Up and down, jumping all around?

It is established case law that European competition law is addressed towards undertakings, and not to legal entities. It is also settled case law that within an undertaking, an infringement of a subsidiary can, under certain conditions, be attributed to a parent company.

As far as Advocate General Pitruzella is concerned, there is however no logical reason why liability can only be attributed upward, from subsidiary to parent company, but could not also be attributed downward, from parent company to subsidiary. This is the essence of his opinion in the Sumal case, which was published today.

This case concerned the damages action of a Spanish party in respect of the Trucks cartel. The claimant had summoned a Spanish subsidiary within the Daimler group, but not also the German parent company, while only that parent company was one of the addressees of the decision of the European Commission. The Spanish court had made a preliminary reference to the European Court of Justice to clarify whether and if so, under what conditions that is possible.

According to Advocate General Pitruzella, it is possible. He argues that – also in this respect – the economic unit theory should be applied. Hence, a first requirement is that the subsidiary and the parent company form a single undertaking in the functional sense. Furthermore, the subsidiary’s business must in some way be necessary to accomplish the anticompetitive conduct (for example, because the subsidiary sells the goods that are the subject of the infringement, like in Trucks). The subsidiary must operate in the same area as that in which the parent company has engaged in the anticompetitive conduct and must, through its conduct on the market, have enabled the infringement to have effects.

If those requirements have been met, the subsidiary, though not an addressee of the Commission decision, is jointly and severally liable together with the parent company for the damages caused by the infringement.

Interestingly, Advocate General Pitruzella is of the opinion that in awarding the damages claim against the subsidiary, the Spanish court would not take a decision that would run counter to the Commission decision, that is only addressed towards the parent company. Also the Commission itself is of the opinion that the fact that its decision does not establish a specific infringement by the subsidiary does not mean that the subsidiary could therefore not be held liable for that infringement.

Should the European Court of Justice follow the opinion of the Advocate General, that would again substantially increase the possibilities for private enforcement of European competition law, but that is exactly the point, according to Advocate General Pitruzella. Therefore, his opinion was awaited with great interest and it won’t take long before the question arises whether there would be a logical reason why liability could not also be attributed sideways, from subsidiary to subsidiary. That question came already up for discussion in a recent case before the Amsterdam District Court.

To be continued.

For more information, please contact Theodoor Verheij.