Two recent decisions and one ongoing appeal against cartel fines in Europe serve as a reminder that the European antitrust authorities take a strict approach to the issue of parental liability in an antitrust context. That differs markedly from the United States, where regulators generally do not impose equivalent parental liability for criminal antitrust fines.

This article explains the extent of parental liability under EU competition law and discusses the implications for private equity sponsors and financial investors when a portfolio company has committed an infringement. In summary:

  • There is a low threshold for being considered an “active” investor for the purposes of a parent company being found personallliable (as opposed to being liable solely on a derivative basis) for the antitrust violations of a portfolio investment under EU antitrust law.

  • The European Commission (the “Commission”) and courts are taking an increasingly strict approach to the interpretation of the principle of “parental liability,” making it factually very difficult to rebut.

  • Consequently, the associated risk for a PE firm of being held personally liable for the unlawful conduct of a portfolio company is high and continues even after exiting the investment.

Legal Basis for Parental Liability under EU Competition Law

EU competition law provides that the parent company of a group may be held jointly and severally liable and fined for the anti-competitive conduct of another member of its group. The focus on economic rather than legal identity means that a parent and its subsidiaries are treated as a single corporate group for the purposes of competition law. The rationale for holding the parent jointly and severally liable with the portfolio company is two-fold. First, it takes the “true” economic strength of the wider business into account. Second, it prevents companies from avoiding payment by restructuring or transferring assets intra-group. This approach allows the Commission to address an infringement decision at the parent company level as well as at the level of the subsidiary where the violation was actually committed, and it also increases the amount of the fine that can be imposed because the amount may be calculated on a group basis, not by reference solely to the infringing subsidiary's turnover.

“Decisive Influence”: The Test for Imputing a Portfolio Company’s Conduct to the Sponsor

The test for imputing a subsidiary’s infringing conduct is whether the parent company is in a position to exercise “decisive influence” over the subsidiary’s conduct during the period of the infringement, and not whether it actually exercised that power.1

Presumption of Control in the Context of a >95% Share Capital Holding. Under EU competition law, there is a presumption that a parent has decisive influence over a subsidiary where a parent company holds 100%—or nearly 100%—of the infringing entity’s share capital. The Commission has notably never applied the presumption where a parent company has held less than a 96% interest.

Rebutting the Presumption. When the presumption is found to apply, the onus shifts to the parent company to show that the subsidiary acted autonomously on the market and so did not form part of the same economic unit as the parent.2 However, case law shows that the bar for rebutting the presumption of influence is very high and the vast majority of appeals on this point have not succeeded. To rebut the presumption, the parent must demonstrate the subsidiary decided independently on its own conduct on the market. In essence, the question is whether the facts indicate that the parent company did not exert sufficient influence that the two must be regarded as one economic unit. As an example of the difficulties involved, a parent has been found to exercise decisive influence over a wholly owned subsidiary despite the fact that the parent had not adopted any formal management decisions during the period of the infringement, had never exercised its voting rights, and had only limited, minority board representation.3

Parental Liability in the Context of a <95% Share Capital Holding. If the presumption of influence does not apply, the Commission must show that the parent exercised control. It is, however, not necessary to show influence was actually exercised. Organizational, legal, and/or structural links can be taken as sufficient. For example, a 30% minority investor has been held jointly liable based on the fact that it had board representation as well as certain governance rights over the portfolio company’s activities.4

Heat Stabilisers: Parent Company Can Be Treated Differently than the Subsidiary for the Subsidiary’s Unlawful Action

Most recently in the Heat Stabilisers case, the EU’s higher European Court of Justice (the “ECJ”) took a strict approach to parental liability, with the result that the parent was ultimately treated more harshly than the infringing subsidiaries in relation to the same unlawful action. Specifically, the parent company was not only found jointly and severally liable for the unlawful conduct of two of its subsidiaries, but it continued to be held liable even after the fines owed by the subsidiaries themselves were found to be time-barred.


In April 2017, the ECJ dismissed an appeal by Akzo Nobel N.V. (“Akzo Nobel”) against fines imposed on it for infringements by two of its subsidiaries, Akzo Nobel Chemicals GmbH and Akzo Nobel Chemicals B.V., both of which took part in a cartel during the first of three periods. In an earlier appeal, the lower-tier EU General Court had overturned the fine on the subsidiaries because the limitation period had expired, but had confirmed that the Commission could still find Akzo Nobel liable as their parent company. The ECJ had been expected to annul the parental fine because of a recommendation that it do so from the Attorney General based on the established principle that the liability of a parent company cannot exceed that of its subsidiary. Instead, the ECJ agreed with the Commission’s approach and rejected the appeal in its entirety.

There were two main reasons for the ECJ’s decision. First, the fact that the subsidiaries could no longer be fined was considered essentially irrelevant. Akzo Nobel and the two infringing subsidiaries “formed one and the same undertaking for the purposes of EU competition law” and Akzo Nobel was therefore “considered personally responsible and severally liable with those companies for the same anti-competitive conduct” (emphasis added). Second, the ECJ confirmed that a parent company can be treated differently to its subsidiaries—even if its liability is based exclusively on the unlawful conduct of those same subsidiaries.

Key Takeaway:

  • Parental liability is personal to the parent rather than derivative, which can result in differences in treatment.

International Flour Cartel: Ability to Appoint Supervisory Board Members Amounts to Decisive Influence

Earlier this year, Bencis Capital Partners lost its appeal against a fine imposed by the Dutch Authority for Consumers and Markets (the “ACM”). The Rotterdam District Court held that the principles of parental liability could be extended to the private equity firm for the unlawful conduct of one of its portfolio companies, Meneba, and explained that that the key question was whether the portfolio company acted autonomously. The Court found that the sponsor Bencis had effectively controlled the decision-making process at Meneba based on its ability to appoint members to the supervisory board.


In 2010, the ACM fined 14 flour producers from Germany, Belgium and The Netherlands more than €81 million for their involvement in a market-sharing cartel. In a later decision, the ultimate parent companies of one of the infringing entities, Meneba, were also fined. Bencis Capital Partners ("BCP") and Bencis Buyout Fund II General Partner ("BBOF II GP") (together, “Bencis”) held over 90% of the shares in Meneba between 2004 and 2007 and were held jointly and severally liable for a fine of approximately €1 million, the statutory maximum that could be imposed under Dutch law at the time.

The appeal court confirmed the regulator’s decision to impose a fine on Bencis, noting that absence of knowledge of the anti-competitive conduct on the part of the controlling entity was no defense. The court reiterated that the powers Bencis held—specifically, the ability to appoint members to the supervisory board (including the chairman with the casting vote) which, in turn, took decisions on the appointment of management and the business plan—gave it decisive influence over the decisions of the company.

Key Takeaways:

  • Absence of knowledge of anti-competitive conduct is no defense.
  • Ability to appoint members to the supervisory board may amount to “decisive influence” and, consequently, give rise to parental liability.

Ongoing Power Cables Cartel Appeal

The final example is the ongoing appeal by Goldman Sachs (“GS”) before the lower-tier EU General Court against the finding that it was jointly and severally liable for an antitrust infringement committed by Prysmian, a former investment made by a fund managed by the bank. Leave to intervene was sought by the European Private Equity and Venture Capital Association (“EVCA”) on the basis that the contested decision raised an issue of principle of particular application to investments made by private equity and venture capital firms, but was rejected.


The GS appeal relates to a 2014 decision by the Commission that held GS jointly and severally liable for antitrust violations by one of its former portfolio companies, Prysmian, for that company’s role in the Power Cables cartel. The Commission imposed fines totaling just over €301 million for the anti-competitive conduct of 11 cable producers over a 10-year period, assigning €104.6 million to Prysmian, of which GS was held to be jointly and severally liable for €37.3 million. GS has appealed on a number of grounds, including that the Commission failed to demonstrate that it actually exercised “decisive influence” over Prysmian over the relevant period.5

The Commission’s Position

The Commission’s position is that GS had exercised decisive influence over Prysmian for several years after it acquired the company from Pirelli in 2005. Prysmian was subsequently listed on the Milan stock exchange in 2007 and GS sold the entirety of its interest by 2010. The Commission reasoned that GS was more than merely a financial investor during that time because it indirectly held all the voting power for two years, could and did nominate individuals to the board of Prysmian, and participated in strategic decision-making. There was no suggestion, however, that GS had been aware of any anti-competitive conduct.

It is, however, unclear whether the Commission’s case relies on a (rebuttable) presumption of decisive influence on account of GS owning 100% of the voting shares—an extension of the existing line of case law—or whether it is another example of decisive influence being shown to have existed based on the facts of the relationship between investor and portfolio company at the time.

Key Takeaway:

  • Liability can still arise for the period the investment was held, even after an investor has exited.

Conclusion and Further Issues Relevant for PE Firms and Other Financial Investors

Overall it is clear that EU case law on joint and several parental liability treats PE firms and other financial investors no differently in imputing the conduct of subsidiaries to their parents and, if anything, is becoming broader in application. From the Commission’s perspective, this is a matter of financial investors being held responsible both for up-front due diligence on their investments and for promoting compliance at the portfolio company level to prevent and detect anti-competitive conduct that could lead to liability.6


See, e.g. Case T-352/94 Stora Kopparbergs [1998] ECR II-2111.

Case C-97/08P Akzo Nobel v. Commission [2009] ECR I-8237.

Joined Cases T-208 & 209/08 Gosselin Group v. Commission [2011] ECR II-03639, [2013] 4 CMLR 671.

Case T-132/07 Fuji Electric Co Ltd v. Commission [2011] ECR II-4091.

Pirelli, which owned Prysmian during the first six years of the infringement, was also fined jointly and severally by the Commission and is also appealing the decision, and there are various other appeals outstanding on behalf of other parties.

As a further complexity, one question that has not yet had to be decided by the courts is how the Commission would behave in the event of an imputed repeat infringement by a PE firm. Recidivism is treated as an aggravating factor, so a PE firm could face punitive fines even where the anti-competitive activity is by a different portfolio company and on a different market. That may be one for a future decision.