On 18 June 2013, the Court of Justice of the European Union (CJEU) held that a company that infringed EU competition rules will not escape a fine even if it can claim that it relied on advice given by a legal adviser on the compatibility of its behaviour with national competition rules (Case C-681/11 Bundeswettbewerbsbehörde, Bundeskartellanwalt v Schenker & Co. and Others). In the same ruling, the CJEU also held that relying on the correctness of a decision taken by a national competition authority (NCA) does not protect a company from being found guilty of an infringement of competition law and fined.
The case concerned a preliminary ruling request from the Austrian Supreme Court. The questions arose in the context of national proceedings against members of the Austrian Freight Forwarding Agents Consolidated Consignment Conference, an interest group for the collective interests of businesses in this sector. The Austrian competition authority had ruled that the Conference constituted a “minor cartel” in the meaning of the Austrian law and as such was not prohibited. The Conference’s legal advisers also took the view that it constituted a minor cartel and was therefore acceptable. The Austrian competition authorities later, however, started an investigation of the Conference for breach of EU competition rules. After the Austrian NCA had requested that the competent court find an infringement of EU competition rules and fine the companies involved, the Austrian Supreme Court asked the CJEU
(i) Whether or not a company could be fined for breaches of Article 101 of the Treaty on the Functioning of the European Union (TFEU) where it erred with regard to the lawfulness of its conduct and that error is unobjectionable, and, if answered in the negative
(ii) Whether or not an error is unobjectionable in the case where the company acted in accordance with advice given by a legal adviser or in the case where the company relied on the correctness of a decision taken by the NCA.
The CJEU first observed that the companies’ characterisation of their conduct as legal cannot protect those companies from a fine, as they must have been aware of the anti-competitive nature of that conduct. Under the facts of the case, the CJEU stated that companies that directly coordinate their behaviour in respect of their selling prices must know their conduct is anti-competitive.
The CJEU repeated that a company may, in exceptional circumstances, rely on the protection of legitimate expectations, but only where the company has been given precise assurance by the competent authority. The CJEU went on to rule that the legal advice given by a lawyer cannot form the basis of a legitimate expectation because a legal adviser is not a competent authority. Similarly, concerning the NCA’s decision, the CJEU ruled that NCAs are not competent to adopt a decision that concludes there is no infringement of Article 101 TFEU. Companies cannot, therefore, have a legitimate expectation that their conduct does not infringe Article 101 based on an NCA decision.
Significance of the Judgment
The CJEU’s judgment is important in that it seems to indicate that there is no such thing as an unobjectionable error in EU competition rules, at least in cases where the anti-competitive nature of the behaviour is (rather) obvious. The judgment also underscores that obtaining legal advice does not remove the risk that an undertaking can be found to infringe EU competition rules and be fined. In this respect, the Court has not followed the opinion of Advocate General Kokott, who recommended that companies could rely on legal advice under certain specific conditions, such as when a company, in good faith, relies on the advice of an independent, external specialist lawyer and other conditions are met (see paragraphs 62 et seq of the Opinion of Advocate General Kokott, 28 February 2013).
The ruling also highlights the somewhat precarious jurisdictional relationship between the NCAs and the European Commission in the context of cartel enforcement. Under the current cartel enforcement regime set out by Regulation 1/2003, NCAs may apply EU competition rules in order to find an infringement of these rules, but they cannot decide that a certain activity does not constitute an infringement.
It would be unwise to take away from this judgment that legal advice on competition law is not important. On the contrary, the judgment is a reminder that companies need to choose their legal advisers with great care, and those legal advisers need to provide accurate, expert competition law advice.