In two recent rulings, the Court of Justice and the General Court note the Commission’s failure to explain, in the decisions, its reasons for attributing the unlawful conduct of the subsidiaries to the parent companies.

In Elf Aquitaine v Commission, the Court of Justice finds that the Commission, in the MCAA (Monochloroacetic acid) cartel decision7 , had not given sufficiently reasoned answers to several arguments and evidence put forward by Elf Aquitaine in order to establish that Arkema determined its conduct on the market independently.

In Koninklijke Grolsch NV v Commission, the General Court states that the Commission decision in the Dutch beer cartel8 treated the parent company, Koninklijke Grolsch N, and the Grolsch group as one and made no mention of the economic, organisational and legal links between the parent company and its subsidiary, whilst nowhere in the statement of reasons was the subsidiary’s name mentioned.

Even if the facts are not exactly comparable in both cases, the Court of Justice and the General Court reach the same conclusion regarding the Commission’s duty to provide an adequate statement of reasons. Both jurisdictions recall that to state reasons is an essential procedural requirement. Pursuant to Article 253 EC (Article 296 TFEU), legal acts shall state the reasons on which they are based. So, the statement of reasons must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review.

With regard to the Commission’s decision, they emphasize that where a decision concerns a number of addressees and raises a problem of attribution of liability for the infringement, it must include an adequate statement of reasons with respect to each of the addressees, in particular those of them who, according to the decision, must bear the liability for that infringement. Thus, in the case of a parent company held liable for the conduct of its subsidiary, such a decision must contain a detailed statement of reasons for attributing the infringement to that company. It is indeed essential that the Commission sets out adequate reasons why the facts or law relied upon were not sufficient to rebut the presumption. Otherwise, it would deny the parent company any opportunity to reverse the presumption and thereby challenge the merits of that attribution before the Court.

Additionally, in Elf Aquitaine, the Court of Justice notes the Commission’s failure to state reasons regarding a change in its decisional practice.  The Court of Justice observes that in the applicant’s view there were no objective differences with the situation in the organic peroxide decision9. Previously, the Commission had not held Elf Aquitaine liable for the collusive behaviour of its subsidiary Arkema (previously Atofina). The Court observes that even if the Commission’s reasoning is not required to go into all the relevant facts and points of law, it is settled case-law that “although a decision of the Commission which fits into a well-established line of decisions may be reasoned in a summary manner, for example by a reference to those decisions, if it goes appreciably further than the previous decisions, the Commission must give an account of its reasoning”. So, in respect of the overall circumstances and in particular the change of the established approach toward the applicant, it was incumbent on the General Court to give special attention to the question whether the Commission Decision contained a detailed statement of reasons why the evidence submitted by Elf Aquitaine was not sufficient to rebut the presumption of liability applied in that decision.

In the Koninklijke Grolsch NV v Commission and Elf Aquitaine v Commission, the Courts’ rulings result in the annulment of the Commission Decisions in so far as the EU institution failed to explain its reasons for imputing to the parents companies the infringement of their subsidiary and  imposing a fine on them.