The EU’s highest court (European Court of Justice or ECJ) recently confirmed that the parents of a joint venture may be held liable under EU competition law for anti-competitive activities of that joint venture. Depending on all the control rights available to the parent, this is the case even where it holds a minority shareholding.
The case concerned Toshiba’s participation in a joint venture relating to its cathode ray tubes (CRT) business. The joint venture was found by the European Commission (EC) to have participated in a cartel. Despite holding only 35.5 percent of the shares, Toshiba was fined by the EC as a parent. This had been appealed to the EU courts.
Toshiba had a right of veto over the joint venture’s business plan for the entire duration of its existence. The ECJ found that the holding of such a right was in itself sufficient to conclude that Toshiba had exercised “decisive influence” over that undertaking together with the other parent. Toshiba could therefore be held liable for its activities. It was not necessary to determine whether Toshiba had actually influenced the joint venture’s operational management. Furthermore, the mere fact that Toshiba never exercised its right of veto did not allow for the conclusion that it did not exercise decisive influence over the joint venture’s conduct.
The ECJ also confirmed that the possibility for Toshiba to prohibit its subsidiary (the joint venture) from making decisions involving outlays which appear relatively modest in the light of that subsidiary’s capital constitutes an indication of the capacity to exercise decisive influence over that subsidiary. Also, Toshiba’s appointment of one of the two directors entitled to represent the joint venture (namely, the vice president of that undertaking) was an indication of Toshiba’s capacity to exercise decisive influence over its conduct.