Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Court of Justice Reaffirms Presumption of Parental Liability, (May 8, 2013)

By Jeffrey May, J.D.

The Court of Justice of the European Union today upheld a judgment against the Italian company Eni SpA for participating in a cartel to fix prices and share customers for certain types of synthetic rubber (Butadiene Rubber and Emulsion Styrene Butadiene Rubber) used for the production of tires and other consumer goods. According to a May 8 announcement, the court reaffirmed the principle that the conduct of a subsidiary may be imputed, for the purposes of the application of the competition rules, to the parent company.

Eni had appealed a decision of the European General Court finding that Eni and its affiliate Versalis S.p.A., previously known as Polimeri Europa S.p.A., violated EC competition law by participating in the cartel. Eni argued that the General Court should have annulled the European Commission's decision against Eni on the ground that the EC improperly imputed to Eni the liability for the infringement committed by Syndial SpA (formerly EniChem SpA, another company in the Eni group) and/or Versalis.

"In the particular case in which a parent company holds all or almost all of the capital in a subsidiary which has committed an infringement of the EU competition rules, there is a rebuttable presumption that that parent company exercises an actual decisive influence over its subsidiary," according to the Court of Justice announcement. "In the present case, for the entire duration of the infringement in question, Eni held, directly or indirectly, at least 99.97% of the capital in the companies which were directly active within its group in the BR and ESBR sectors (EniChem Elastomeri, EniChem SpA and Versalis). Since the parent company and its subsidiary form, in the present case, a single undertaking, the Commission may impose fines on the parent company without having to establish its individual involvement in the infringement."

In order to rebut the presumption, Eni would have had to show that Versalis could act with complete autonomy not only at the operational level but also at the financial level, which it failed to do. The court also rejected Eni’s argument that, on the basis of the limited liability of capital companies and the separate legal personality of companies, the company was not liable for the infringement committed by its subsidiaries.

Background. In November 2006, the EC fined five groups of companies a total of € 519 million for participating in the synthetic rubber cartel. The EC imposed a €272.25 million fine jointly and severally on Eni and Versalis. The fine uplift represented €90.75 million. On appeal, the General Court upheld the finding that Eni and Versalis violated EC competition law; however, it annulled the fine enhancement based on the parties’ prior participation in two cartels. The court decided that the EC "had not adduced sufficient detailed and specific evidence" to justify its conclusion that the three violations had been committed by the same firm. In light of the Court of Justice decision today, Eni is definitively required to pay a fine of €181.5 million.

Companies: Eni SpA

News: Antitrust