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Parent company held liable for antitrust infringements committed by its subsidiary

20 May 2024 | Knowledge, News, The Right Focus

Last year’s amendment to the Competition and Consumer Protection Act of 16 February 2007 (uniform text: Journal of Laws of 2023, item 1689, as amended) introduced a new principle of liability of a dominant company for antitrust infringements by its subsidiary, which as early as the legislative stage was seen as a novelty in Polish law and caused numerous controversies. We examine what consequences the new regulations may have for businesses and their activities.

Severe penalties for infringements

The new provisions of Articles 6b, 9a and 106c of the Act provide for the possibility of imposing a penalty for antitrust infringements also on a dominant company if it has ‘exercised significant influence’ over a subsidiary that has committed such an infringement.

In such a case, the UOKiK President may impose a joint fine on both the perpetrator and the influencing undertaking. These entities are then jointly and severally liable for the infringement and, in calculating the penalty, the UOKiK President takes into account both the turnover achieved by the perpetrator and the undertaking(s) exerting influence. The method of calculating the penalty provided for in Article 106c of the Act thus increases its calculation base.

In the case of a breach of the prohibition on anti-competitive arrangements (pursuant to Article 6 of the Act and Article 101 of the TFEU), a penalty may also be imposed on managers, e.g. management board members of a dominant company.

Greater protection under competition law in the European Union

The amendment results from the implementation of Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 (OJ 2019 No. L 11, p. 3), known as the ECN+ Directive.

Its main objective was to make the enforcement of competition law in the EU Member States more effective and efficient and to extend the powers of the competent authorities in this field.

The liability of a dominant company for antitrust infringements committed by a subsidiary is a long-established concept in EU case law. According to it, a parent company and its subsidiary form a single undertaking within the meaning of Article 101 or 102 of the TFEU if they are part of a single economic unit. This allows the Commission to address a decision imposing a fine directly to the dominant company without having to prove its direct involvement in the infringement (see the CJ judgment of 14 July 1972 in Case C-48/69 Imperial Chemical Industries v Commission).

According to Article 6b(2) (similarly Article 9a) of the Act, decisive influence is exercised when economic, legal or organisational links between undertakings result in one of them fulfilling or adapting to the instructions given to it by the other, thereby limiting or even preventing its market independence.

In EU case law, decisive influence refers to the type of relationship where the subsidiary does not independently determine its own conduct but generally follows the instructions given to it by the parent company.

Following this (the CJ judgment of 10 September 2009 in Case C-97/08 P, Akzo Nobel and Others v. Commission and of 16 November 2000 in Case C-283/98 P Mo och Domsjö AB v Commission), Article 6b(3) and Article 9a provide for a presumption of determining influence where an undertaking has a shareholding of more than 90% in the capital of another undertaking.

Although this presumption is rebuttable, it must be assumed that, in line with the Commission’s existing practice and the case law of the CJ, it will be extremely difficult to rebut (see the CJ judgment of 16 June 2016 in Case C-155/14 P Evonik Degussa GmbH and AlzChem AG v Commission).

This would require companies to provide evidence of the autonomy of the subsidiary and it would not be relevant to show that the parent company was not involved in the infringement or was even unaware of the infringing conduct.

Antitrust infringements: what businesses can expect

The application of the new regulations will certainly give rise to many problems. This is because the regulations make use of numerous general clauses, which lead to a lack of precision and loose interpretation, as well as to a large degree of discretion on the part of the UOKiK President in assessing individual conditions for incurring liability.

In this context, it will be extremely important to follow EU case law. Recently, there has been an increasingly strict approach in this area involving:

  • Extension of liability for antitrust infringements also to subsidiaries (the FIC judgment of 27 September 2006 in Case T-43/02 Jungbunzlauer), or
  • Acceptance of the liability of subsidiaries for antitrust infringements committed by a dominant company (the CJ judgment of 6 October 2021 in Case C-882/19 Sumal SL v Mercedes Benz Trucks España SL)

This will undoubtedly have a significant impact on businesses and their continued operations.

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