentiality under review, and as trial approaches seek to limit the number of documents subject to confidentiality restrictions to the minimum necessary so as to avoid disruption and ensure that the trial (or substantive hearing) will take place in open court unless exceptional circumstances apply.
The CAT expects the parties to work together to resolve confidentiality issues, and the Practice Direction puts down a marker that there may be costs consequences if it becomes necessary for the CAT to intervene.
In recent years, confidentiality arrangements for disclosure in competition cases have become increasingly complex. While confidentiality rings remain an option to protect information that warrants special protection, the new Practice Direction emphasises the need for parties to justify whether specific confidentiality arrangements are really required at an early stage of proceedings.