Short Reads

Court of Justice clarifies parental liability rules in the context of prescription

Court of Justice clarifies parental liability rules in the context of

Court of Justice clarifies parental liability rules in the context of prescription

01.05.2017 EU law

On 27 April 2017, the Court of Justice dismissed an appeal brought by AkzoNobel regarding its participation in the heat stabilisers infringements. The judgment clarifies the rules concerning the liability of parent companies for the unlawful conduct of their subsidiaries.

In 2009, the European Commission imposed a fine on Akzo Nobel NV and several of its subsidiaries for infringements on the heat stabilisers market. The Commission divided AkzoNobel's participation in the infringement into three separate periods. With regard to the first infringement period, the Commission attributed liability to the ultimate parent company Akzo Nobel NV because two of its subsidiaries had participated directly in the infringement (Akzo Nobel Chemicals GmbH and Akzo Chemicals BV).

In 2010, AkzoNobel brought an action before the General Court (GC) challenging, among other things, the attribution of liability to Akzo Nobel NV for the first infringement period. In its judgment, the GC ruled that while the Commission's power to impose a fine on the subsidiaries was time-barred, this did not affect the parent company's liability [see our August 2015 Newsletter]. AkzoNobel appealed this judgment before the Court of Justice.

In its appeal, AkzoNobel relied on the case Total v Commission in which the Court of Justice held that the liability of a parent company cannot exceed that of its subsidiary when its "liability is purely derivative of that of its subsidiary" and "no other factor individually reflects the conduct for which the parent company is held liable" [see our October 2015 Newsletter]. If these conditions are met, the parent company "must, in principle, benefit from any reduction in the liability of its subsidiary which has been imputed to it."

AkzoNobel argued that the Total-conditions were met and that the parent company should benefit from the fact that the Commission was time-barred from imposing a fine on the subsidiaries. The Court of Justice, however, disagreed. First, it held that Akzo Nobel NV is regarded to have carried out the anticompetitive activities in the first infringement period itself, since it formed an economic unit with its subsidiaries. Second, it ruled that because Akzo Nobel NV continued the participation in the infringement beyond the first infringement period (with another subsidiary), this justified assessing Akzo Nobel NV's liability differently from that of Akzo Nobel Chemicals GmbH and Akzo Chemicals BV.

The judgment shows that even if a parent company’s liability results exclusively from the direct participation of its subsidiary in the infringement, the parent company cannot always benefit from defences which are available to its subsidiary.

This article was published in the Competition Law Newsletter of May 2017. Other articles in this newsletter:

  1. Court of Justice allows use of evidence received from national tax authorities
  2. European Commission publishes report on effectiveness of enforcement in online hotel booking sector
  3. Dusseldorf Court confirms that Asics' online sales restrictions violate competition law
  4. Hague Court of Appeal rules on interpretation of object infringements
  5. Commercial Court of Ghent grants compensation to parallel importers for competition law infringement by Honda

Team

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