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In the firing line

Can parent companies be held liable for anti-competitive practices committed by a subsidiary? Paul Stanley QC investigates

1 February 2011

The notion of an ‘undertaking’ for the purposes of article 101 of the Treaty of the Functioning of the European Union (TFEU) – which prohibits anti-competitive agreements and concerted practices – does not necessarily respect the corporate veil. Related companies – although separate persons in law – may be a single ‘undertaking’ for the purposes of that article. This has various implications. One question it raises is: in what circumstances will a parent company be liable for infringements committed by a subsidiary?

That question arose on appeal from the General Court in Case C-90/09 P General Química SA (First Chamber, 20 January 2011). GQ manufactured rubber chemicals. It was a wholly-owned subsidiary of RQ, which was in turn owned by RYPF. Having found an infringement by GQ, the commission imposed a penalty of €3.38m on all three companies, jointly and severally. It contended that there was a ‘presumption’ that a parent company exercised deci...

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