In its judgment of 20 January 20111 the Court of Justice set aside the judgment of the General Court2, but nevertheless, the Court dismissed the action for annulment of the Commission decision as it was unfounded.
The case relates to the Commission decision of 21 December 20053 in which the Commission imposed a fine on General Quimica (GQ), Repsol Quimica (RQ), and Repsol YPF (RYPF), jointly and severally for participating in a cartel concerning rubber chemicals. GQ, RQ, and RYPF lodged an appeal against this decision at the General Court in which RYPF and RQ argued that they could not be held jointly and severally liable for the conduct of their subsidiary GQ, amongst other things. The General Court dismissed this argument on the ground that GQ is a 100% subsidiary of RQ, which in turn is a 100% subsidiary of RYPF, which constitutes a rebuttable presumption that the parent company actually exerted a decisive influence over its subsidiary’s conduct and that therefore, the parent and subsidiary constitute a single undertaking for the purpose of Article 101 TFEU. Furthermore, the General Court held that the fact that RQ ordered GQ by letter to cease any anti-competitive practices was sufficient to prove that RYPF and RQ exercised decisive influence over GQ’s policy. Finally, the General Court examined, for the sake of completeness, whether the Commission made a manifest error of assessment in relation to the evidence submitted by the appellants to rebut the presumption that the parent companies had decisive influence. The arguments of the appellants along that line were rejected.
In their appeal against the judgment of the General Court, the appellants put forth two pleas in law. The first plea in law concerns the attribution of liability to RQ for GQ’s conduct and consists of three parts: (i) the alleged wrongful application of the presumption of a decisive influence of a parent company over the conduct of a wholly-owned subsidiary; (ii) the errors in the assessment of the existence of decisive influence; and (iii) the errors of law and reasoning in the examination of the evidence submitted to rebut the presumption of RQ’s decisive influence over GQ’s conduct. The second plea in law concerns the attribution of liability to RYPF for GQ’s conduct.
Regarding the first part of the first plea, the Court of Justice confirms that the Commission can suffice to demonstrate that the subsidiary is wholly owned by the parent company to conclude that the parent company exercises a decisive influence over the commercial policy of the subsidiary and thus is jointly and severally liable for the fine imposed on the subsidiary. Consequently, the General Court did not err in law in finding that where a parent company holds 100% of the capital of its subsidiary, there is a rebuttable presumption that that parent company exercises decisive influence over its subsidiary and that no additional indicia relating to the actual exercise of influence should be produced by the Commission to support this presumption.
In the second part of the first plea, RQ makes four claims. Firstly, the General Court would have excessively restricted the possibilities to rebut the presumption of exercising decisive influence concerning a wholly-owned subsidiary. Secondly, RQ states that the evidence used by the General Court does not enable the conclusion that there is a single economic entity. Thirdly, RQ submits that the General Court misinterpreted a piece of evidence. Fourthly, RQ claims that the General Court did not motivate its finding that the order of RQ to GQ to cease any anti-competitive practices was sufficient to prove that RYPF and RQ exercised decisive influence over GQ’s policy. The Court of Justice held that the General Court did not excessively restrict the possibilities to rebut the presumption, but it had instead applied the settled case-law requiring that a parent company should bring any evidence relating to the organisational, economic, and legal links between itself and its subsidiary that are apt to demonstrate they do not constitute a single economic entity, in order to rebut the presumption. As far as the second and third claims are concerned, the Court of Justice noted that these were based on a misreading of the judgment and should thus be dismissed. Regarding the fourth claim, the Court of Justice followed RQ’s arguments and held that the General Court simply asserted a principle (i.e. the order itself was sufficient to conclude that RQ exercised decisive influence over its subsidiary), however, without setting out clearly and in an unequivocal manner the grounds which led to its conclusion.
Regarding the third part of the first plea, the Court of Justice first emphasised the fact that it is for the General Court alone to assess the value which should be attached to the evidence produced to it. So unless when the clear sense of the evidence has been distorted, that appraisal does not constitute a point of law which is subject to review by the Court of Justice. Nevertheless, the Court of Justice held that the General Court erred in law when the General Court stated that the evidence produced could not succeed in ‘the light of the case-law cited’ without carrying out a concrete examination of the factors raised by RQ. The case-law to which the General Court did refer, did not provide factors capable of dismissing the evidence RQ presented before the General Court, but rather only stated what kind of evidence RQ should produce to rebut the presumption of decisive influence. Furthermore, from that case-law it follows that the General Court should examine in detail all the evidence put before it that could demonstrate that the subsidiary implemented its commercial policy independently from the parent company. In not examining this evidence but merely referring to the case-law of the Court, the General Court has thus erred in law.
In the second plea in law, RYPF basically claimed that the General Court was wrong in automatically extending the presumption of decisive influence from the direct parent company to the company at the head of the group (‘holding company’) without taking into account the individual circumstances of the case and the fact that the holding company only has an indirect holding in the subsidiary. The Court of Justice held in this regard that the General Court did not commit an error in law in finding that the presumption of liability based on the holding of the entire share capital of another company does not only apply when there is a direct relationship between the parent company and the subsidiary but also in the case of a remote or indirect relationship. The second plea in law was thus dismissed by the Court of Justice.
After concluding that the judgment of the General Court should be set aside for the two reasons mentioned above, the Court of Justice decided that the state of the proceedings allowed it to give a final judgment in the matter.
For that case, RQ and RYPF brought forward two claims. First, they claimed that the order from RQ to GQ to cease any anti-competitive action after the inspection at GQ shows that RQ was not aware of and did not participate in the anti-competitive conduct of GQ. Second, they claimed that the Commission made a manifest error in the assessment of the evidence put forward by RQ to rebut the presumption of the exercise of decisive influence by RQ over GQ.
The Court of Justice dismissed both claims based on two reasons: (i) the Court repeated that the parent company’s being unaware of or non-participation in the anti-competitive conduct of its subsidiary is not relevant for the question whether the parent company can be held liable for the acts of its subsidiary. Indeed, the joint and severally liability of the parent company for its subsidiary is based on the fact that they form a single economic entity, and thus a single undertaking in the sense of Article 101 TFEU. The facts invoked by RQ are thus not capable of rebutting the presumption of the exercise of decisive influence, and therefore, a parent company and its subsidiary indeed form a single economic unit; and (ii) the Court, based on the examination of the evidence put forward by RQ, concluded that the Commission did not commit a manifest error of assessment in deciding that the evidence presented did not allow for the rebuttal of the presumption that RQ exercised decisive influence over GQ’s conduct.
Therefore, the Court of Justice dismissed the action for annulment.