The Court of Justice of the European Union (CJEU) dismissed an appeal by Alliance One International on 26 September 2013 of a decision upholding the European Commission’s fines against a raw tobacco cartel in Spain, (see Case C-668/11 P Alliance One International Inc. v European Commission.)
In October 2004, the Commission fined (amongst others), the Spanish raw tobacco producer, Agroexpansion EUR 2.59 million, for participation in a raw tobacco cartel concerning the delivery price for tobacco. The parent company of Agroexpansion, Alliance One International Inc. (Alliance), then called Dimon Inc., was held jointly and severally responsible for the payment of the fine. Alliance was held responsible on the basis that it exercised a decisive influence over the conduct of Agroexpansion as owner of its entire share capital.
Alliance appealed this finding to the General Court which rejected the appeal, upholding the Commission’s decision that liability should be on a joint and several basis between parent and subsidiary. Following this rejection, Alliance further appealed the decision of the General Court to the CJEU.
The CJEU’s judgment affirms its continuing desire for parents and their subsidiary companies to be found jointly and severally liable. The CJEU affirmed the dictum from Case C97/08 Akzo Nobel NV and others v Commission that where a parent company owns the entire share capital of another company, there is a rebuttable presumption that the parent exercises decisive influence over the behaviour and actions of that subsidiary, and therefore, should be jointly and severally liable for its actions.
The CJEU stated however, that the presumption can be used in conjunction with evidence to establish such influence. The rebuttable presumption was not necessarily used exclusively to establish whether influence was present between parent and subsidiary. It was and remains possible to judge the relationship both in the context of a rebuttable presumption, but also to allow and assess further evidence that the influence exists.
The relevance of this appeal to companies and future cartel decisions is that it allows the Commission flexibility to use evidence of influence by parent companies. It could be seen as a further evidential hurdle for defendants to overcome as in these cases they won’t simply be trying to rebut the presumption of influence, but may have to actively disprove or counter evidence introduced by the Commission that the parent held a decisive influence over its subsidiary. Company group compliance with competition law, no matter how small and distant the subsidiary, should therefore remain a priority for parent companies following this decision.