A submit by visitor blogger Charlotte Reyns (Quinz, KU Leuven)
For the reason that introduction of the EU Personal 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 facet 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. Current rulings comparable 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 one financial unit doctrine.
This submit delves deeper into the attainable legal responsibility of the completely different members of a bunch of corporations when solely one in every of them has been discovered to infringe EU competitors regulation. Who might be liable, and easy methods to handle this threat?
First issues first: the one financial unit doctrine and its influence on legal responsibility
EU competitors regulation is addressed to “undertakings”, which 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, in contrast to in (nationwide) company regulation, doesn’t discuss with authorized entities with a definite authorized character. In EU competitors regulation, an endeavor can, in some instances, correspond to a pure or authorized particular person however could, in others, comprise a number of of stated individuals. Within the latter situation, the time period “single financial unit” is used. Two corporations are typically 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 dad or mum firm holding 100% of the shares in a daughter firm. In such scenario, the entire group will likely 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 nice is subsequently based mostly on the turnover of the one financial unit as a complete. In an fascinating flip of occasions, the CJEU held lately in its judgment ILVA (C-383/23) that when figuring out whether or not the nice for an infringement of the Normal Knowledge Safety Regulation (GDPR) is efficient, proportionate and dissuasive, regard should be needed to the one financial unit of which the processor types half, making use of the one financial unit doctrine by analogy. Nonetheless, the willpower of the authorized particular person liable stays solely regulated by the GDPR and isn’t topic to the identical ideas on parent-subsidiary legal responsibility.
In distinction, when an endeavor is discovered to have infringed EU competitors regulation, 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 regulation 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 under.
The dad or mum firm is accountable for the misbehavior of a subsidiary – Skanska
It’s settled case regulation from the CJEU {that a} dad or mum firm might be held accountable 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 means of non-public damages claims.
It’s due to this fact of essence that dad or mum 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} dad or mum firm exerts decisive affect over a subsidiary when it holds, instantly 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 a substitute 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 in the end result in the legal responsibility of the dad or mum firm.
The current Athenian Brewery case (C-393/23) moreover reveals 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 purchasing software for claimants.
A subsidiary is accountable for the misbehaviour of the dad or mum – Sumal
Maybe much less intuitive, a subsidiary may also be held accountable 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 type an financial unit, the subsidiary might be accountable 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 accountable for the dad and mom’ infringements.
This additionally has implications by way of discussion board purchasing: since in response to 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 needs to 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 situation, 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 corporations that don’t exert such decisive affect over each other, can’t be held accountable 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 corporations in a single group might be held accountable for infringements of competitors regulation by any of them. Firms are due to this fact suggested to concentrate on 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 all the group might 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 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 Legislation)