General Court ruling on liability of parent company for Spanish raw tobacco cartel

The General Court has handed down its judgment on an appeal brought by three group companies against a fine imposed jointly and severally upon the companies by the Commission in October 2004 for the part played by their subsidiary, World Wide Tobacco Espana, in a Spanish tobacco cartel.

The General Court found that whilst the Commission would be entitled to attribute liability of a subsidiary to its ultimate parent company or to an intermediate subsidiary, the Commission cannot do so merely on the basis that a parent company is in a position to exercise decisive control over its subsidiary. Rather, it must also establish that such influence was actually exercised. The General Court did however hold that where a parent company holds 100% of the share capital of its subsidiary, the burden of proof would rest with the parent to show that it did not in fact exercise decisive control over the subsidiary.  

In this case an intermediate subsidiary was released from its liability, having been found not to have exercised decisive control over its subsidiary. The other group companies were not however released from liability and now face joint and several liability for the same fine of €1,822,500.

T-24/05 - 27 October 2010