Follow-on: confirmation of the subsidiary’s liability for the anti-competitive practices of its parent (CJEU 6 October 2021)
In the context of actions for damages, the Court of Justice of the European Union (CJEU) ruled in a decision of 6 October 2021 on the existence of a “downward attribution of liability” of the subsidiary for acts committed by its parent company in the context of a truck cartel [1].
In this case, following the European Commission’s decision condemning several truck manufacturers based on Article 101 TFEU [2], the company Sumal SL brought an action for damages before the Spanish courts against the subsidiary of a parent company sanctioned by the Commission.
Having rejected the action at first instance, the Spanish courts referred to the CJEU several questions for a preliminary ruling on the possibility of bringing an action for damages against the subsidiary for acts committed by its parent company.
In this respect, the CJEU indicates that there is joint and several liability between the different entities amongst the entities of which the economic unit is made up at the time of the infringement. Thus, in the event of a conviction of the parent company, “there is nothing to prevent, in principle,” the victim of an anticompetitive practice from bringing an action for damages against an undertaking constituting the same economic unit, and in particular against one of its subsidiaries (point 50 of the decision).
However, such an action will only be possible if the victim succeeds in proving that the subsidiary and the parent company is part of the same economic unit, but also that there is a specific link between the economic activity of the subsidiary and the anti-competitive practice for which the parent company has been condemned of.
However, the CJEU stresses that, by virtue of the right to an effective remedy, the subsidiary must be able to show that it does not belong to that undertaking and/or to challenge the existence of the alleged infringement before the national court, unless, of course, the infringement has been found by the Commission, as in the present case [3].
Finally, in response to the last question referred for a preliminary ruling, the CJEU states that Article 101 TFEU precludes any national regulation providing for the possibility of imputing liability for the anti-competitive conduct of the parent company to its subsidiary solely based on its control over that company.
By Michel Ponsard for our competition law department.
[1] CJEU, 6 October 2021, case C-882/19, Sumal S.L.
[2] European Commission, 19 July 2016, AT. 39824
[3] Council Regulation (EC) 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, Article 16(1)