Short Reads

European Court of Justice issues landmark ruling on parental liability

European Court of Justice issues landmark ruling on parental liability

European Court of Justice issues landmark ruling on parental liability

15.03.2019 EU law

On 14 March the European Court of Justice issued a landmark judgment in the Skanska case. In this ruling, the Court of Justice held that parent companies can be held liable for the damage caused by a competition infringement committed by their subsidiary if the parent company (that holds all the shares in the subsidiary) has dissolved the subsidiary but continued its economic activity.

The case stems from an asphalt cartel on the Finnish market between 1994 and 2002. The Finnish competition authority imposed fines on the cartelists in 2004. By that time, one of the cartel participants – Sata-Asfaltti – had been dissolved in voluntary liquidation proceedings and its assets had been acquired by its sole shareholder Skanska, who continued the economic activity of its former subsidiary. Based on the principle of economic continuity, the competition authority fined Skanska for the anticompetitive behaviour of Sata-Asfaltti.

One of the alleged victims of the cartel, Vantaa, subsequently claimed compensation from the companies that had been fined – including Skanska – for the damage it suffered as a result of the cartel. Skanska argued that it could not be held liable for the harm allegedly caused by the anticompetitive behaviour of a legally independent company. In Skanska's view, Vantaa should have brought its claims against the (estate of the) companies that dissolved in the voluntary liquidation proceedings.

The Finnish District Court and Court of Appeal reached different conclusions on the matter. The Finnish Supreme Court then decided to ask several preliminary questions to the Court of Justice:
 

  1. is it for EU law or for national Finnish law to determine who is to be liable for the damage caused by an infringement of article 101 TFEU?
  2. if the answer to the first question is "EU law", should the concept of "undertaking" also apply in private damages proceedings? and
  3. if the answer is "national law", does the principle of effectiveness require that the parent companies in the case at hand are to be held liable for the damage of their dissolved subsidiaries?

Today the Court of Justice ruled that it is for EU law to determine who is liable for the harm caused by an infringement of article 101 TFEU. According to the Court, Article 101 TFEU requires that a parent company is liable for the damage caused by its subsidiary when –as in this case – the subsidiary has committed the infringement, but has been dissolved while its parent company (that held all the shares in the subsidiary) continued its economic activity.

In its reasoning, the Court of Justice underlines that the right to claim damages is an integral part of the enforcement of EU competition law, which is a system that aims to deter companies from engaging in such conduct. If a company could escape liability by means of corporate or legal restructuring, the objectives pursued by the enforcement of EU competition law would be compromised. Therefore, the notion of 'undertaking' should have the same meaning and scope in the context of the imposition fines by the EU Commission as in the context of private damage claims for the violation of EU competition rules. In the situation at hand, that means that Skanska assumed the liability of its former subsidiary Sata-Asfaltti for the damage caused by the cartel when it continued its economic activities.

Today's judgment is a clear boost for claimants who wish to hold parent companies liable for a competition infringement committed by their subsidiaries. However, at least one important question remains. Skanska concerned a case in which the competition authority fined the parent company for the anticompetitive conduct of its subsidiary. That same parent company – Skanska – is now also liable in a private action for damages concerning that conduct. Thus, in terms of the entities who are liable, it would appear that liability for competition law fines and civil liability for damages run parallel. This begs the question what happens in cases in which the European Commission does not address its infringement decision to all legal entities that could (theoretically) be said to be part of the same 'undertaking'. Will the findings of the Commission be determinative for the imposition of civil liability on the relevant legal entities, or does it remain open to a civil claimant to argue that a non-addressee of the Commission decision is (also) liable for the conduct described in the infringement decision? In the Martinair case, the General Court considered that there is no room for civil courts in the Member States to diverge from the (final) findings of the Commission, also "as regards the liability or non-liability of persons investigated in relation to the conduct at issue". Today's judgment in Skanska appears to support that view, as the Court of Justice specifically notes that the concept of an undertaking "cannot have a different scope with regard to the imposition of fines by the Commission [..] as compared with actions for damages for infringement of EU competition rules". 

Team

Related news

15.01.2020 NL law
The Dutch scheme - a summary of the upcoming new restructuring tool

Short Reads - As mentioned in our earlier blog, the Dutch legislator has prepared a bill – the Act on confirmation of private restructuring plans (Wet homologatie onderhands akkoord) – introducing a framework that allows debtors to restructure their debts outside formal insolvency proceedings (the “Dutch Scheme“). We expect this highly-anticipated bill to enter into force by this summer. The Dutch Scheme combines features from the UK Scheme of Arrangement and the US Chapter 11 proceedings. Below, we summarize certain key aspects of the Dutch Scheme.

Read more

16.01.2020 NL law
De Amsterdamse milieuzone voor brom- en snorfietsen: voertuigen van een bepaald jaar weren is mogelijk bij ontbreken van een redelijk alternatief

Short Reads - ABRvS 20 november 2019, ECLI:NL:RVS:2019:3865 Deze blog is het vierde deel in een reeks Stibbeblogs over gemeentelijke milieuzones. In 2017 oordeelde de Afdeling over de milieuzone voor personen- en bestelauto’s met dieselmotoren in Utrecht. In 2018 presenteerde de staatssecretaris van Infrastructuur en Waterstaat haar beleid voor harmonisatie van uiteenlopende gemeentelijke milieuzones. Een jaar geleden maakten wij in een FAQ de balans op over de harmonisatie van milieuzones.

Read more

10.01.2020 NL law
Is het mededingingsrecht de reddingsboei van zwakke zzp’ers?

Articles - Het toenemende aantal zzp'ers heeft ook mededingingsrechtelijke gevolgen. Volgens de ACM werkt de markt namelijk niet goed als zzp'ers door lage uurtarieven onder het bestaansminimum komen. Jan Truijens Martinez en Simone Evans bespreken in het Tijdschrift voor Arbeidsrecht in Context hoe eventuele belemmeringen die het mededingingsrecht opwerpt bij de bescherming van zzp'ers kunnen worden beperkt en of het mededingingsrecht eigenlijk wel het juiste instrument daarvoor is? 

Read more

16.01.2020 NL law
Wetgever, koester het burgerlijk procesrecht

Articles - Civiele procedures worden waarschijnlijk niet sneller en eenvoudiger met het Conceptwetsvoorstel modernisering en vereenvoudiging bewijsrecht en de Tijdelijke Experimentenwet rechtspleging. De wetsvoorstellen gaan uit van onjuiste veronderstellingen over het verloop van civielrechtelijke procedures en overspannen verwachtingen van de rol van de civiele rechter als alvermogende geschilbeslechter.

Read more

09.01.2020 NL law
Deleting WhatsApp chats during dawn raids may cost you dearly

Short Reads - Companies should be aware that the Dutch competition authority (ACM) will not only examine electronic records and emails, but can also check WhatsApp messages during dawn raids. The ACM recently imposed a fine of EUR 1.84 million on a company for non-cooperation with a dawn raid; its highest fine so far for non-cooperation. Several of the company’s employees had left WhatsApp groups and deleted chats before handing over their mobile phones for inspection.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring