The ECJ has set aside a ruling imputing liability to Elf Aquitaine for the participation by its subsidiary, Arkema, in the monochloroacetic acid cartel but the rebuttable presumption leading to parent companies being held liable for the transgressions of their subsidiaries remains a part of the legal landscape, albeit with some further guidance.
By a decision in 2005, the Commission found that both the appellant, Arkema SA, and its parent company, Elf Aquitaine SA, had infringed EU competition law because the appellant, not the parent company, had participated in an unlawful cartel in the market for monochloroacetic acid (‘MCAA'). The Commission held both companies joint and severally liable for the infringement by imputing the appellant's liability to the parent company. In 2009, the decision was appealed but the General Court rejected all the arguments put forward by Elf Aquitaine and Arkema in first instance.
On 29 September 2011 an ECJ ruling finally annulled Elf Aquitaine's liability for it found the Commission had failed to fully address several arguments presented by Elf Aquitaine at the outset. Though the ruling is useful in offering guidance on what the ECJ expects from the Commission in terms of justified reasons, it does not mark a change to the existing laws governing when a subsidiary's liability will be imputed to its parent company.
The ECJ confirmed the existing case law to be as follows. Article 101 TFEU (Treaty on the Functioning of the European Union) lists what agreements and practices "undertakings" are forbidden to engage into under competition law and the Court has explained how the term "undertaking" must be understood as referring to an economic unit. A subsidiary that does not decide independently on its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company will be viewed as falling within the same single economic unit as the parent company. As a result, the subsidiary's liability for infringing competition law will be imputed to its parent company.
In the specific case, where a parent company holds 100% (or nearly all) of the shares in the infringing subsidiary, the Commission is entitled to presume that the parent company exercises a decisive influence on the conduct of that subsidiary. However, the Court emphasized that this presumption is rebuttable, the burden of rebutting it being on the parent company, which it can do by adducing sufficient evidence to show that its subsidiary acts independently on the market. The crux of this case being that the Commission found that Elf Aquitaine had not provided sufficient evidence to rebut the aforementioned presumption but failed to sufficiently justify this finding.
The ECJ clarified an issue raised in relation to non-operational parent companies. It made clear that it is not sufficient to show simply that the parent company in question is a non-operational holding company to rebut the afore mentioned presumption. The reason being that the possibility cannot be ruled out that a non-operational holding company, despite the fact that it does not act directly in the market, may still exercise influence over the commercial policy of its subsidiaries, in view of its particular function of coordination and financial management.
With regards to Elf Aquitaine and the adequacy of the Commission's reasoning, the Court noted firstly that where a decision in a competition case relates to several addressees and concerns the attributability of an infringement, the Commission must include an adequate statement of reasons with respect to each of the addressees. Secondly, with regards to a Commission decision which is based exclusively on the presumption of the actual exercise of a decisive influence over the conduct of a subsidiary, the standard of proof is higher. While the Commission is admitted to focus on the arguments it deems most worthy of response and can ignore irrelevant arguments, its decision must nevertheless set out full reasons as to why the facts or law relied upon were not sufficient to rebut the presumption. As the Commission's statement of reasons lacked the detail required to enable Elf Aquitaine to ascertain the matters justifying the measure adopted, Elf Aquitaine's liability for the cartel was annulled.
Cases C-520/09 P Arkema Sa v Commission and C-521/09 P Elf Aquitaine v Commission
