Introduction
Sumal - a new landmark case on the notion of 'undertaking' in EU competition law will cast its shadow over the next years of public and private enforcement. This blog discusses the most pressing topics covered by the
The Sumal case is originally a private enforcement case in which a Spanish customer (Sumal - a company manufacturing roll containers) claimed damages as a result of the Truck-cartel. Sumal bought two trucks from Mercedes Benz Trucks Espańa SL, which is a subsidiary of
Sumal-judgement
Yes, is the short answer from the
From Skanska and
To answer the question from the Spanish court whether liability can also exist in the opposite direction (downward liability) affirmatively, the
However, the
So - subsidiaries can be liable for parent companies if they form part of the same economic unit engaged in the anticompetitive behaviour addressed by the cartel decision (Sumal, par. 50). To demonstrate the 'economic unit' between the subsidiary and the parent company, it is necessary to establish:
- the economic organisational and legal links between the subsidiary and the parent company (Sumal, par. 51); and
- the specific link between the economic activities of the subsidiary and the parent company (Sumal, par. 52).
Implications for private and public enforcement
The
Related to private enforcement this judgement has the result of broadening the access to justice of claimants for damages caused by anticompetitive behaviour. Sumal makes clear that claimants can sue any subsidiaries that form an economic unit with their parent company resulting in more possible 'anchor defendants' (see article 8(1) of the Brussels Recast Regulation). Furthermore, nothing in the judgement indicates that this reasoning does not apply to sister companies forming an economic unit.
Related to public enforcement this judgement will likely have an impact on the options for the supervision authority to address an infringement decision to the 'economic unit', which includes the subsidiary company in certain cases. However, this might be more of a theoretical discussion since it seems the most logical option for the supervising authority to address the parent company. Of a bigger practical influence might be that Sumal will play a role in the calculation of the turnover of the 'economic unit'.
Related to intra-group relations this judgement might even have the most far-reaching implications. It follows from the judgement that a group company can consist of multiple economic units and a parent company can be part of all of them. Subsidiaries form an economic unit with their parent company when there is a 'specific link between the economic activities'. When such a specific link is absent, there is no economic unit. This means that the companies, despite being part of the same group, are not part of the same 'undertaking' as referred to in article 101 TFEU so that the cartel prohibition is applicable to those relationships. On the basis of this development in the notion of undertaking, many group companies in the EU may need to reconsider and reassess their intra-group relationships and contracts.
Conclusion
Whether or not one agrees with the far-reaching implications of this judgement, all competition lawyers will need to study Sumal and assess the potential impact of this case in their daily practice. One thing is clear: Sumal will lead to many more discussions and undoubtedly more case law will follow on the notion of 'undertaking' in EU competition law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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