On 12 July 2018, the General Court dismissed the appeals against the fines imposed by the European Commission in the power cable cartel. The Court also confirmed the EUR 37.3 million fine levied on Goldman Sachs on the basis of its exercise of decisive influence over cable maker Prysmian through one of its funds.
Goldman Sachs nor its fund were held liable by the Commission for their direct participation in the cartel or for having knowledge of any wrongdoings of Goldman Sachs' portfolio company Prsymian. It is a well-established principle of EU competition law that parent companies can be held liable for the conduct of their subsidiaries. Moreover, where the parent company has a 100% shareholding there is a rebuttable presumption that the parent company exercises decisive influence over the conduct over the subsidiary.
In its appeal, Goldman Sachs disputed having exercised decisive influence, stating, among other things, that Prysmian was a pure financial investment and that for most of the relevant period its shareholding was less than 100%. The Court confirmed that the Commission was correct in applying the presumption of decisive influence to Goldman Sachs. The Court held that Goldman Sachs was in a similar situation to that of a sole owner of a subsidiary as it held all the voting rights in combination with a very high majority stake, even though it did not hold all the share capital.
The Court also held that the Commission had correctly taken account of other objective factors which supported the finding that Goldman Sachs exercised decisive influence over Prysmian, including its power to appoint members of the board of directors of Prysmian, the ability to call shareholder meetings and the role played by the directors of Goldman Sachs within the strategic committee of Prysmian.
The ruling of the Court shows how the concept of parental liability continues to expand. This case further highlights the importance for investors to ensure that their portfolio companies are compliant with competition law, even when they are considered as a pure financial investment. This becomes especially relevant where investors have large shareholdings and have rights that allow them to exercise decisive influence over the portfolio companies.