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Severing Parent Liability For Cartel Infringements By Employees Of Subsidiaries

Yves Botteman, Laura Atlee, Apr 16, 2010

We have previously  discussed the Akzo Nobel case,  in which the European Court of Justice ("ECJ")  clarified the presumption of joint and several liability of parent companies for cartel infringements committed by their wholly-owned subsidiaries. The attribution of liability has major implications for the amount (up to 10 percent of global turnover ) and payment of any fines imposed by the European Commission (the "Commission" or "EC") for such infringements. In most cases, regardless if a parent company has taken all of the steps necessary to ensure that its subsidiaries comply with competition law, it will be held jointly responsible for any subsequent infringement.

Assuming that the current EU competition legislation and the Court's position are not going to change in the near future, what can be done? In this article, we submit that the criminalization of cartel behavior against employees of subsidiaries could be used to achieve a higher level of deterrence while reducing fines on parent companies, particularly in circumstances where there is a showing that the latter have taken all of the steps within their power to ensure that their subsidiaries and employees strictly comply with EU competition law.

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