Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

There´s always a first time (Parent company escapes liability for the conduct of a wholly-owned subsidiary; case T-185/06)

with 5 comments

Some weeks ago, in one of our competition law quizzes we asked the following question:

 ” When was the last time that a company was able to rebut the presumption on the exercise of decisive influence applicable to 100% owned subsidiaries?”

Until this morning, the correct answer was: never. 

The General Court has just issued a Judgment as a consequence of which, for the first time ever, a parent company has escaped liability for the anticompetitive conduct of a wholly owned subsidiary despite the Commission´s attempt to apply the Stora presumption.  (The English version of Judgment is not yet available; click here for the Spanish version). 

Remarkably, the General Court does not provide any guidance on the type of evidence that could be put forward in the future by parties attempting to rebut the presumption. That is because the Court did not engage in a substantive balancing exercise of the elements adduced by the applicant and by the Commission; on the contrary, its Judgment concludes that the Commission failed to address adeuately the applicant´s arguments and thereby breached its duty to provide sufficient motivation to its decisions.

In a way, the General Court is sending the Commission the same message that the Court of Justice addressed to the General Court in its Judgment on the General Química case.

In my view, this is a step in the right direction, but there´s still way to go…

Written by Alfonso Lamadrid

16 June 2011 at 12:25 pm

5 Responses

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  1. Neat, thanks for the quick heads-up! The link to the decision does not work (it never does, because the CURIA website is set up poorly) – what is the case number? Thanks!

    Florian Prischl

    16 June 2011 at 4:27 pm

    • Thanks, Florian. You´re right about the link; it only leads to the list of latest Judgments. The case number is T-185/06 (Air Liquide v Commission) (it actually appears on the title of the post 😉

      Alfonso Lamadrid

      16 June 2011 at 5:10 pm

      • Seems I can’t read. Duh. Thank you! 😀

        Florian Prischl

        16 June 2011 at 5:18 pm

  2. Thank you Alfonso. At first when I saw this I thought it was a nuclear bomb, then realized that the Court relies solely on the duty to motivate and, as you say, does not provide any guidance on the evidence to rebut the 100% presumption.

    I actually always considered the recent ruling the Spanish Tobacco case (T-24/05 Alliance One) as the first time where the 100% parent liability was rebutted. I agree that it was a special case: the fault was the Commission’s since it “raised the standard of proof” by requiring that actual influence be proved, without a mere reliance on the 100% ownership presumption; moreover the partial annulment did not affect the fine since the Commission based its calculation on the total turnover of the ultimate parent; finally the parent company was actually an intermediary parent company. However, in Alliance one / Spanish Tobacco, the operative part of the ruling relieves the 100% parent company of its responsability.

    What do you think?

    GDS

    20 June 2011 at 3:06 pm

  3. Thanks for the excellent comment, Gianni. What you say is absolutely accurate. Unfortunately the GC did not drop the (long awaited) nuclear bomb you refer to and rather took the (usual) shortcut of resorting to insufficient motivation.

    I also agree with you with regards to your views on Alliance One, but I view it as a different scenario for the same reasons you mention:

    It is true that Alliance One is a case where the parent company escaped liability in an scenario of 100% ownership. In fact, there are also other examples of parent companies escaping liability for the conduct of wholly owned subsidiaries, notably because the Commission refused to apply the presumption (sometimes without explaining why..)(e.g. the Opel Decision, where the Commission stopped at Opel Nederland and did not climb to General Motors; of even also in the raw tobacco cases, where the parent of Deltafina was declared responsible for its subsidiary´s conduct in Spain but not for the Italian market).

    Admittedly, the title I give to the post is perhaps somehow sensationalistic (when we write here we add some journalistic stuff to the purely legal writing,, 😉 but nonetheless I still think this Judgment is a first:

    As I developed on the post in order to nuance the title, it is the first time that a parent escapes liability “despite the Commission´s attempt to apply the Stora presumption”. In the Alliance One case, as you note, the Commission raised its own standard of proof and refused to resort to the presumption as such (if you recall, that took place at a time when it wasn´t certain that 100% ownership in itself was sufficient to trigger the presumption (think even of the GC´s Judgment in Bollore..). Consequently, in Alliance One, the Court did not therefore challenge the operation of the presumption but rather said that the Commission hadn´t met the additional standard it had set.

    Thanks again for the comment!

    Alfonso Lamadrid

    20 June 2011 at 6:15 pm


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