Legal advice and legitimate expectations – The ECJ in Schenker

In Schenker, Case C-681/11, defendants in the main proceedings were members of the Spediteur-Sammelladungs-Konferenz (Freight Forwarding Agents Consolidated Consignment Conference; ‘the SSK’). The SSK was an interest group comprising some of the ordinary members of the Zentralverband der Spediteure (Central Association of Freight Forwarding Agents; ‘the Zentralverband’). The Zentralverband, which was set up as an association, represents the collective interests of freight forwarding agents and of logistics service providers with a forwarding licence.

The SSK pursued the objective of ‘enabling more favourable road/rail consolidated consignment rates to be granted to shippers and to end consumers (compared with the rail tariffs for general cargo) and – through the creation of equal conditions of competition – of promoting fair competition among its members, an objective … to be pursued whilst having particular regard to ensuring compliance with Austrian, [European Union and European Economic Area (EEA)] law on cartels’.

The Austrian competition court confirmed that the arrangement was a ‘minor cartel’, meaning that it could go ahead without the approval of the competition authority. Hence, it would seem – but I am not au fait with the detail of Austrian competition law – putting the ball back in the camp of the cartel: for a finding of mini-cartel does not to me seem to imply a finding of non-breach of competition law.

Advice of counsel had confirmed the existence of a ‘mini cartel’ both at the time of the 1996 agreement and later, in 2006, at the entry into force of a new competition law. In neither instance had counsel advised on the legality or not under EU competition law. The European Commission raided the offices of members of the cartel in 2007, following which the Austrian competition authority pursued the case for breach of EU (as opposed to national) competition law. The courts in first instance held that the finding of a mini-cartel implied the absence of impact on cross-border trade, which is  prerequisite for EU competition law to apply. Upon appeal, questions were referred to the ECJ.

The Court held that an undertaking which has infringed that provision may not escape imposition of a fine where the infringement has resulted from that undertaking erring as to the lawfulness of its conduct on account of the terms of legal advice given by a lawyer or of the terms of a decision of a national competition authority.

In the case of the competition authority, since it does not under EU law have the power to adopt a decision concluding that there is no infringement of EU law, it cannot cause companies to entertain a legitimate expectation that their conduct does not infringe competition rules. Moreover, in the present instance the national authority examined the companies’ conduct on the basis of national competition law only.

In the case of the legal advice, a person may not plead breach of the principle of the protection of legitimate expectations unless he has been given precise assurances by the competent authority (the ECJ referred to its finding in  AJD Tuna, and Agrargenossenschaft Neuzelle). It follows that legal advice given by a lawyer cannot, in any event, form the basis of a legitimate expectation on the part of an undertaking that its conduct does not infringe EU competition law or will not lead to a fine.

The judgment to me it would seem to have important implications: for legal advice is often sought by companies not just to enable them to adapt their behaviour, but also to buy themself an insurance policy.


The buck (or copper tube) does not stop here. Forum shopping and European Competition Law in  KME Yorkshire v Toshiba Carrier.

A neat reminder of the relevance of follow-up litigation and anchor defendants in the EU competition law sector. In [2012] EWCA Civ 1190 KME Yorkshire et al v Toshiba Carrier UK at al [2012] EWCA Civ 1190 the Court of Appeal has confirmed that a connected undertaking that had implemented, but not been party to, an anti-competitive agreement, can nevertheless be in breach of Article 101 TFEU (the foundation Article for EU competition law) and therefore ground jurisdiction against all other defendants who had been originally named in the Commission decision fining the companies concerned.

Toshiba et al had been buying large quantities of copper tubes from the group of companies which had been fined earlier by the European Commission (for follow-up litigation at the ECJ see here).

Article 6 of the Jurisdiction Regulation on multipartite litigation and consolidated claims, includes four cases which grant jurisdiction to a court which does not originally have it against some of the defendants and which are effectively joined to its jurisdiction against another. Are all inserted because of procedural expediency and because of the need to avoid irreconcilable judgments. However they all do harbour scope for abuse hence the ECJ has interpreted each of them fairly strictly.

Procedural efficiency and forum shopping often tempts plaintiffs into identifying an ‘anchor defendant’ in one jurisdiction, subsequently to employ Article 6 (or similar provisions in national law for subjects outside of the JR) to engage other parties in the same jurisdiction. The KME decision at the Court of Appeal confirms the kosherness of forum shopping and anchor defendants in cases such as these.


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