Tuesday, November 29, 2011
Guilty of a Fault that one has not Committed. The Limits of the Group-Based Sanction Policy Carried out by the Commission and the European Courts in EU-Antitrust Law
Posted by D. Daniel Sokol
Stefan Thomas, Professor of Law at the Eberhard Karls University Tubingen discusses Guilty of a Fault that one has not Committed. The Limits of the Group-Based Sanction Policy Carried out by the Commission and the European Courts in EU-Antitrust Law.
ABSTRACT: The economic entity doctrine allows the Commission to fine a parent company if its subsidiary has infringed the competition rules. In such cases, the Commission holds the subsidiary and the parent jointly and severally liable. The EU Courts have acknowledged this sanctioning concept as based on an interpretation of the notion of “undertaking”. Group companies are deemed to form one unitary undertaking in terms of the competition rules. However, the economic entity doctrine faces increasing criticism. It is argued that being a parent can hardly suffice to establish liability for the infringement of the subsidiary. Also, the rule stating that a 100 % shareholder is presumed to form an economic entity with its subsidiary is seen to conflict with the in dubio pro reo principle. As far as joint and several liability is concerned, practical problems arise with respect to recourse litigation between the corporate entities. The practical significance of the problems is rising. Although the Court of Justice has espoused the economic entity doctrine, there are reports that a Dutch company has recently asked the European Court of Human Rights to rule on whether such a concept is compatible with the presumption of innocence. Moreover, the national Courts struggle with the problem of how to apportion liability between the jointly and severally liable group companies with respect to recourse claims. The General Court has recently tried to establish general principles in that respect in its Siemens/VA Tech judgment which, however, seem to have created further problems.