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Dutch District Court ruled that parent companies cannot be held liable for damages

Dutch District Court ruled that parent companies cannot be held liable for damages

Dutch District Court ruled that parent companies cannot be held liable for damages

02.08.2016 EU law

Dutch District Court ruled that parent companies are not liable for damages arising from antitrust infringements committed by their subsidiaries.

On 20 July 2016, the District Court of the Middle-Netherlands dismissed a EUR 30 million antitrust damages action filed by claim vehicle East West Debt B.V. ("EWD") against five Dutch elevator manufacturers and their ultimate parent companies.

EWD based its claim on a 2007 Commission Decision, in which the defendants were held liable for a competition law infringement that took place on the Dutch elevator market. Five Dutch companies were fined for taking part in the infringement, while four of their ultimate parent companies were held liable for the fine on the basis of the "presumption of decisive influence". This presumption entails that if an (indirect) parent company owns 100% of the shares in a subsidiary, it is presumed to exercise decisive influence over the commercial behaviour of that subsidiary. Under EU competition law, legal responsibility for the infringement and the related fine can be attributed to both the subsidiary that actually participated in the cartel and the parent company or companies that exercised decisive influence over that subsidiary.

The District Court ruled that this competition law doctrine of parental liability does not  extend to civil claims for damages. National law, and not EU competition law, governs the question whether the "corporate veil" can be pierced. As a matter of Dutch civil law, parent companies are not liable for wrongdoings committed by their subsidiaries. While there are special circumstances in which the corporate veil can be pierced, according to the District Court EWD had not stated sufficient facts to substantiate a damage claim against the parent companies.

The District Court also found that EWD failed to provide the requisite evidence to support its claims vis-à-vis the Dutch subsidiaries. More specifically, the Court considered that EWD failed to show that the claimants which EWD represents had purchased elevators and related services during the period in which the infringement took place. According to the judgment, EWD could not content itself by merely submitting aggregated data. At a minimum, EWD should have set out the basis for each specific claim, identifying the conditions under which the elevators and related services had been purchased. The District Court also noted that EWD should have submitted the assignment documentation to show that the claimants had assigned their damage claims to EWD.

The District Court of the Middle-Netherlands is the first Dutch court to rule on the question whether under Dutch law parent companies are liable to pay damages for infringements committed by their subsidiaries. The judgment also shows that claim vehicles like EWD must properly substantiate each individual claim they present in court. 

This article was published in the Competition Law Newsletter of August 2016. Other articles in this newsletter:

  1. Court of Justice clarifies the legality of royalty payments in the event of revocation or non-infringement of the licensed patent 
  2. General Court confirms fines imposed on the basis of economic continuity in maritime hose cartel 
  3. European Commission imposes record cartel fine on truck manufacturers for price fixing 
  4. European Commission deems support measures in favour of Dutch football clubs in line with State aid rules 
  5. Dutch District Court ruled that parent companies cannot be held liable for damages arising from antitrust infringements committed by their subsidiaries 
  6. ACM lowered fines in the pepper cartel case 
  7. Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation 
  8. Brussels Court of Appeal rules that concerted lobbying efforts of cement producers do not breach competition law 
  9. Belgian competition authority upholds licence refusal to football club White Star

Source: Competition Law Newsletter August 2016

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