A put up by visitor blogger Charlotte Reyns (Quinz, KU Leuven)
Because the introduction of the EU Personal Damages Directive 2014/104, the quantity of personal damages actions following competitors legislation infringements have grown exponentially. Certainly, enforcement by non-public events is seen as a complementary limb to the enforcement of competitors legislation by the European Fee and the nationwide competitors authorities. One facet that deserves particular consideration in that regard is the “single financial unit” doctrine which permits a number of or all firms belonging to a bunch of firms to be held accountable for an infringement of competitors legislation they didn’t themselves commit. Current rulings reminiscent of Athenian Brewery (C-393/23) within the context of personal worldwide legislation 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 put up delves deeper into the doable legal responsibility of the completely different members of a bunch of firms when solely certainly one of them has been discovered to infringe EU competitors legislation. Who might be liable, and how one can handle this threat?
First issues first: the only financial unit doctrine and its impression on legal responsibility
EU competitors legislation 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. It is a practical idea and, not like in (nationwide) company legislation, doesn’t seek advice from authorized entities with a definite authorized character. In EU competitors legislation, an enterprise can, in some circumstances, correspond to a pure or authorized individual however could, in others, comprise a number of of stated individuals. Within the latter state of affairs, the time period “single financial unit” is used. Two firms are typically thought-about to kind 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 most typical instance is that of a father or mother firm holding 100% of the shares in a daughter firm. In such scenario, the entire group will probably be thought-about to be the “enterprise” to which EU competitors legislation guidelines are addressed.
In case of an infringement of competitors legislation, the quantity of the positive is subsequently based mostly on the turnover of the only financial unit as an entire. In an attention-grabbing flip of occasions, the CJEU held just lately in its judgment ILVA (C-383/23) that when figuring out whether or not the positive for an infringement of the Normal Information 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 ideas on parent-subsidiary legal responsibility.
In distinction, when an enterprise is discovered to have infringed EU competitors legislation, it’s established that the completely different members of the financial unit might be held collectively and severally accountable for infringements. Over the course of the final years, the case legislation of the Courtroom of Justice of the European Union (CJEU) has fleshed out completely different situations beneath which this may be the case. These are introduced beneath.
The father or mother firm is accountable for the misbehavior of a subsidiary – Skanska
It’s settled case legislation from the CJEU {that a} father or mother firm might 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 via non-public damages claims.
It’s due to this fact of essence that father or mother firms are conscious when they are often thought-about to be a part of the identical financial unit as their misbehaving subsidiary. As said 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 in the end 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 convey a case in opposition to a father or mother firm positioned in a single member state even when all different components 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 buying software for claimants.
A subsidiary is accountable for the misbehaviour of the father or mother – Sumal
Maybe much less intuitive, a subsidiary can 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 kind an financial unit, the subsidiary might 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 might be held accountable for the mother and father’ infringements.
This additionally has implications by way of discussion board buying: since in line with the rule of thumb defendants might be sued of their place of residence, giant teams with subsidiaries working on the identical market because the father or mother firm must be ready to be sued within the nations the place their subsidiaries are positioned.
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 (Normal Courtroom) held within the Jungbunzlauer case (T-43/02) that one sister firm might 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 firms that don’t exert such decisive affect over each other, can’t be held accountable for one another’s conduct.
Classes realized: preserve tabs on the completely different group members, notably these working on the identical market
It’s clear from the above that subsidiaries, sister and father or mother firms in a single group might be held accountable for infringements of competitors legislation by any of them. Corporations are due to this fact suggested to pay attention to the conduct of its group members, since collective compliance with EU competitors legislation 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 entire group might be thought-about, complemented by common self-assessments to allow early detection of compliance points. M&A attorneys are moreover suggested to maintain tabs throughout a due diligence on the competitors compliance of the group and think about further warranties within the SPA with regard to legal responsibility ensuing from infringements of group members, if applicable.
Charlotte Reyns
lawyer (Quinz)
instructing assistant
(KU Leuven Institute for European Regulation)
