The CJEU opens the possibility of claiming antitrust damages against the subsidiary that is not an addressee of the competition authority's decision instead of the liable parent company

By Javier Pérez

Context

The Court of Justice of the European Union (the "CJEU") recently ruled on 6 October 2021 on an important question referred for a preliminary ruling by the 15th chamber of the Audiencia Provincial de Barcelona (the "Barcelona Appeal Court") regarding the private enforcement of competition law.

The national dispute referred to the CJEU concerns the damages action brought by Sumal, S.L. ("Sumal") against Mercedes Benz Trucks España ("MBTE") stemming from the Trucks case sanctioned by the European Commission. 

The question posed concerned whether MBTE, the sole defendant, could be held liable for the damages arising from the infringement of article 101.1 of the Treaty on the Functioning of the European Union ("TFEU"). It would appear reasonable to claim damages directly, in principle, from the infringer as declared in the decision (as, in fact, has been the case in most proceedings). However, despite the risk of dismissal of the claim, the reasons behind the claimant’s decision to target the non-sanctioned Spanish subsidiary, MBTE, may have been merely practical: to avoid delays and costs associated with the service of claim and translation of documents in respect of a foreign defendant. Having said this, such a circumstance gave rise to an interesting debate on EU law, which the Barcelona Appeal Court rightly deemed appropriate to refer to the CJEU.

The national court asked, in essence, whether liability for damages could be attributed to the non-infringing subsidiary vis-à-vis the infringing parent company that forms part of the same economic unit. It must be noted how the opposite (the liability of the non-infringing parent company vis-à-vis the infringing subsidiary over which it exercises control) is recognised, under certain presumptions, in the CJEU’s case law and in the new article 71.2 of the Spanish Competition Act (Ley de Defensa de la Competencia).

The CJEU finally concluded that:

• Article 101.1 TFEU allows for a damages action to be brought against either the parent company which was the addressee of the decision of the competition authority or the subsidiary which was not addressed by the decision (and, therefore, was not considered as an infringer), provided that both form part of the same economic unit and that the subsidiary's rights of defence are respected. In other words, the subsidiary must be allowed to rebut the presumption of belonging to that economic unit and, in those cases which do not concern European Commission’s decisions, the existence of the infringement.

• In view of the above, Article 101.1 TFEU is opposed to a rule such as article 71.2 LDC, which only allows liability to be attributed to the parent company and not to the subsidiary.

Assessment

The ruling of the CJEU was to be expected given the progressive development of the CJEU’s case law on private enforcement of competition law and the Advocate General’s opinion in this case.

This response is reasonable in view of how the test for attributing liability has been established. That is, the CJEU has not merely applied a reversal of the parental liability doctrine (exercising control over the subsidiary) but has narrowly defined the cases in which this doctrine can be applied, depending on the nature and context of the specific case. Moreover, according to the CJEU, the attribution of liability must be understood on the basis of the autonomous concept of “infringer” under EU law, as established in Skanska, which implies that this test will be governed directly by Article 101 TFEU and not by national law (as interpreted under the principles of equivalence and effectiveness).

The conclusion in Trucks cannot automatically be extrapolated to other cases, as it will require a detailed case-by-case analysis by claimants. That said, although the practical consequences of this judgment seem, in principle, limited to complex transnational litigation cases, it could also be applied in purely domestic cases, as it offers a new range of strategies to claimant who might take into account the solvency of the entity or its registered office (for forum shopping purposes).

All in all, Sumal is another key precedent in the growing list of landmark judgments rendered by the CJEU in this field. In this regard, in the coming months the CJEU is expected to rule on other pending preliminary references (many of them raised by Spanish judges in the context of the Trucks case) that will contribute to further establishing the substantive and procedural bases for the private enforcement of competition law. We will stay tuned.