Liability Of Non-addressee Subsidiaries In Cartel Decisions ' An Extension Of Existing Principles?

• Published date: 08 June 2021
• Subject Matter: Anti-trust/Competition Law, Antitrust, EU Competition , Cartels, Monopolies
• Law Firm: Vilgerts
• Author: Andris Dimants

Article 101 of the Treaty on the Functioning of the European Union prohibits agreements and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition within the internal market. For violation of this restriction, the European Commission may impose a fine of up to 10% of the turnover of the undertaking, and victims may seek compensation for the damages caused by the violation. Fines for violations of competition law may also be imposed by the national competition regulatory authorities, such as the Competition Council in Latvia.

According to the case-law of the Court of Justice of the European Union ("CJEU"), an undertaking consists of an "economic unit", which may include several natural and legal persons. A subsidiary is presumed to be part of the same undertaking as the parent company if the subsidiary is wholly owned by the parent company. In turn, this means the parent company can be fined for a breach of competition law by the subsidiary,¹ and the victims can take action against the parent company for the damage caused by the breach. At the same time, the CJEU has so far not clarified whether such group liability can also be applied in a top-down manner. Namely, to fine and claim liability for damages from the subsidiary for the infringement of competition law, for which the parent company has been fined for.

On the one hand, the attribution of liability to a subsidiary which has not been fined for the infringement is consistent with the already aforementioned definition of "economic unit" in European Union law. In addition, it also enhances the effectiveness of competition law enforcement by providing victims with additional opportunities to seek redress. On the other hand, the subsidiary does not have decisive influence over the parent company, thus the subsidiary is unlikely able to influence the parent company's conduct.

This issue is now before the CJEU in the Case No.C‑882/19 ("Sumal"). In the Sumal case, the claimant in the main proceedings brought an action before the Spanish court for damages against the defendant, Mercedes Benz Trucks Espana SL ("MB Trucks"), a subsidiary of Daimler AG. On 19 July 2016, the European Commission fined Daimler AG for participating in the trucks cartel. MB Trucks was not the addressee of the decision. A Spanish...