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Legal Update

Parent-Subsidiary Liability in Cartels: The ECJ AG Sets the Record Straight — But is this the End?

1 May 2009
Mayer Brown Legal Update

In a bold opinion, Advocate General Kokott of the European Court of Justice (ECJ) attempted to set the record straight regarding the liability of parent companies for infringements conducted by their wholly owned subsidiary(ies).1

The Commission Decision

On 9 December 2004, the European Commission found that four wholly owned subsidiaries of Akzo Nobel NV (Akzo), a Dutch chemicals company, had participated in agreements and concerted practices in the choline chloride sector in the European Economic Area (EEA), thereby infringing Article 81(1) of the EC Treaty and Article 53(1) of the EEA Agreement.2 In its decision, the Commission reasoned that Akzo was liable for the actions of its subsidiaries in the choline chloride cartel even though Akzo had not participated in the cartel itself. The main argument put forward in this regard was that Akzo’s subsidiaries lacked commercial autonomy, thereby rendering Akzo jointly and severally liable. Akzo was fined EUR 20.99 million.

The Appeal

Akzo and its subsidiaries filed an appeal before the Court of First Instance of the EC (CFI) seeking the annulment of the Commission decision. In its judgment of 12 December 2007, the CFI dismissed Akzo’s appeal and upheld the Commission’s decision in its entirety.3 Akzo and its subsidiaries have now brought their case before the ECJ asking it to review and set aside the CFI judgment to the extent that it failed to recognize that the Commission wrongfully attributed responsibility to Akzo in its decision. To this end, Akzo argues that the CFI has misapplied the concept of "undertaking" within the meaning of Article 81 EC and Article 23(2) of Regulation 1/2003, as interpreted by the CFI in its case law on the imputation of the unlawful conduct of a subsidiary to its parent company.4

Akzo does not dispute that a company can be called to account for cartel offenses of its subsidiaries if it exercises a decisive influence over them. Rather, it contests the view that a 100 percent shareholding in the offending subsidiaries, without the existence of additional indicia, is in itself sufficient for the parent company’s influence to be deemed decisive. On this ground, Akzo alleges that it was wrongfully held jointly and severally liable for the actions of its subsidiaries by the Commission (and subsequently by the CFI).

The AG’s Opinion

The AG saw this case as a good opportunity for the ECJ to clarify its case law on the attribution of liability within groups of companies under EU antitrust law rules.

She first referred to the “sanctionative” nature of measures imposed by competition authorities in cartel cases, which effectively means that in such cases the principle of personal responsibility5 is at the center of the assessment of the attribution of liability. However, considering that there is an ever increasing complexity of the organisational structure of economic operators, the identification of the legal person actually responsible for a cartel offence can be a very complicated task. 

The AG recalled that according to settled case law, “a subsidiary’s conduct can be imputed to its parent company, in particular where the subsidiary, although having separate legal personality, does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company.”

She also confirmed that the parent company must not only be able to exert decisive influence over its subsidiary, but that it must actually exert that influence in practice. Accordingly, the fact that the parent holds 100 percent shareholding in the subsidiary proves beyond doubt that the parent company has the ability to exert decisive influence over the subsidiary and at the same time it creates a presumption that the parent company is actually exerting such influence over the subsidiary.  This presumption however is rebuttable. Therefore, it would be “open for the parent company in the case at issue to dispute the actual exertion of such influence, by producing evidence in rebuttal.”

The AG also disagreed with the position of the CFI in Bolloré,6 where it was suggested that a 100 percent shareholding constitutes a strong indication of the parent’s ability to exercise decisive influence but that it is not in itself sufficient to attribute liability to the parent for the conduct of its subsidiary. The CFI had rather found that “something more than the extent of the shareholding must be shown, but this may be in the form of indicia.” According to the AG the CFI in Bolloré failed to adhere to the framework established by the ECJ in settled case law and blurred the distinction between the existence of control and the actual exercise thereof, without giving any reasons for doing so.

Furthermore, the AG pointed out that “the parent company and the subsidiaries under its decisive influence, are collectively a single undertaking for the purposes of competition law and responsible for that undertaking. Therefore, if that undertaking commits an infringement of competition law rules, this gives rise to the collective personal responsibility of all the principals in the group structure, regardless of whether they are the parent company or a subsidiary.”  She considered that “the parent company pulls the strings within the group of companies and consequently, it cannot simply shift responsibility for cartel offences committed within its group just to individual subsidiaries.”

On these grounds, the AG recommended the ECJ judges to dismiss Akzo’s appeal against the Commission decision, and the CFI judgment, in its entirety.

What Next?

In the present case, AG Kokott openly disagreed with the findings of the CFI in the Bolloré judgment regarding the notion of “exertion of decisive influence.” She found that a 100 percent shareholding constitutes a presumption that the parent company did exert decisive influence. The burden is on the interested companies to produce cogent evidence in order to rebut this presumption and by no means on the authorities who make such presumption.

If the AG’s opinion is followed by the ECJ judges in their final judgment on the case, the standards of parent-subsidiary liability would be set at a stricter basis for interested parties.

The opinion of the AG constitutes a mere recommendation to the ECJ judges who will be ruling on the case. The ECJ judges will consider the opinion and will draw their own conclusions before rendering the final judgment on the case. It usually takes 3-8 months to deliver a judgment following the publication of the opinion of the AG. There is no possibility to appeal an ECJ judgment.

If you have any questions about this alert please contact the authors, , at +32 2 551 5959, and , at +32 2 551 5983.

Learn more about our Antitrust & Competition practice.


  1. Opinion of the A.G. Kokott in Case C-97/08P, Akzo Nobel and Others v Commission, delivered on 23 April 2009.
  2. Commission Decision 2005/566/EC of 9 December 2004 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case COMP/E-2/.37.533 – Choline Chloride), summarised in OJ 2005 L 190, p. 22.
  3. Case T-112/05, Akzo Nobel and Others v Commission [2007], ECR II-5049.
  4. See, Notice of Appeal in Case C-97/08 P, Akzo Nobel and Others v Commission, OJ C 128 of 24.05.2008, p.22.
  5. The principle of “personal responsibility” provides that a cartel offence is to be attributed to the natural or legal person who operates the undertaking which participates in a cartel. See, Opinion of AG Kokott, cited above, para 39.
  6. Case T-136/02 Bolloré v Commission [2007] ECR II-947.

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