European Papers (Feb 2022)
The Court of Justice's Sumal Judgment: Civil Liability of a Subsidiary for its Parent's Infringement of EU Competition Law
Abstract
(Series Information) European Papers - A Journal on Law and Integration, 2021 6(3), 1325-1337 | European Forum Insight of 11 February 2022 | (Table of Contents) I. Introduction. - II. The economic entity's liability for damages under EU competition law. - II.1 The very existence of the economic unit as a basis for (civil) liability. - II.2. Conditions for determining the responsible economic unit. - II.3. Extension of liability to further companies of the same economic unit. - III. The subsidiary as defendant in damage claims for EU competition law infringements. - III.1. Framework for the exercise of the subsidiary's rights of defence. - III.2. Civil procedural implications of the EC's findings in administrative proceedings. - IV. Joint and several liability of the legal entities of the economic unit. - IV.1. Financial risks of the joint and several liability for shareholders. - IV.2. The internal allocation of the debt for the payment of damages. - V. Conclusion. | (Abstract) The judgment of the Court of Justice in the Sumal ECLI:EU:C:2021:800 case charts new territory in the application of the concept of the "economic unit" in EU competition law. In addition to the established principles regarding the liability of the economic unit for fines imposed by the European Commission, the Court has found that the concept may also serve as a basis for damage claims against a subsidiary of a parent company that has been found to infringe EU competition law. The application of these principles regarding the liability of a subsidiary for its parent's conduct warrants an adjustment of the criteria that determine the existence of the single economic unit. In the case of downward liability, the exercise of decisive influence of the parent company over the subsidiary is not enough. Additionally, to establish a uniform market conduct the subsidiary needs to be involved in the specific economic activity of the economic unit. Based on this new judgment, victims of infringements of EU competition law will no longer be limited to bringing actions for damages against those companies punished by the Commission. They may also hold liable any subsidiary of the parent company belonging to same economic unit - even though it is not named in the Commission's decision - and may benefit from the binding effect of this decision, joint and several liability, and additional fora.
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