The European General Court (GC) has confirmed a European Commission decision to hold chemical companies EI du Pont de Nemours and Dow Chemical jointly and severally liable for a fine imposed on their 50:50 joint venture (JV) for an infringement of European competition law (EI du Pont de Nemours and Company v Commission T-76/08 and The Dow Chemical Company v Commission T-77/08). In light of this judgment, parent companies would be well advised to check that their 50:50 JVs are compliant with EU competition rules.
In Elf Aquitaine SA v Commission, the European Court of Justice ruled on 29 September 2011 that Elf Aquitaine was not jointly and severally liable as a parent company for the involvement of its wholly owned subsidiary in the cartel for monochloroaecetic acid. Taken with a number of recent judgments, this suggests that European courts are getting tougher with the Commission on parental liability.
Under EU antitrust law, parent companies are presumed liable for antitrust infringement of their wholly owned subsidiaries. While this presumption is rebuttable, it is unclear what a company must do to rebut it successfully. The recent Air Liquide judgment of the General Court of the European Union marks the first time that a company escaped the presumption of liability, if only for procedural reasons. The judgment also sheds some light on the arguments that may work for a parent company.
A recent Decision of the European Court of Justice shows once more that it is still next to impossible for a parent company to rebut the presumption of liability for its subsidiary’s conduct. Nevertheless, companies with subsidiaries operating in the EU would be well-served to consider reinforcing their compliance programmes throughout their groups. Reinforcing compliance is more likely to reduce competition law risks for parent companies than, for example, a strategy of distancing itself from its subsidiaries.