Is my mother liable for my competition infringement? (Or a few words about the SEE doctrine)
„Most likely yes”, would say the single economic entity doctrine (SEE).
The SEE seems to be an abstract concept but it has very concrete consequences. It seems to design a flexible boundary of each undertaking by defining it as “an economic unit for the purpose of the subject-matter of the agreement in question even if in law, this economic unit consists of several persons” (see Hydrotherm or Shell Case).
From the competition point of view, an undertaking may consist in a single entity or in an economic unit including both the controlling entity and the controlled ones which do not have real freedom in determining their actions in the market. The courts decided that: a) a parent and its subsidiaries (e.g. Viho Case) or b) a principal and its agent when the agent does not take financial and commercial risks (e.g. DaimlerCrysler Case) or c) in some circumstances, a joint venture and its parents form a SEE and thus, a single undertaking.
In order to determine if an entity enjoys real autonomy or in other words, if a company exercise decisive influence over another, a test of control shall be passed. The control test is based on various factors such as: the shareholding that a company has in its subsidiary, the board of directors, the instructions received from the parent and similar matters.
The courts held a rebuttable presumption (see Case T-24/05 where it was rebutted by a member of the group companies) of decisive influence over the subsidiary in which the parent has 100% stake. Moreover, in some more recent cases, the concept of SEE was invoked even where a parent has a negative control (e.g. veto rights) over its subsidiary.
Despite its rather abstract nature, the SEE doctrine has many real consequences, such as:
1) An agreement between entities within an SEE does not infringe competition law because they are considered one and the same economic unit.
2) The parent company, exercising a decisive influence over the subsidiary may be held liable for the anticompetitive behaviour of the subsidiary, without any obligation “to establish personal involvement of the parent in the infringement” (see Akzo Nober Case).
This use of the SEE doctrine is somehow controversial and sometimes deemed “unconvincing, illogical and breaches the principle of personal responsibility and the presumption of innocence” (e.g. Ooms Avenhorn Holding v. The Netherlands). Conversely, the courts noted that: “since any gains resulting from illegal activities accrue to the shareholders it is only fair that those who have the power of supervision should assume liability for the illegal business activities of their subsidiaries” (Dow Chemical Case).
3) In case of an SEE, the fine provided by Article 23 (2) of the Regulation 1/2003 as well as by Article 69 of the Romanian competition law refers to the entire group’ turnover not only to the turnover of the subsidiary which had an anticompetitive behaviour.
4) Private claim for damages can be submitted either against the parent company or against the subsidiary.
Photo Credits: Valeria Zoncoll