A put up by visitor blogger Charlotte Reyns (Quinz, KU Leuven)
For the reason that introduction of the EU Non-public Damages Directive 2014/104, the quantity of personal damages actions following competitors legislation infringements have grown exponentially. Certainly, enforcement by personal events is considered as a complementary limb to the enforcement of competitors legislation 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 firms belonging to a gaggle of firms to be held answerable for an infringement of competitors legislation they didn’t themselves commit. Current rulings comparable to 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 potential legal responsibility of the completely different members of a gaggle of firms when solely considered one of them has been discovered to infringe EU competitors legislation. Who might be liable, and tips on how to handle this threat?
First issues first: the only financial unit doctrine and its affect 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. This can be a practical idea and, not like in (nationwide) company legislation, doesn’t discuss with authorized entities with a definite authorized character. In EU competitors legislation, an endeavor can, in some instances, correspond to a pure or authorized individual however could, in others, comprise a number of of stated individuals. Within the latter situation, the time period “single financial unit” is used. Two firms are usually thought of 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 dad or mum firm holding 100% of the shares in a daughter firm. In such scenario, the entire group shall be thought of to be the “endeavor” to which EU competitors legislation guidelines are addressed.
In case of an infringement of competitors legislation, the quantity of the effective is subsequently primarily based on the turnover of the only financial unit as an entire. In an fascinating flip of occasions, the CJEU held just lately in its judgment ILVA (C-383/23) that when figuring out whether or not the effective for an infringement of the Normal Information Safety Regulation (GDPR) is efficient, proportionate and dissuasive, regard have to be needed to the only financial unit of which the processor types half, making use of the only financial unit doctrine by analogy. Nevertheless, the dedication of the authorized individual liable stays solely 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 legislation, it’s established that the completely different members of the financial unit might be held collectively and severally answerable for infringements. Over the course of the final years, the case legislation of the Court docket of Justice of the European Union (CJEU) has fleshed out completely different eventualities below which this may be the case. These are introduced under.
The dad or mum firm is answerable for the misbehavior of a subsidiary – Skanska
It’s settled case legislation from the CJEU {that a} dad or mum firm might be held answerable for anti-competitive conduct of its subsidiary when the dad or mum 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 way of personal damages claims.
It’s subsequently of essence that dad or mum firms are conscious when they are often thought of to be a part of the identical financial unit as their misbehaving subsidiary. As said above, that is the case once they train decisive affect over their subsidiary. In that regard, a rebuttable presumption exists {that a} dad or mum firm exerts decisive affect over a subsidiary when it holds, immediately or not directly, all or virtually all the 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 dad or mum firm holds all the voting rights as an alternative of all or virtually all the share capital in a subsidiary. It’s thus the diploma of management of the dad or mum firm over its subsidiary that’s related for the presumption and that may finally result in the legal responsibility of the dad or mum 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 dad or mum firm positioned in a single member state even when all different parts of the case relate to a unique member state. Additionally seemingly ‘purely home’ instances can thus be introduced in entrance of the seat of a dad or mum firm when the presumption is fulfilled, making it an fascinating discussion board buying instrument for claimants.
A subsidiary is answerable for the misbehaviour of the dad or mum – Sumal
Maybe much less intuitive, a subsidiary will also be held answerable for the misbehavior of a dad or mum. Within the Sumal case (C-882/19), the CJEU discovered that when a dad or mum and a subsidiary kind an financial unit, the subsidiary might be answerable for the infringement of the dad or mum 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 dad or mum firm function on the identical cartelised market, the subsidiary might be held answerable for the mother and father’ infringements.
This additionally has implications by way of discussion board buying: since based on the rule of thumb defendants might be sued of their place of residence, massive teams with subsidiaries working on the identical market because the dad or mum firm ought to be ready to be sued within the international locations the place their subsidiaries are positioned.
A sister firm can, in particular circumstances, be answerable for the misbehaviour of one other sister – Jungbunzlauer
Whereas a extra unlikely situation, the CJEU (Normal Court docket) held within the Jungbunzlauer case (T-43/02) that one sister firm might be liable for one more sister’s cartel infringement. Nevertheless, 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 answerable for one another’s conduct.
Classes discovered: maintain tabs on the completely different group members, notably these working on the identical market
It’s clear from the above that subsidiaries, sister and dad or mum firms in a single group might be held answerable for infringements of competitors legislation by any of them. Firms are subsequently 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 the whole group might be thought of, 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 think about further warranties within the SPA with regard to legal responsibility ensuing from infringements of group members, if acceptable.
Charlotte Reyns
lawyer (Quinz)
educating assistant
(KU Leuven Institute for European Regulation)
