COMPETITION • EUROPEAN LAW • PROCEDURE
An undertaking can be defined as an economic unit which may consist of several distinct persons, natural or legal. Even though the principle of personal liability fully applies to sanction procedures in competition law, it is possible, without violating that principle, to impose a fine on a legal person who did not commit the infringement. The anticompetitive conduct of a subsidiary can indeed be attributed to the parent undertaking when, although it may have a separate legal personality, it has no real autonomy in determining its course of action on the market but basically carries out the instructions given to it by the parent company, having regard in particular to the economic, organizational and legal links between those two legal entities. The courts will thus consider that in such a situation the parent company and its subsidiary constitute an economic unit and therefore a single undertaking within the meaning of Article 101 TFEU and the Commission can then issue a decision imposing fines on the parent company without having to show its personal involvement in the infringement. The undertaking is defined as of the date of the infringement not the date the decision was rendered.
– Presumption of control
Where a parent company, whether directly or indirectly, holds all or almost all the capital of the subsidiary having committed an infringement of the EU competition rules, the parent company is presumed to effectively exercise a decisive influence over its subsidiary. That presumption means that it is jointly liable for the fine imposed on its subsidiary and the Commission is not obliged to provide additional evidence of the lack of autonomy of the subsidiary in relation to the parent. The presumption is rebuttable however; the parent undertaking can rebut it by bringing forward evidence showing that the subsidiary behaves autonomously on the market.
The presumption cannot be implemented where the Commission has not previously mentioned the possibility in the Statement of Objections. In effect, in such cases the parent company has not been given the opportunity to properly ensure its defense on that point. Furthermore, although the Commission is not under an obligation to rely exclusively on the presumption to establish a parent’s liability and can apply the so-called ‘dual basis’ method which consists in the consolidating of that presumption with other evidence, it must respect the principle of equal treatment with regard to all the groups of undertakings involved in the same proceedings.
– Rebutting the presumption
The courts are generally very strict when assessing claims of undertakings to rebut the presumption of decisive influence. The fact that the parent company does not have an economic activity is irrelevant where it ensures the unified management of the companies of the group thus influencing their conduct on the market. The parent cannot escape liability by claiming that it had no knowledge of the anticompetitive conduct of its subsidiary; in effect, it is not because of any instigation by or even involvement in the infringement by the parent company that the Commission can attribute liability to the parent but merely the fact that it constitutes, together with the subsidiary, a single undertaking within the meaning of Article 101 TFEU. The fact that the parent had never operated directly in the sector in question also cannot reverse the burden of proof insofar as the demonstration of effective control does not presume that such control must concern all aspects of the subsidiary’s business or all sectors in which it operates, or in fact even the sector in which the anticompetitive behavior has taken place. Attempting to show the operational autonomy of the subsidiary will also fail both where the latter is commercially dependent on the parent and inversely where it has commercial autonomy but no operational independence.
– Proof of effective control
Where the presumption is not applicable, the Commission must show that a decisive influence is exercised over the subsidiary’s market conduct, i.e. prices, production and distribution activities, sales objectives, gross margins, sales costs, cash-flow, stocks and marketing. The actual exercise of a decisive influence may therefore be adduced by relying on a body of evidence, even if each of those indicia taken in isolation does not have sufficient probative value. The perception of the other members of the cartel that several undertakings of the same group form an economic unit and the fact that they have been treated as such during the anticompetitive negotiations, constitutes, with others, an indication of their economic integration. The concept of an undertaking’s management power over another company does not necessarily mean that the former may issue legally binding instructions to that company or that the latter has implemented all the instructions issued by its parent.