Parental company liability for antitrust infringements
Produced in partnership with Dentons
Parental company liability for antitrust infringements

The following Competition practice note Produced in partnership with Dentons provides comprehensive and up to date legal information covering:

  • Parental company liability for antitrust infringements
  • The legal basis for parental company liability
  • The concept of undertaking
  • The rationale
  • The basic premise
  • The quasi-irrebutable presumption
  • Pure financial investors
  • The approach towards joint ventures
  • The treatment of ‘intermediate companies’
  • Leniency considerations
  • More...

Under EU competition law, a parent company may be held jointly and severally liable for antitrust violations committed by its subsidiary, where the parent company exercises decisive influence over the subsidiary. There has been much case law on parental company liability which has the potential to open up considerable risk for companies.

The legal basis for parental company liability

The concept of undertaking

Article 101 TFEU applies to ‘undertakings’. The concept of an undertaking is not defined in the EU Treaties and/or regulations. The case law commonly describes an undertaking as a unitary organisation of personal, tangible and intangible elements, which pursues a specific economic aim on a long-term basis, regardless of its legal status and the way in which it is financed. Undertakings are thus economic, rather than legal entities. As a result, an undertaking under Article 101 TFEU does not necessarily correspond with the definition of a legal person under national corporate law (eg limited liability company)—an economic unit comprising different legal or natural persons may form a single undertaking for competition law purposes.

It is the economic unity of the undertaking that enables the Commission to target entire corporate groups and hold the parent company jointly and severally liable for antitrust violations committed by one of the group’s subsidiaries.

See further, The prohibition on restrictive agreements.

The rationale

Initially, the rationale behind the concept of parental company liability

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