Is bad advice a good excuse
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Can an infringement of EU cartel rules be defeated by claiming reliance in good faith on bad legal advice? A recent opinion from an Advocate General of the European Court suggests that bad advice can only in very rare circumstances be a good defence.
Bad advice is the main defence put forward by a group of Austrian haulers against whom proceedings were brought by the Austrian competition authority for breach of the EU's cartel prohibition.
Since the mid-1990s the haulers had agreed tariffs for domestic consolidated consignment transport. Under Austrian domestic law in force between 1989 and 2006, minor cartels which had a share of less than 5% of the Austrian domestic market were lawful.
The haulers, wanting to act lawfully, sought advice from a specialist legal practice which advised that the agreements were a minor cartel and were compatible with Austrian law.
The advice did not address the issue of whether the agreements were compatible with EU law. Following raids on suppliers of freight forwarding services in October 2007, the Austrian competition authority sought to impose fines on the haulers for infringing the EU antitrust rules from 1994 – 2007.
Could the haulers' good faith reliance on legal advice that they had stayed on the safe side of the law exculpate them?
In principle, there should be no punishment without fault. However, only where a company's error regarding the lawfulness of its behaviour was unavoidable, has it acted without fault. This means that certain minimum requirements in obtaining the legal advice upon which reliance is made must have been complied with: the advice was relied on in good faith; the advice must be from specialist external counsel who had a full and accurate description of relevant facts; the advice must address the question of EU law (error of law precluding liability cannot be inferred by omission); the advice must not be manifestly incorrect; and a company acts at its own risk if the advice is that the situation is unclear.
Conclusion: good advice is a better defence!