– Aggravating factor of repeated infringement – Judicial Competition Training

11 October, 2021

Judgement of the Court of Justice (Grand Chamber) of October 06, 2021 in the Judgment in Case C-882/19 Sumal (ECLI:EU:C:2021:800). The victim of an infringement of EU competition law committed by a parent company may seek compensation from that company’s subsidiary for the resulting loss. To do so, it must prove that the two companies constituted an economic unit at the time of the infringement. The determination of the entity which is required to provide compensation for damage caused by an infringement of Article 101 TFEU is directly governed by EU law. The right for any person to seek compensation for a harm strengthens the working of the EU competition rules, since it discourages agreements or practices, frequently covert, which are liable to restrict or distort competition, by contributing to the maintenance of effective competition in the European Union. Actions for damages for infringement of EU Competition rules (private enforcement) are an integral part of the system for enforcement of those rules, which are intended to punish anticompetitive behaviour on the part of undertakings and to deter them from engaging in such conduct. The concept of ‘undertaking’, within the meaning of Article 101 TFEU, which constitutes an autonomous concept of EU law, cannot have a different scope with regard to the imposition of fines by the Commission under Article 23(2) of Regulation No 1/2003 as compared to actions for damages for infringement of EU competition rules (Confirming Skanska). All the members of an economic unit at the moment of the infringement of EU Competition law – attending the economic activity in question – are liable for infraction. A legal entity which is not designated in the decision as having committed the infringement of competition law may nevertheless be held liable on that basis due to conduct amounting to an infringement committed by another legal entity, where those two entities both form part of the same economic unit and thus constitute an undertaking which is the perpetrator of the infringement. The economic unit of which it is constituted must be identified having regard to the subject matter of the agreement at issue. The aggravating factor of repeated infringement may be applied to a parent company for previous infringement of the subsidiary constituting a single economic unit with the parent company in the second infraction. There is nothing to prevent, in principle, a victim of an anticompetitive practice from bringing an action for damages against one of the legal entities which make up an economic unit and thus the undertaking which, by infringing Article 101(1) TFEU, caused the harm suffered by that victim. The liability of the subsidiary for conducts of the parent company in case of the existence of a relevant economic unit cannot however be invoked unless victim proves the links uniting both companies as well as the specific link between the economic activity of that subsidiary company and the subject matter of the infringement for which the parent company has been held responsible. The victim should in principle establish that the anticompetitive agreement concluded by the parent company, for which it has been punished, concerns the same products as those marketed by the subsidiary. The principle of personal responsibility does not preclude the possibility that a finding of such an infringement in the Decision should be definitive with regard to a subsidiary company since it is for the economic unit which constitutes the undertaking that has committed the infringement to answer for it. Inapplicability of the administrative procedural guaranties for the defendant in an infringement proceeding to the defendant in a damage compensation proceeding before a national court. The possibility, for the national court concerned, of making a finding of the subsidiary’s liability for the harm caused is not precluded merely because the Commission has not adopted any decision or that the decision in which it found that there was an infringement did not impose an administrative penalty on that company. If the referring court considered that it was not possible for it to uphold an interpretation of Article 71(2) of the Law on the protection of competition that was consistent with the interpretation of Article 101(1) TFEU set out in paragraph 67 of this judgment, it would be required to disregard that national provision and to apply directly Article 101(1) TFEU to the dispute in the main proceedings.(JIRP)

Mercedes Benz Trucks España is a subsidiary company in the Daimler group, the parent company of which is Daimler. Between 1997 and 1999, Sumal acquired two […]

11 October, 2021

Judgement of the Court of Justice (Grand Chamber) of October 06, 2021 in the Judgment in Case C-882/19 Sumal (ECLI:EU:C:2021:800). The victim of an infringement of EU competition law committed by a parent company may seek compensation from that company’s subsidiary for the resulting loss. To do so, it must prove that the two companies constituted an economic unit at the time of the infringement. The determination of the entity which is required to provide compensation for damage caused by an infringement of Article 101 TFEU is directly governed by EU law. The right for any person to seek compensation for a harm strengthens the working of the EU competition rules, since it discourages agreements or practices, frequently covert, which are liable to restrict or distort competition, by contributing to the maintenance of effective competition in the European Union. Actions for damages for infringement of EU Competition rules (private enforcement) are an integral part of the system for enforcement of those rules, which are intended to punish anticompetitive behaviour on the part of undertakings and to deter them from engaging in such conduct. The concept of ‘undertaking’, within the meaning of Article 101 TFEU, which constitutes an autonomous concept of EU law, cannot have a different scope with regard to the imposition of fines by the Commission under Article 23(2) of Regulation No 1/2003 as compared to actions for damages for infringement of EU competition rules (Confirming Skanska). All the members of an economic unit at the moment of the infringement of EU Competition law – attending the economic activity in question – are liable for infraction. A legal entity which is not designated in the decision as having committed the infringement of competition law may nevertheless be held liable on that basis due to conduct amounting to an infringement committed by another legal entity, where those two entities both form part of the same economic unit and thus constitute an undertaking which is the perpetrator of the infringement. The economic unit of which it is constituted must be identified having regard to the subject matter of the agreement at issue. The aggravating factor of repeated infringement may be applied to a parent company for previous infringement of the subsidiary constituting a single economic unit with the parent company in the second infraction. There is nothing to prevent, in principle, a victim of an anticompetitive practice from bringing an action for damages against one of the legal entities which make up an economic unit and thus the undertaking which, by infringing Article 101(1) TFEU, caused the harm suffered by that victim. The liability of the subsidiary for conducts of the parent company in case of the existence of a relevant economic unit cannot however be invoked unless victim proves the links uniting both companies as well as the specific link between the economic activity of that subsidiary company and the subject matter of the infringement for which the parent company has been held responsible. The victim should in principle establish that the anticompetitive agreement concluded by the parent company, for which it has been punished, concerns the same products as those marketed by the subsidiary. The principle of personal responsibility does not preclude the possibility that a finding of such an infringement in the Decision should be definitive with regard to a subsidiary company since it is for the economic unit which constitutes the undertaking that has committed the infringement to answer for it. Inapplicability of the administrative procedural guaranties for the defendant in an infringement proceeding to the defendant in a damage compensation proceeding before a national court. The possibility, for the national court concerned, of making a finding of the subsidiary’s liability for the harm caused is not precluded merely because the Commission has not adopted any decision or that the decision in which it found that there was an infringement did not impose an administrative penalty on that company. If the referring court considered that it was not possible for it to uphold an interpretation of Article 71(2) of the Law on the protection of competition that was consistent with the interpretation of Article 101(1) TFEU set out in paragraph 67 of this judgment, it would be required to disregard that national provision and to apply directly Article 101(1) TFEU to the dispute in the main proceedings.(JIRP)

Mercedes Benz Trucks España is a subsidiary company in the Daimler group, the parent company of which is Daimler. Between 1997 and 1999, Sumal acquired two […]