Liability of a Parent for the Antitrust Violations of a Subsidiary Under Asian Antitrust Law

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David Eggert, Jingbo Hou, Nov 12, 2009

On September 10, 2009, the European Court of Justice (the highest court in the European Union) issued its much-anticipated decision in Akzo Nobel. N.V., and held that a parent company’s 100 percent ownership of a subsidiary automatically creates a presumption that the parent company controlled the actions of the subsidiary and is therefore liable for the antitrust violations of the subsidiary. Although this presumption of control is rebuttable, the court held that it had not been rebutted in the Akzo case. The issue was of special relevance in Akzo because the European Commission had imposed a fine upon Akzo (which had not been shown to have directly participated in a price-fixing conspiracy) and certain subsidiaries (which had been shown to have directly participated). Under European law, the maximum fine is bounded by 10 percent of the “turnover” (revenues) of the offending undertaking in the immediately preceding year. Since the turnover of Akzo Nobel was significantly larger than the turnover of the particular subsidiaries involved, this resulted in a much larger fine than otherwise could have been imposed. In reaching its conclusion, the Court relied heavily upon the concept of “undertaking” as developed in the law interpreting Sections 81 and 82 of the Treaty of Rome. The Akzo decision establishes a clear distinction between United States and European law on the i…

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