A publish 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 regulation infringements have grown exponentially. Certainly, enforcement by personal 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 gaggle of corporations to be held responsible 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 only financial unit doctrine.

This publish delves deeper into the attainable legal responsibility of the totally different members of a gaggle of corporations when solely certainly one of them has been discovered to infringe EU competitors regulation. Who will be liable, and methods to handle this threat?

First issues first: the only financial unit doctrine and its affect on legal responsibility

EU competitors regulation is addressed to “undertakings”, that means any entity engaged in an financial exercise, no matter its authorized standing and the way in which it’s financed. It is a useful idea and, in contrast to in (nationwide) company regulation, doesn’t consult with authorized entities with a definite authorized character. In EU competitors regulation, an endeavor can, in some instances, correspond to a pure or authorized individual however might, in others, comprise a number of of stated individuals.  Within the latter situation, the time period “single financial unit” is used. Two corporations are usually 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 workout routines decisive affect over the opposite which doesn’t act autonomously (Akzo Nobel (C-97/08, § 60)). The most typical instance is that of a guardian firm holding 100% of the shares in a daughter firm. In such scenario, the entire group can 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 fantastic is subsequently primarily based on the turnover of the only financial unit as a complete. In an attention-grabbing flip of occasions, the CJEU held lately in its judgment ILVA (C-383/23) that when figuring out whether or not the fantastic for an infringement of the Basic Knowledge Safety Regulation (GDPR) is efficient, proportionate and dissuasive, regard should be needed to the only financial unit of which the processor varieties half, making use of the only financial unit doctrine by analogy. Nonetheless, the willpower of the authorized individual 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 totally different members of the financial unit will be held collectively and severally responsible 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 totally different eventualities below which this may be the case. These are offered beneath.

The guardian firm is responsible for the misbehavior of a subsidiary – Skanska

It’s settled case regulation from the CJEU {that a} guardian firm will be held responsible for anti-competitive conduct of its subsidiary when the guardian workout routines 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 personal damages claims.

It’s due to this fact of essence that guardian corporations 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 once they train decisive affect over their subsidiary. In that regard, a rebuttable presumption exists {that a} guardian firm exerts decisive affect over a subsidiary when it holds, straight 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 guardian firm holds the entire voting rights as an alternative of all or virtually the entire share capital in a subsidiary. It’s thus the diploma of management of the guardian firm over its subsidiary that’s related for the presumption and that may finally result in the legal responsibility of the guardian firm.

The current Athenian Brewery case (C-393/23) moreover exhibits that the presumption of decisive affect can be utilized to convey a case towards a guardian firm situated in a single member state even when all different parts of the case relate to a special member state. Additionally seemingly ‘purely home’ instances can thus be introduced in entrance of the seat of a guardian firm when the presumption is fulfilled, making it an attention-grabbing discussion board buying instrument for claimants.

A subsidiary is responsible for the misbehaviour of the guardian – Sumal

Maybe much less intuitive, a subsidiary can be held responsible for the misbehavior of a guardian. Within the Sumal case (C-882/19), the CJEU discovered that when a guardian and a subsidiary type an financial unit, the subsidiary will be responsible for the infringement of the guardian 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 guardian firm function on the identical cartelised market, the subsidiary will be held responsible for the mother and father’ infringements.

This additionally has implications by way of discussion board buying: since in keeping with the rule of thumb defendants will be sued of their place of residence, massive teams with subsidiaries working on the identical market because the guardian firm must be ready to be sued within the nations the place their subsidiaries are situated.

A sister firm can, in particular circumstances, be responsible for the misbehaviour of one other sister – Jungbunzlauer

Whereas a extra unlikely situation, the CJEU (Basic Courtroom) held within the Jungbunzlauer case (T-43/02) that one sister firm will 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 responsible for one another’s conduct.

Classes discovered: hold tabs on the totally different group members, notably these working on the identical market

It’s clear from the above that subsidiaries, sister and guardian corporations in a single group will be held responsible for infringements of competitors regulation by any of them. Corporations 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 your complete group will 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 contemplate 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 Legislation)