On 20 October 2015, the Dutch competition authority (ACM) announced to uphold its fine (in excess of EUR 1 million) on a private equity firm for the involvement of its portfolio company in the flour cartel. This decision shows that the ACM attributes liability and imposes fines on investment firms for antitrust violations by a portfolio company. 

The private equity firm argued that it did not have decisive influence over its portfolio company. Furthermore, it stated that private equity firms cannot easily be held responsible for their portfolio companies because different principles apply in comparison to centrally guided enterprises. These arguments were dismissed by the ACM. The ACM assumes that there is decisive influence on the basis of certain aspects that are typical for private equity investments, such as the power of a private equity firm to appoint board members and to influence the business plan, dividend payments, the supervisory board (and through the supervisory board the activities of the company) and management participation. 

The approach of the ACM is in line with that of the European Commission, which has previously fined private equity firms for cartel participation of a portfolio company. It is however the first time that the ACM fines a private equity firm on this basis.  

The ACM’s decision emphasizes that private equity firms should be aware that the mere fact of having decisive influence over a portfolio company will generally result in liability (and thus the risk of fines) for the relevant private equity firms in a situation where such portfolio company is involved in a cartel. A careful due diligence investigation with respect to antitrust compliance and adequate provisions in the transaction documentation are therefore essential, as well as continued monitoring of ongoing compliance of its portfolio companies. 

We are gladly available to discuss the implications of this approach by the antitrust authorities.

Please click here to read the accouncement of the ACM itself.