In Europe, a parent company is held liable for infringements of competition law committed by its wholly-owned subsidiaries when they are considered a single economic unit and an “undertaking” under EU competition law.  Where a parent company exercises decisive influence over the commercial policy of its subsidiary, the parent and the subsidiary are deemed to form a single economic unit.  In respect of wholly-owned subsidiaries, AKZO Chemie BV v Commission of the European Communities established a presumption that the parent company exercises decisive influence over the conduct of the subsidiary, making it unnecessary for the Commission to show the actual exercise of influence.

Although the Commission and the courts repeated that the presumption was rebuttable, concern has grown that it may be de facto irrebuttable since it had never been rebutted.  However, in July 2010, in L’Air Liquide v Commission and in Edison v Commission, parent companies finally escaped the presumption of liability.  The General Court annulled the Commission’s decision in both cases as the Commission had failed to take detailed positions on the evidence and counter-arguments adduced in order to rebut the presumption.  The General Court also shed some light on the arguments that might succeed in the future.

In another judgment handed down on the same day, the General Court also annulled the Commission’s decision in Gosselin Group and Stichting dministratiekantoor Portielje v Commission, finding that Portielje was not even an “undertaking” and was not therefore capable of exercising decisive influence.

These two cases appear to suggest that the Courts will scrutinise the Commission’s analyses more carefully when they impute liability to parent companies.

On another occasion, the General Court also carefully analysed the Commission’s reasoning behind catching repeat offenders by applying the concept of an “undertaking”.  In Eni SpA v Commission and ThyssenKrupp et al. v Commission, the Court cautioned that the Commission must produce enough detailed and specific evidence in order to demonstrate that the addressee of the contested decision had repeated an infringement.  The Court reduced the fines imposed on the companies concerned.

Key Point to Note

Although the Commission is still entitled to use the presumption, it will be required to analyse the corporate structure and any other elements related to decisive influence more closely.