ECJ - Advocate General: Joint and several liability of parent companies dependent on duration of control

In 2007 the European Commission (“Commission”) imposed fines on eleven companies totaling EUR 750 Mio for bid rigging gas insulated switchgears sold to public utility companies.

ALSTOM (Société anonyme) was originally fined EUR 54 Mio jointly and severally with its subsidiary Alstom Grid SAS, later Areva T&D (“Areva”). Areva SA, who took over Areva from ALSTOM at the beginning of 2004, was held jointly and severally liable for EUR 26 Mio of Areva’s fine of EUR 54 Mio. These fines were reduced by the General Court in 2011 to EUR 48.2 Mio and EUR 20.4 Mio respectively. This decision is now under appeal in front of the European Court of Justice (“ECJ”) as C-247/11 P, Areva vs Commission.

The Commission argued that it would be for the national courts to decide disputes between parent companies and subsidiaries which part of a fine should be paid by whom. Contrary to this, all other parties involved argued that the Commission infringed their right to legal certainty since it did not specify their respective shares of liabilities when imposing the fine. Accordingly, the attorney general argued that imposing fines on parent companies for a period during which they did not control the infringing subsidiary would breach the right to legal certainty.

Consequently, Areva’s liability should be reduced to EUR 1.4 Mio, since it controlled the infringing subsidiary only for four months until the antitrust violation ended. At the same time, Alstom’s joint and several liability for the fine should be increased to EUR 46.8 Mio as Alstom had exercised control over the infringing subsidiary for eleven years.

It has to be seen whether the ECJ follows the attorney general opinion that the level of joint and several liability should be based on the duration of exercising control as a parent company over its subsidiary during the duration of the infringement.

Authors:

Dr. Christina Hummer
Ori Kahn