Liability Of Subsidiaries Where Parent Companies Infringe EU Competition Law

• Published date: 06 December 2021
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, Corporate and Company Law, Antitrust, EU Competition
• Law Firm: Ganado Advocates
• Author: Ms Laura Aquilina

In the case Sumal SL vs. Mercedes Benz Trucks Espa'a SL, holding case number Case C-882/19 and decided on 6 October 2021, the Court of Justice of the European Union delved into whether damages may be sought against subsidiary companies where the parent company infringes EU competition law.

Facts of the Case

Mercedes Benz Trucks Espa'a SL ('the subsidiary') is a subsidiary of Daimler group, the parent company of which is Daimler AG ('the parent'). Between 1997 and 1999, Sumal SL acquired two trucks from Mercedes Benz Trucks Espa'a. The Commission, on 19 July 2016, adopted a decision¹ (the 'Commission's Decision') concluding that 15 European truck producers, including Daimler AG, participated in a cartel (which took the form of a single continuous infringement of Article 101 of the TFEU and Article 53 of the EEA Agreement). For Daimler, the infringement took place between 17 January 1997 and 18 January 2011. Following the Commission's Decision, Sumal brought an action for damages in Spain. Sumal sought to obtain a payment of EUR 22,204.35 from Mercedes Benz Trucks Espa'a, which amount corresponds to the additional cost of acquisition that Sumal bore due to the cartel in which Daimler (as Mercedes Benz Trucks Espa'a's parent company) had taken part. The action was rejected since the Commission's Decision referred to Daimler alone, inferring that Daimler should be held solely responsible for the infringement at hand. Sumal appealed. The court hearing the appeal made a preliminary reference to the Court of Justice of the European Union ('the Court') asking whether actions for damages may be brought against subsidiary companies which are not referred to in decisions finding the parents responsible for the infringement. The four questions referred to the Court were as follows:

• Does the doctrine of the single economic unit developed by the Court itself provide grounds for extending liability from the parent company to the subsidiary, or does the doctrine apply solely in order to extend liability from subsidiaries to the parent company?
• In the context of intra-group relationships, should the concept of single economic unit be extended solely on the basis of issues of control, or can it also be extended on the basis of other criteria, including that the subsidiary may have benefited from the infringing acts?
• If it is possible to extend liability from the parent company to the subsidiary, what would be required?
• If a subsidiaries' liability is extended to cover...