Through a series of judgments dated 10 April 2014 (Judgments), the Court of Justice of the European Union (CJEU) reversed the decisions of the General Court of the European Union (General Court) which had held that the European Commission (Commission) had jurisdiction to allocate the respective share of fine to be paid by co-debtors jointly and severally liable for such fine. In so holding, the CJEU rejected the principle of equal distribution established by the General Court and recalled that such issue falls under the exclusive jurisdiction of national courts in the context of an action for indemnity.

In 2007, the Commission had sanctioned eleven groups of companies for having entered into a cartel agreement in the gas-insulated switchgear sector. Siemens, who was, as a parent company, found jointly and severally liable with its subsidiary involved in the infringement, obtained a reduction of the total amount of the fine before the General Court.

However, since the General Court had also decided to involve itself in Siemens’ internal relationships with the other co-debtors by allocating their respective share of the fine, Siemens (and the Commission) brought the case before the CJEU.

The rule established by the General Court that, in the absence of a contractual agreement, the joint fine should be divided equally between the co-debtors was the main issue at stake. This rule was particularly shocking for parent companies who have not played any personal role in the infringement and are held liable solely as a result of the conduct of their subsidiary.

In this respect, the CJEU dismissed the existence of such a supranational suppletive rule and stressed that the Commission and the General Court cannot regulate internal relationships between co-debtors since the mechanism of joint and several liability is sufficient to ensure the payment of the fine by the undertaking as a whole, and thus to ensure the effectiveness of competition law and the goal of deterrence sought.

The CJEU therefore upheld the Commission’s argument pursuant to which the principle according to which penalties must be specific to the offender and to the offence applies only to the undertaking and should not result in each subsidiary constituting the undertaking being able to deduce from the decision the share it should bear in its relationship with its joint and several co-debtors, once the fine has been paid to the Commission in full. This principle should not extend to internal relationships between the various entities of an undertaking.

As a result, the rules of the allocation of the fine between co-debtors depend either on the decision of the parties, who may contractually fix their share of liability, or on the jurisdiction of national judges who must determine the responsibility of each party in the infringement under the national law applicable to the dispute. In this respect, the CJEU suggested that judges could call upon the Commission to obtain all necessary elements to determine the involvement of each codebtor identified in its decision.

Under these circumstances, although the CJEU may impose on each co-debtor claiming an unequal distribution of responsibility the burden of proving that the other debtors had a greater degree of responsibility in the infringement, it can be hoped that these Judgments will contribute to reinstating fairness in actions for indemnity – for the benefit of parent companies who were not involved in the practices committed by their subsidiaries.

Such a solution would all the more be desirable for parent companies held jointly and severally liable for an infringement with their subsidiary solely due to the presumption of liability of parent companies holding 100 % of their subsidiaries, a presumption which remains particularly difficult to rebut in practice.