On the 21^st September 2009, the European Commission issued a press release publicising the ECJ decision in the long running AKZO Nobel case.

Background

The press release states “.. On 9 December 2004, the Commission fined Akzo Nobel NV and four of its subsidiaries jointly and severally €20.99 million for price fixing, market sharing and agreeing actions against competitors in a cartel with other chemical producers in the EEA market of choline chloride, a feed additive (see IP/04/1454 ).

On 12 December 2007, the CFI rejected Akzo Nobel’s appeal in its entirety and confirmed all aspects of the Commission decision. Today the Court of Justice has upheld the Court of First Instance judgment.

The ECJ judgement

The press release states “..Today’s judgment is important because it confirms the Commission finding that a parent company may be held liable for anti-competitive behaviour of its subsidiaries even if did not itself participate in those activities. The Court confirmed that what matters is whether a parent company forms a single economic unit together with its subsidiaries. The Court ruled that a 100% shareholding of a parent company in a subsidiary creates a rebuttable presumption that the parent company exercised decisive influence over the commercial policy of the subsidiary, no other elements being necessary to establish the presumption. The parent company cannot rebut the presumption merely because the subsidiary was capable of independent day-to-day market conduct. ..”

The result is not a surprise. The interesting questions are about the level of control by a parent with less than 100% ownership of its subsidiary which will trigger liability. As the press release confirms “..the Court confirmed that account must also be taken of other relevant factors such as economic, organisational and legal links between the parent company and the subsidiary…”.  As is often the case all will depend on the circumstances so that there is no hard and fast rule to guide businesses about this risk.  

Posted: September 24th, 2009 under Competition Law & Regulatory.
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