Wettbewerbsrechtliche Haftung im Konzern (Liability for Competition Law Infringements in a Group of Companies)
Heinrich Heine University Düsseldorf - Faculty of Law
July 14, 2011
Der Konzern, 2011
The European Court of Justice (ECJ) has in several cases, most recently in Akzo Nobel (Case C-97/08) and General Química (Case C-90/09), held parent companies liable for competition law infringements of their subsidiaries. This practice is widely criticized by scholars and practitioners. The criticism is mostly based on alleged violations of fundamental principles of law. It is argued that holding the parent company liable for its subsidiary’s infringements violates the principle of no punishment without fault, furthermore is not compatible with the presumption of innocence and also ignores the character of the subsidiary as a separate legal entity which shields the parent company from liability.
This article takes the opposite view: The ECJ’s judicature does not violate fundamental principles of law. The ECJ relies on the concept of undertaking in order to hold parent companies liable for competition law infringements of their subsidiaries. Competition law is addressed to undertakings. The term ‘undertaking’ includes any entity engaged in an economic activity, regardless of its legal status or the way in which it is financed (cf. e.g. Case C-41/90 at 21 or Case C-97/08 at 54). A group of companies, by acting in concert on the market, can form an economic unit which is also considered to be an undertaking. Consequently, violations of competition law are committed by this undertaking, the economic unit, not by the parent company. Therefore the parent company is not held liable because it is considered or presumed to be at fault. Rather, it is held liable as part of the undertaking that breached European competition law. Thus the parent company is not fined but held liable for the payment of a fine imposed on another, i.e. the undertaking.
The article argues that this situation can best be explained by reference to partnership law and uses German partnership law as an example to illustrate this point. To be clear: It does not argue that the ECJ applies German partnership law, it does, however, show that the ECJ’s judicature has significant parallels in partnership law and that it can be justified by a general principle of European company law: The ECJ treats a group of companies, i.e. the parent and its subsidiaries, as an economic unit and considers this unit to be an undertaking in the sense of Art. 101 TFEU. The constituent parts of this economic unit, i.e. the parent and its subsidiaries, are then being held liable for its liabilities. This is strikingly similar to partnership law: The economic unit consisting of a parent company and its subsidiaries constitutes a partnership because parent and subsidiaries act in concert on the market. Naturally, the partnership is liable for any breaches of competition law it commits, with breaches of competition law committed by one of the partners being imputed to the partnership. Thus, cartel activity by a subsidiary is imputed to the partnership, i.e. to the economic unit. It follows that the partnership is liable and, consequently, each of the other partners, including the parent company, are liable as well. This last conclusion has been challenged as unfounded. It has been argued that there is no reason why the fact of belonging to a group should be sufficient to impute liability. This article argues that the single entities, i.e. parent and subsidiaries, are considered a group (an economic unit) because of their joint economic activity, that joint economic activity in European company law leads to joint and unlimited liability, and that this idea legitimately can and should be adopted for competition law purposes, too. This does not disregard the separate legal personalities of the companies involved because the parent is not held liable as a shareholder in its subsidiary; the parent is held liable as its subsidiary’s partner in a partnership formed between parent and subsidiary. From this basis it is argued in this article that not only should the parent company be held liable for competition law infringements of one of its subsidiaries, but that also a subsidiary should be held liable for infringements by the parent or by another subsidiary.
The article concludes by dealing with the consequences for private claims for damages under German civil law and with the imposition of fines under German administrative law. It argues that in this field German partnership law should be applied directly to the group of companies. However, it explicitly limits this notion to the field of competition law in order to avoid general liability of a parent for a subsidiary.
Note: Downloadable document is in German.
Number of Pages in PDF File: 32
Keywords: Wettbewerbsrecht, Kartellrecht, Konzernrecht, Gesellschaftsrecht, GbR, Gesellschaft bürgerlichen Rechts, Personengesellschaft, Haftung, Mutter, Tochter, Unternehmen, Wirtschaftliche Einheit, Competition Law, Company Law, Group of Companies, Partnership Law, Liability, Parent, Subsidiary
JEL Classification: K13, K19, K21, K22, K42Accepted Paper Series
Date posted: July 20, 2011
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