{"id":3027,"date":"2019-11-15T16:21:23","date_gmt":"2019-11-15T15:21:23","guid":{"rendered":"https:\/\/www.d-kart.de\/?p=3027"},"modified":"2020-03-09T11:25:27","modified_gmt":"2020-03-09T10:25:27","slug":"auf-ein-neues-haftung-von-konzerngesellschaften","status":"publish","type":"post","link":"https:\/\/www.d-kart.de\/en\/blog\/2019\/11\/15\/auf-ein-neues-haftung-von-konzerngesellschaften\/","title":{"rendered":"And Again: Liability for Cartel Damages"},"content":{"rendered":"\n<p><em>Spain has recently provided the international media with more than just\none news story worthy of making frontpage headlines. From a competition law\nperspective, the next big thing could just have been launched from Barcelona. The\nAudiencia Provincial de Barcelona, has decided to present the European Court of\nJustice with some interesting questions as it requests a preliminary ruling on\nmatters of liability for cartel damages. Here is a report by Hans-Markus\nWagener.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>Referring court and the background of the case<\/strong><\/h2>\n\n\n\n<p>First of all, a very quick <s>debriefing<\/s>\nbriefing on the relevant court system: Spain consists of 16 <em>comunidades aut\u00f3nomas<\/em> (&#8220;CA&#8221;),\nwhich represent the administrative hierarchical counterpart to the German <em>L\u00e4nder<\/em>. A CA in turn consists of several\n<em>provincias<\/em>, of which there are a\ntotal of 50. Barcelona is one of them. At this level of state organization, the\n<em>Audiencia Provincial<\/em> is the highest\njudicial body. As such, it is responsible, among other things, as a second\ninstance for all civil appeal proceedings that have previously been decided by\na subordinate court in its area.<\/p>\n\n\n\n<p>Thus, the 15th Chamber of the <em>Audiencia Provincial de Barcelona<\/em>\n(&#8220;APB&#8221;), in the course of the proceedings at issue here, has to rule\non an appeal initiated by the plaintiff (APB Secci\u00f3n 15<sup>a<\/sup>, Order of\n24 October 2019, Rollo n<sup>o<\/sup> 775\/2019-2<sup>a<\/sup>,\npreviously unpublished; in the following references to paragraphs not otherwise\nspecified below refer to this order). The plaintiff is asserting a payment of\ndamages for additional cartel-related costs against the Spanish branch of a\nGerman parent company. The former is constituted under Spanish law as <em>sociedad de responsabilidad limitada<\/em>\n(SL). The case concerns the Trucks cartel, against whose participants the EU\nCommission imposed <a href=\"https:\/\/europa.eu\/rapid\/press-release_IP-16-2582_en.htm\">fines totalling\nEUR 2.93 bn.<\/a> by <a href=\"https:\/\/ec.europa.eu\/competition\/antitrust\/cases\/dec_docs\/39824\/39824_6567_14.pdf\">decision\nof 16 July 2016<\/a>. According to the official notice, one of the\ncompanies fined at the time was the defendant&#8217;s parent company. However, the\nplaintiff did not bring its action against the German parent, but rather\nagainst its Spanish subsidiary.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>Why sue subsidiaries in the first place if you have their parents?<\/strong><\/h2>\n\n\n\n<p>This is remarkable in so far as the\nparent company is often perceived as the target of choice in cartel damages\nlitigation. Thus, harmed parties regularly turn to the parent company even if\nit was not one of the officially established cartel members. The reason for\nthis is usually the higher attractiveness of the parent&#8217;s assets compared to\nthose of subsidiaries. Nevertheless, the assertion of a claim against a\n(non-participating) subsidiary may under certain circumstances be favorable\nfrom the plaintiff&#8217;s perspective \u2013 e.g. if it is the national subsidiary of a\nparent company incorporated abroad. In particular, when the domestic subsidiary\nis considered as an equally reliable debtor due to its financial situation,\nbringing an action against it is better in line with the plaintiff\u2019s interests.\nIn principle, because it avoids additional costs and considerable delays that\notherwise may result from the participation of parties domiciled abroad (e.g.\nby translating the procedural documents). Hence, the overall litigation risk is\nsignificantly lower.<\/p>\n\n\n\n<p>However, the court with jurisdiction\nat first instance had dismissed the case as inadmissible (Juzgado de lo\nMercant\u00edl n\u00ba 7 de Barcelona, judgment of 23 January 2019, ECLI: ES:JMB:2019:981\n\u2013 <em><a href=\"http:\/\/www.poderjudicial.es\/search\/AN\/openDocument\/662d4129513295e5\/20190919\">Sumal\nSL v. Mercedes Benz Trucks Espa\u00f1a SL<\/a><\/em><em>)<\/em>. It argued that the defendant was not capable of being sued for\ncartel damages because the Spanish company itself had not been officially implicated\nin the infringement as the Commission\u2019s decision only established a wrongdoing\nof the parent company. This defense is the <s>gold<\/s> standard in antitrust\ndamages cases whenever the defendant is a group company which has not by name\nbeen the subject of an official decision. This line of argument goes back to\nthe principle of distinct corporate bodies (as in the <em>Salomon principle<\/em> in English law). Put into a scheme it looks like\nthis:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>(i)&nbsp;The Commission has identified an infringement of Art. 101 TFEU and established it by decision.<\/li><li>(ii)&nbsp;The finding of a fine is expressly addressed only to the parent company.<\/li><li>(iii)&nbsp;The defendant is neither included in the Commission&#8217;s findings nor is it identical as a legal person with the parent. From the defendant&#8217;s point of view, the violation of antitrust law thus constitutes an external conduct from which no liability arises according to the principle of personal responsibility.<\/li><li>(iv)&nbsp;Since the defendant has no control or decisive influence over its parent company, the latter\u2019s infringement is not imputable to the former. Therefore, the defendant is not liable.<\/li><\/ul>\n\n\n\n<p>At first glance, this chain of\nreasoning appears to be conclusive, at least in the isolated context of\nnational liability law. An attribution of conduct giving rise to liability is\nin any case necessary insofar as the infringement in question does not\nconstitute the defendant\u2019s own conduct. If mother and daughter are regarded as\nseparate legal entities in accordance with the principle of separation, the\ncriterion of control (<em>decisive influence<\/em>)\ncould be taken into account as an imputable fact. A subsidiary which, according\nto its nature, never controls the parent company, would then be de facto\nexcluded from any liability in cartel damages cases if it did not commit the\ninfringing behavior by itself. Nor would a sister company, which belongs to the\nsame economic unit as the infringing company, be liable for cartel damages for\nlack of imputability via the criterion of control.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>Antitrust infringements are the very own behavior of the economic unit<\/strong><\/h2>\n\n\n\n<p>Against the background of the\nEuropean Union law <em>principle of economic\nunity<\/em> it seems highly doubtful that an infringement can constitute behavior\nof its own on the part of one group company, but an external behavior on the\npart of the others. The APB also notes this by referring to the inconsistent\nhandling of such constellations by Spanish courts. While a subsidiary\u2019s\ncapability of being sued for cartel damages caused by the parent company\u2019s\ninfringement is partially rejected as described above, there are also\ncontradictory decisions which, in contrast, provide for an extension of civil\nliability to subsidiaries or even sister companies in the light of economic\nunity (para. 11). To the extent that in the latter sense the liability of the\nsubsidiary for the parent company\u2019s infringement is recognized, this can be\nlegally justified considering the settled concept of economic unity under EU\nlaw (arguing in this sense and consequently also for the liability\nresponsibility of sister companies cf. <em>Kersting<\/em>,\nLiability of Sister Companies and Subsidiaries in European Competition Law,\navailable on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3355816\">SSRN<\/a>;\n<em>Wagener<\/em>, Follow-up to Skanska \u2013 The\n&#8216;Implementation&#8217; by National Courts So Far, available on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3455993\">SSRN<\/a>).<\/p>\n\n\n\n<p>With &#8220;undertaking&#8221;, the rules\nof EU competition law address a legal subject that \u2013 in deviation from the\nseparation principle under national company law \u2013 is determined solely by\neconomic considerations. The consistent application of this doctrine inevitably\nleads to the responsibility of all companies of the economic unit for a cartel\ninfringement of the others (with further references <em>Kersting<\/em>, Liability of Sister Companies and Subsidiaries in\nEuropean Competition Law, available on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3355816\">SSRN<\/a>.).\nSince according to Artt.&nbsp;101, 102&nbsp;TFEU it is not a single company but\nrather the undertaking that commits the infringement, the legislator\nconsequently assigns the resulting burden to the economic unit instead of an\nindividual legal entity as defined by corporate law. This applies to fines as\nwell as damages claims.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>The referral questions: (caught) between separation principle and effective protection of competition<\/strong><\/h2>\n\n\n\n<p>The area of conflict between the two\napproaches described now prompts the APB to refer the following specific\nquestions to the ECJ for some answers (para.&nbsp;16):<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>A)&nbsp;Does the principle of economic unity developed by the case law of the European Union allow for an extension of parent company\u2019s liability in such a way that its subsidiaries can be held liable in the same way, or does the concept only apply in the reverse case of an extension of the subsidiary\u2019s liability onto the parent for the conduct of the former?<\/p><p>B) Is the extent to which the concept of economic unity must be applied when dealing with intra-group relations to be exclusively determined considering circumstances of control or can it also be traced back to other criteria, such as the fact that the subsidiary may have benefited from the infringement?<\/p><p>C) If the extension of liability from the parent company to its subsidiaries is permissible, what conditions must be fulfilled to assert it?<\/p><p>D)&nbsp;If the above questions are answered in the affirmative and subsidiaries should therefore be responsible for infringements committed by their parent company, are those provisions of national law which require control in order to extend a subsidiary\u2019s liability to its parent company compatible with Union law?<\/p><\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>Liability as the flip side of the economic benefits (silently) drawn from the infringement<\/strong><\/h2>\n\n\n\n<p>Without clearly positioning itself\nin this respect, the APB states in this context that it considers it quite\npossible not to identify the economic unit solely on the grounds of internal\ncontrol mechanisms (para.&nbsp;24). Rather, the ECJ ruling in the <em>Skanska<\/em> case (<a href=\"http:\/\/curia.europa.eu\/juris\/document\/document.jsf?text=&#038;docid=211706&#038;pageIndex=0&#038;doclang=EN&#038;mode=req&#038;dir=&#038;occ=first&#038;part=1\">ECJ,\njudgment of 14 March 2019, C-724\/17<\/a>) in particular suggests that the\ncorresponding doctrine of economic unity has to be applied much more widely\n(para. 17, 24). In concrete terms, against the background of this principle a\ncompetition law infringement by an individual group company could very well be\ninterpreted as tortious act of all the other legally autonomous parts of the\nundertaking. As a consequence, each individual company of a bigger group could be\nheld liable for an infringement by another company. This means that the need\nfor imputability would no longer play any role in cartel damages litigation\ntargeting member of the undertaking that is an economic unit out of which the\ninfringement was committed. The legal principle of <em>personal responsibility<\/em>\nwould not stand in the way of this, assuming that each member of the economic\nentity has in fact (if unconsciously) benefited from the infringement precisely\nbecause it forms part of the same. In this respect, liability is the <em>flip\nside<\/em> of corporate affiliation (<em>Wagener<\/em>,\nFollow-up to <em>Skanska<\/em> \u2013 The\n&#8216;Implementation&#8217; by National Courts So Far, available on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3455993\">SSRN<\/a>).<\/p>\n\n\n\n<p>The (civil) liability of a group\ncompany would therefore not further depend on whether it, as legal entity, had\nmade its own (direct or indirect) contributions to the infringement as long as\nit was a member of the economic unit by which the infringement was committed.\nThat is because any group company (silently) profited of the infringement\n(para. 17). Ultimately, the bare affiliation to the undertaking involved in the\ncartel &#8211; that is the economic unit &#8211; would be sufficient ground to establish\nthe liability of each individual legal entity (for this, <em>Kersting<\/em>, Liability of Sister Companies and Subsidiaries in\nEuropean Competition Law, available on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3355816\">SSRN<\/a>;\n<em>Wagener<\/em>, Follow-up to Skanska \u2013 The\n&#8216;Implementation&#8217; by National Courts So Far, available on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3455993\">SSRN<\/a>).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>Extended liability under Spanish law<\/strong><\/h2>\n\n\n\n<p>However, the order for reference\nalso shows that the Chamber by no means considers the principle of separation\nas such to be outdated. Rather, it emphasizes its essential significance as a\nsource of legal certainty and \u201cdecent order\u201d in a rule of law state (para. 26).\nIt was precisely for this reason that Spanish national law allows for a breach\nof this principle only in exceptional cases. Thus, Spanish law provides for an\nextension of liability if the legal person by whom a tortious act has been\ncommitted is merely an empty shell which a third party uses as a vehicle to\nconceal its own activities in order to ultimately benefit from limitations of\nliability under company law (&#8220;<em>levantamiento del velo societario<\/em>&#8220;,\npara. 26; this legal figure originates from the Anglo-Saxon legal tradition,\nwhere it is referred to as <em>lifting\/piercing the veil doctrine<\/em>, cf. <em>Gevurtz<\/em>, Piercing Piercing: An Attempt\nto Lift the Veil of Confusion Surrounding the Doctrine of Piercing the\nCorporate Veil, available on <a href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=140280\">SSRN<\/a>).\nIn a(n alleged) departure from the principle of separation, this legal figure\nthus extends liability to the persons behind the vehicle in order to ensure\nthat legal entities do not provide a safe haven for abusive, in particular\nfraudulent, activities.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"965\" height=\"689\" src=\"https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil.png\" alt=\"\" class=\"wp-image-3039\" srcset=\"https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil.png 965w, https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil-300x214.png 300w, https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil-768x548.png 768w, https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil-600x428.png 600w, https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil-440x314.png 440w, https:\/\/www.d-kart.de\/wp-content\/uploads\/2019\/11\/Another-piercing-of-the-veil-378x270.png 378w\" sizes=\"auto, (max-width: 965px) 100vw, 965px\" \/><figcaption>Another piercing of the veil.<\/figcaption><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>General liability of non-participating companies or only in case of economic unity plus X?<\/strong><\/h2>\n\n\n\n<p>On the basis of this consideration,\nthe Chamber expresses doubts as to whether the follow-on constellations under\nantitrust law could be regarded as exceptional in nature per se or only in\nindividual cases with regard to the (perceived) breach of the separation\nprinciple. On the one hand, the practice of the EU courts on the liability of\nlegal successors is implicitly based on the same considerations under whose\nconsideration the Spanish legal practice already permits the extension of\nliability to intervene (para. 26). This would argue for a general extension of\nliability for cartel damages to all legal entities of economic unity.<\/p>\n\n\n\n<p>On the other hand, the order for\nreference raises the question of whether further circumstances must not be\nadded to the simple existence of group companies\u2019 economic unity &#8211; e.g.\n\u201cextraordinary difficulties resulting from an assertion of liability against\nthe actors that have been considered in the previous administrative\nproceedings\u201d (para.&nbsp;26) &#8211; so that an action against group companies other\nthan those would only then be admissible. The fact that in such\n&#8220;extraordinary difficulties&#8221; the court does not have in mind\nexcessively high hurdles in the sense of unreasonable hardship (<em>au\u00dfergew\u00f6hliche\/unbillige\nH\u00e4rte<\/em>) under German law is shown by the fact that the risk of time delays\nor additional costs due to the involvement of foreign parties in the court\nproceedings is cited as an example of such circumstances (para. 26).<\/p>\n\n\n\n<p>The reader can guess how <s>pointless<\/s> meaningful the judges themselves consider this requirement to be on the\nbasis of the immediately following remarks in their order. Thus, they point out\nthat the additional time as well as the additional financial effort, which\ncivil court proceedings against foreign parties entail for all parties\ninvolved, is usually completely useless for the cause. Especially in cartel\ndamages litigation, the general defense in all proceedings before both domestic\nand foreign courts is ultimately coordinated centrally by the same law firms\nand attorneys in accordance with the interests of the entire company. In view\nof this circumstance, the additional expense does not create any added value\nfor the judicial process (para. 27). In other words, the rejection of cartel damages\ncases or the group companies\u2019 capability of being sued could not be reconciled\nwith the principle of procedural efficiency.<\/p>\n\n\n\n<p>To the extent that the Court&#8217;s\nreasoning implies that, in general, only those companies which are mentioned by\nname in the fining decision are capable of being sued, this must be countered\nindependently of the ECJ&#8217;s upcoming answers to the questions now referred for a\npreliminary ruling. The starting point for the obligation to pay for cartel\ndamages is, after all, neither the participant status in the administrative\nproceedings nor the mention in the decision, but rather the commission of a\ncorresponding violation of competition law. This becomes clear in the\ndifferentiation of the types of cartel damages actions between follow on and\nstand alone. What actually crossed the judges&#8217; minds was most probably the\nfacilitation of evidence which a procedure based on the official findings\nentails. Of course, the respective content of a decision <em>de lege lata<\/em> is\nonly binding for a court if the defendant is one of the legal entities listed\nin it by name. However, the fact that a plaintiff does not enjoy these\nfacilitating benefits due to the lack of a corresponding decision is simply\nirrelevant for the question if a specific company is capable of being sued for\ncartel damages.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><br><strong>Private enforcement as an instrument for effective protection of competition<\/strong><\/h2>\n\n\n\n<p>Apart from that, the referral court\nrightly recognizes that SMEs in particular would be badly hit if they were\nforced into a legal dispute with foreign entities for purely formal reasons.\nThis is because the increased risk associated with lower amounts in disputes\ncan come across as a factual &#8220;barrier to entry&#8221; with regard to the\nassertion of their rights (para. 27). By erroneously recurring to the principle\nof separation, private enforcement would be seriously weakened and EU\ncompetition law would be deprived to a large degree of its behavioral control\neffect for purely formalist legal reasons.<\/p>\n\n\n\n<p>It is therefore already clear today\nthat the replies sent back to Barcelona by the ECJ, if it responds to the\nsubmission in detail, could have a trend-setting character for the future of\nthe entire European competition law practice.<\/p>\n\n\n\n<p><br><em>Hans-Markus Wagener is a researcher and doctoral candidate at the chair of Prof. Dr. Christian Kersting at Heinrich Heine University D\u00fcsseldorf.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Spain has recently provided the international media with more than just one news story worthy of making frontpage headlines. From a competition law perspective, the next big thing could just have been launched from Barcelona. The Audiencia Provincial de Barcelona, has decided to present the European Court of Justice with some interesting questions as it requests a preliminary ruling on matters of liability for cartel damages. Here is a report by Hans-Markus Wagener. Referring court and the background of the&#8230;<\/p>\n<p class=\"read-more\"><a class=\"btn btn-default\" href=\"https:\/\/www.d-kart.de\/en\/blog\/2019\/11\/15\/auf-ein-neues-haftung-von-konzerngesellschaften\/\"> Read More<span class=\"screen-reader-text\">  Read More<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":3044,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[302,102,24,104],"class_list":["post-3027","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-allgemein","tag-audiencia-provincial-de-barcelona","tag-lkw-kartell","tag-organhaftung","tag-schadensersatz"],"translation":{"provider":"WPGlobus","version":"3.0.0","language":"en","enabled_languages":["de","en"],"languages":{"de":{"title":true,"content":true,"excerpt":false},"en":{"title":true,"content":true,"excerpt":false}}},"_links":{"self":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts\/3027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/comments?post=3027"}],"version-history":[{"count":14,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts\/3027\/revisions"}],"predecessor-version":[{"id":3857,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts\/3027\/revisions\/3857"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/media\/3044"}],"wp:attachment":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/media?parent=3027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/categories?post=3027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/tags?post=3027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}