The General Court of the EU clarifies the parental responsibility of financial investors in the event of infringements of competition – Antitrust / competition law

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On July 12, 2018, the General Court of the EU issued an important judgment which clarified the basis on which the European Commission can impose antitrust fines on financial investors for the activities of their subsidiaries, even if the investment is largely passive in nature.


The case concerned a cartel in the electric cables market. From February 1999 to January 2009, European, Japanese and South Korean producers of submarine and underground power cables participated in a network of multilateral and bilateral meetings and established contacts aimed at restricting competition for their products in specific territories. , by awarding contracts and customers, which distorts the normal competitive process.

The European Commission has fined Prysmian, the world’s largest cable manufacturer, € 104.6 million for its participation in the cartel. At the material time, a fund managed by Goldman Sachs, GS Capital Partners, held a significant controlling interest in Prysmian, through a number of managed funds. During the counterfeiting period, Goldman Sachs’ stake in Prysmian fluctuated between 84% and 91%. Apart from 41 days when its stake was 100%, Goldman Sachs’ stake in Prysmian was only between 84.4% and 91.1% until May 3, 2007, when the shares of Prysmian were offered to the public as part of an initial public offering on the Milan Stock Exchange.

Although the investment bank did not own 100% of the shares, it indirectly controlled all of the voting rights associated with the shares of Prysmian until the date of the IPO. After this date, although Goldman Sachs no longer had absolute control over the voting rights, it continued to exercise control over the board of directors (as evidenced by the fact that this board continued to have the same composition) . Despite its substantial equity stake, Goldman Sachs argued that its investment in Prysmian was primarily financial in nature and that Goldman Sachs was in no business sense the “parent” of Prysmian.

The European Commission found that because of its involvement, Goldman Sachs had “decisive influence” over Prysmian for a substantial period in which the infringement occurred. Applying the long-established principle that one firm can be held jointly and severally liable for the anti-competitive behavior of another when those firms are part of a “single economic unit”, the Commission found that Goldman Sachs’ was jointly liable for Prysmian’s behavior and fined Goldman Sachs € 37.3 million. The Commission based this decision on two grounds: (i) a presumption arising from EU case law that Goldman Sachs exercised material influence over Prysmian by virtue of its participation; and (ii) an analysis of the economic, organizational and legal ties of Goldman Sachs with its subsidiaries demonstrating that it indeed exercised a decisive influence on Prysmian’s behavior in the market. Goldman Sachs appealed the Commission’s decision to the Tribunal.

The Tribunal’s decision

The General Court upheld the Commission’s decision and dismissed Goldman Sachs’ appeal. At the heart of the dismissed appeal was the level of general influence that the Court and the Commission found Goldman Sachs to exercise over Prysmian.

The General Court referred to the judgment of the Court of Justice in Akzo Nobel v Commission, and noted that the behavior of a subsidiary can be attributed to the parent company or to the investment company when, although having a separate legal personality, the subsidiary does not decide on its own behavior in the market, but follows the instructions of the parent company with all material respects. In this case, the parent company and its subsidiary form a single company within the meaning of Article 101 TFEU. On this basis, the Commission can impose fines on the parent company without having to establish its personal involvement in the conduct in question or the infringement. When a parent company has a 100% interest in a subsidiary, this is sufficient to presume that the parent company has decisive influence over the subsidiary. When a company owns almost all the capital of a subsidiary of its group, there is a rebuttable presumption that the company exercises a decisive influence on the behavior of the subsidiary. In order to be able to attribute the conduct of a subsidiary to the parent company, it must also be established that the decisive influence was in fact exercised over the subsidiary, and not only that the parent company was simply in a position to do so.

Decisive influence

In the present case, the application of the presumption of effective exercise of decisive influence was not based on the level of Goldman’s ownership, but on the fact that it controlled 100% of the voting rights attached to the shares. of the company, giving it a capacity comparable to that which it would have enjoyed as sole owner. The Court recognized other factors relating to the economic, organizational and legal relationship between Goldman Sachs and Prysmian to support the finding of determining influence, including the power to appoint the members of the various boards of directors of Prysmian, the power to call meetings of shareholders and propose the removal of directors or entire boards of directors, the actual level of representation of Goldman Sachs on the board of directors of Prysmian, the managerial powers of the representatives of Goldman Sachs on the board of directors administration, receipt of regular updates and monthly reports, measures to ensure that decisive control is maintained after the IPO date and evidence of typical industrial owner behavior.

The Court noted that it is possible to rebut the presumption that a parent company had a decisive interest by providing proof that the subsidiary acted independently of the parent company. However, the Court concluded that the presumption had not been rebutted in this case.


The Prysmien This case reaffirms the principle well established in EU case law that parent companies can be held liable for the anti-competitive behavior of their subsidiaries. However, the Commission’s decision, confirmed by the General Court, has shown that institutional investors can also be held responsible for the behavior of the companies in which they have invested, in the event that this investment is relatively passive or when the investor has limited direct involvement in the effective functioning of the subsidiary in question. As the European Commission noted in its response welcoming the judgment of the General Court, the case recognizes that institutional investors are treated “like other parent companies, giving them parental responsibility in exactly the same way“and the legal and factual analysis will focus on the ability of the parent company / investor to exercise a decisive influence over the subsidiary. The nature of the investment, whether financial or more strategic, is not relevant to this respect.


The case underscores the importance for investors and parent companies in general to ensure that their subsidiaries comply with applicable competition law rules and that subsidiaries have strong policies in place to minimize risk. offense. In addition, the case provides additional impetus for acquirers to perform due diligence with respect to competition law risks and obtain appropriate protection from suppliers in transaction agreements (through guarantees / allowances, etc.).

For more information, please contact a member of the Competition and Regulated Markets group.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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