Clifford Chance

In a landmark decision, the German Federal Supreme Court has adjudicated on the balance between the need for transparency in competition investigations and the protection of a party's trade secrets.

The German Federal Supreme Court (the "Court") has delivered a pivotal judgment on 20 February 2024, concerning the disclosure of trade secrets in antitrust proceedings. The case (KVB 69/23) revolves around the German Federal Cartel Office's (Bundeskartellamt – "FCO") intention to share Google's confidential information with competitors during an investigation into Google's business practices.

Background

The FCO had previously sent a preliminary legal assessment to Alphabet Inc. and Google Germany GmbH in June 2023, addressing concerns over Google's practices with its Google Automotive Services ("GAS"). GAS, a suite of products including Google Maps, Google Play, and Google Assistant, is offered to car manufacturers as a bundle, a practice the FCO suggests may contravene new regulations for digital conglomerates under sec. 19a of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen – "ARC"), potentially constituting anti-competitive behaviour.

Google contested the FCO's plan to disclose a redacted version of its assessment to two of Google's competitors, arguing that even the redacted information contained trade secrets. The FCO, after failing to resolve the dispute in the investigative procedure, referred the matter to the Court as per sec. 73 paragraph 5 ARC.

During the proceeding, Google and the FCO agreed on several but not all of the contested instances, leading to a first decision by the Court under sec. 73 paragraph 5 ARC and clarifying the treatment of business secrets during the FCO's investigations.

The Judgement

The Court's decision was mixed. It upheld Google's complaint regarding one specific quote from internal documents but dismissed the rest of the complaints.

The Court reasoned that the disclosure was permissible if it adhered to the principle of proportionality, meaning it should be suitable, necessary, and appropriate for clarifying the facts of the case. Disclosure is deemed appropriate when, upon weighing the interests at stake, the FCO's need for fact-finding outweighs the interest in protecting operationally and commercially sensitive information that is constitutionally safeguarded. Initially, it is necessary to assess the significance of the specific disadvantages posed by disclosure against the interest in fact-finding. Additionally, the FCO's and the involved competitors' interest in preserving their right to a fair hearing must also be taken into account.

The Court found that, except for the aforementioned quote, the remaining contested text either did not constitute trade secrets or the FCO's interest in clarifying the case outweighed Google's interest in keeping the information confidential.

This ruling has significant implications for the balance between the protection of trade secrets and the need for transparency in antitrust investigations. It underscores the Court's role in delineating the boundaries of permissible disclosure and the importance of safeguarding competitive processes without unduly compromising corporate confidentiality.

Practical considerations

Parties to antitrust proceedings in Germany should note the Court's emphasis on the proportionality test when considering the disclosure of potentially sensitive information.

The decision sets a precedent for future cases where competition authorities seek to provide access to internal information of an undertaking concerned to third parties for investigative purposes. It also highlights the need for companies to carefully assess what constitutes a trade secret and how to protect such information in regulatory proceedings. In particular in contentious proceedings with third-party involvement, the protection of business secrets, so far often considered a formality, may gain further importance.