A submit by visitor blogger Charlotte Reyns (Quinz, KU Leuven)
Because the introduction of the EU Non-public Damages Directive 2014/104, the quantity of personal damages actions following competitors regulation infringements have grown exponentially. Certainly, enforcement by non-public events is seen as a complementary limb to the enforcement of competitors regulation by the European Fee and the nationwide competitors authorities. One side that deserves particular consideration in that regard is the “single financial unit” doctrine which permits a number of or all corporations belonging to a bunch of corporations to be held accountable for an infringement of competitors regulation they didn’t themselves commit. Latest rulings equivalent to Athenian Brewery (C-393/23) within the context of personal worldwide regulation and ILVA (C-383/23) with regard to legal responsibility for infringements of the GDPR moreover showcase the far-reaching implications of the only financial unit doctrine.
This submit delves deeper into the doable legal responsibility of the totally different members of a bunch of corporations when solely one in every of them has been discovered to infringe EU competitors regulation. Who will be liable, and how you can handle this danger?
First issues first: the only financial unit doctrine and its affect on legal responsibility
EU competitors regulation is addressed to “undertakings”, that means any entity engaged in an financial exercise, no matter its authorized standing and the best way it’s financed. This can be a purposeful idea and, not like in (nationwide) company regulation, doesn’t check with authorized entities with a definite authorized persona. In EU competitors regulation, an endeavor can, in some circumstances, correspond to a pure or authorized individual however could, in others, comprise a number of of mentioned individuals. Within the latter state of affairs, the time period “single financial unit” is used. Two corporations are usually thought-about to type a part of a single financial unit when (i) there are financial, organizational, or authorized ties between the entities concerned and (ii) one workouts decisive affect over the opposite which doesn’t act autonomously (Akzo Nobel (C-97/08, § 60)). The commonest instance is that of a father or mother firm holding 100% of the shares in a daughter firm. In such state of affairs, the entire group will probably be thought-about to be the “endeavor” to which EU competitors regulation guidelines are addressed.
In case of an infringement of competitors regulation, the quantity of the effective is subsequently primarily based on the turnover of the only financial unit as an entire. In an attention-grabbing flip of occasions, the CJEU held not too long ago in its judgment ILVA (C-383/23) that when figuring out whether or not the effective for an infringement of the Basic Knowledge Safety Regulation (GDPR) is efficient, proportionate and dissuasive, regard should be needed to the only financial unit of which the processor types half, making use of the only financial unit doctrine by analogy. Nonetheless, the willpower of the authorized individual liable stays completely regulated by the GDPR and isn’t topic to the identical rules on parent-subsidiary legal responsibility.
In distinction, when an endeavor is discovered to have infringed EU competitors regulation, it’s established that the totally different members of the financial unit will be held collectively and severally accountable for infringements. Over the course of the final years, the case regulation of the Court docket of Justice of the European Union (CJEU) has fleshed out totally different situations beneath which this may be the case. These are offered beneath.
The father or mother firm is accountable for the misbehavior of a subsidiary – Skanska
It’s settled case regulation from the CJEU {that a} father or mother firm will be held accountable for anti-competitive conduct of its subsidiary when the father or mother workouts a decisive affect over its subsidiary. In its judgment Skanska (C-714/19), the CJEU clarified that this additionally extends to civil legal responsibility by means of non-public damages claims.
It’s due to this fact of essence that father or mother corporations are conscious when they are often thought-about to be a part of the identical financial unit as their misbehaving subsidiary. As acknowledged above, that is the case after they train decisive affect over their subsidiary. In that regard, a rebuttable presumption exists {that a} father or mother firm exerts decisive affect over a subsidiary when it holds, immediately or not directly, all or virtually the entire capital in a subsidiary that has dedicated an anti-competitive infringement. In Goldman Sachs v Fee (C-595/18 P), the CJEU expanded this presumption to the speculation the place the father or mother firm holds the entire voting rights as a substitute of all or virtually the entire share capital in a subsidiary. It’s thus the diploma of management of the father or mother firm over its subsidiary that’s related for the presumption and that may finally result in the legal responsibility of the father or mother firm.
The latest Athenian Brewery case (C-393/23) moreover exhibits that the presumption of decisive affect can be utilized to carry a case towards a father or mother firm situated in a single member state even when all different parts of the case relate to a special member state. Additionally seemingly ‘purely home’ circumstances can thus be introduced in entrance of the seat of a father or mother firm when the presumption is fulfilled, making it an attention-grabbing discussion board purchasing instrument for claimants.
A subsidiary is accountable for the misbehaviour of the father or mother – Sumal
Maybe much less intuitive, a subsidiary may also be held accountable for the misbehavior of a father or mother. Within the Sumal case (C-882/19), the CJEU discovered that when a father or mother and a subsidiary type an financial unit, the subsidiary will be accountable for the infringement of the father or mother when there’s a particular hyperlink between the subject material of the infringement and the financial exercise of subsidiary. In different phrases, when the subsidiary and father or mother firm function on the identical cartelised market, the subsidiary will be held accountable for the mother and father’ infringements.
This additionally has implications when it comes to discussion board purchasing: since in accordance with the rule of thumb defendants will be sued of their place of residence, giant teams with subsidiaries working on the identical market because the father or mother firm ought to be ready to be sued within the nations the place their subsidiaries are situated.
A sister firm can, in particular circumstances, be accountable for the misbehaviour of one other sister – Jungbunzlauer
Whereas a extra unlikely state of affairs, the CJEU (Basic Court docket) held within the Jungbunzlauer case (T-43/02) that one sister firm will be liable for an additional sister’s cartel infringement. Nonetheless, on this case it was discovered that the sister firm that was held liable had decisive affect over the sister firm that dedicated the infringement. It may be assumed that sister corporations that don’t exert such decisive affect over each other, can’t be held accountable for one another’s conduct.
Classes realized: hold tabs on the totally different group members, notably these working on the identical market
It’s clear from the above that subsidiaries, sister and father or mother corporations in a single group will be held accountable for infringements of competitors regulation by any of them. Firms are due to this fact suggested to pay attention to the conduct of its group members, since collective compliance with EU competitors regulation is of the essence. That is particularly the case for group members working on the identical market. To mitigate dangers, clear compliance insurance policies throughout your complete group will be thought-about, complemented by common self-assessments to allow early detection of compliance points. M&A legal professionals are moreover suggested to maintain tabs throughout a due diligence on the competitors compliance of the group and contemplate further warranties within the SPA with regard to legal responsibility ensuing from infringements of group members, if acceptable.
Charlotte Reyns
lawyer (Quinz)
instructing assistant
(KU Leuven Institute for European Regulation)
