Tuesday, November 17, 2009
Posted by D. Daniel Sokol
James Bourke (European Commission) explains Parental Liability for Cartel Infringements.
ABSTRACT: The imputation of liability to a parent company for its subsidiary's participation in a cartel forms part of a field of law which has been ploughed almost exclusively by the Community Courts. Ultimately, imputation is permissible where the parent and subsidiary form part of a single economic entity (an "undertaking") such that the subsidiary lacks autonomy with respect to commercial policy. However, the wording of the test originally set out by the European Court of Justice (“ECJ”) more than thirty years ago is somewhat ambiguous and appears, at first blush, to impose a very onerous burden on the Commission. The jurisprudence from more recent years shows that the exact wording of the legal test should not be taken too literally. Rather it is necessary to make a global assessment of the influence which the parent has over its subsidiary in deciding whether they are part of a single economic entity.
In September 2009, the Luxembourg courts provided further guidance on parental liability. The most important of these judgments is the ECJ's ruling in the Akzo Nobel (Choline Chloride) appeal which marks the end of one wave of litigation with respect to the application and strength of the presumption of actual exercise of decisive influence in the case of 100 percent shareholdings. However, that judgment is also significant because it confirms that the Commission should look to all relevant economic, organizational and legal links which tie the subsidiary to the parent in order to assess whether they are part of one undertaking.