Subsidiary liable for competition law damages relating to parent company infringement

 

Subsidiary liable for competition law damages relating to parent company infringement

 

The ECJ has given judgment in a preliminary ruling from a Spanish court on questions relating to whether a subsidiary company can be held liable for damages incurred as a result of an infringement committed by its parent company.

 

The ECJ ruled that, where the existence of an infringement of Article 101(1) by a parent company has been established, the victim may establish the civil liability of a subsidiary of that parent company.

However, it is necessary to prove that the subsidiary and parent constituted an economic unit.  This may be established based on both the economic, organisational and legal links that unite the two legal entities and also the existence of a specific link between the economic activity of that subsidiary and the subject matter of the infringement.

The ECJ also ruled that EU law precludes a national law which provides for the possibility of imputing liability for one company’s conduct to another company only in circumstances where the second company controls the first company. ]

The judgment does not ensure the success of all competition law damages actions against subsidiaries in respect of infringements by their parents.  It does, however, reflect the economic reality that often those subsidiaries will be involved in the marketing and sale of the cartelised products.  As such they cannot easily escape liability simply because they were not the addressee of the Commission’s decision.

Case C-882/19 Sumal, S.L. v Mercedes Benz Trucks España ECLI:EU:C:2021:800

CMA competition investigation into sale of Leicester City FC-branded products and merchandise

 

CMA competition investigation into sale of Leicester City FC-branded products and merchandise

 

The Competition and Markets Authority has opened an investigation into suspected violation of competition law by Leicester City Football Club Limited and JD Sports Fashion Plc.

The investigation concerns potential infringements of Chapter I of the Competition Act 1998 in relation to the sale of Leicester City-branded products and merchandise in the UK.

The CMA will conduct and initial investigation until March 2022.

The probe follows a similar investigation, launched in December 2020, concerning the sale of Rangers FC-branded replica football kit sold in the UK.  This investigation is ongoing.

Suspected anti-competitive behaviour in relation to the sale of Leicester City FC-branded products and merchandise - GOV.UK (www.gov.uk)

General Court upholds Commission decision in largest ever EU merger gun-jumping case but reduces penalty

 

General Court upholds Commission decision in largest ever EU merger gun-jumping case but reduces penalty

The General Court has ruled in Altice Europe NV (Altice)’s challenge against the European Commission's decision to fine Altice for implementing its acquisition of PT Portugal in breach of the EU Merger Regulation.

The Commission found that the acquisition agreement contained provisions pre-empting clearance, in particular clauses relating to how the target business was to be managed prior to completion including veto rights.

Therefore, the Commission was correct in finding that there had been a breach of both the notification and standstill obligations.

The Commission was entitled to impose fines for the infringements of both Article 4(1) and Article 7(1) of the EU Merger Regulation.

The General Court decided that it was appropriate to reduce by 10% (to EUR 56,025,000) the fine imposed in relation to the infringement of the notification obligation in Article 4(1).  This reflected the fact that Altice had informed the Commission about the transaction before it was signed and had engaged in some pre-notification contact.

The case is a reminder of the Commission’s increasing vigilance to enforce the notification and standstill provisions under the EU Merger Regulation and impose significant fines for breaches even if the transaction itself does not raise serious competition concerns.

Case T-425/18, Altice Europe NV v European Commission, ECLI:EU:T:2021:607

CMA refers Sony Music Entertainment / AWAL and Kobalt Neighbouring Rights merger to Phase 2

 

CMA refers Sony Music Entertainment / AWAL and Kobalt Neighbouring Rights merger to Phase 2

The Competition and Markets Authority (CMA) has referred the completed acquisition by Sony Music Entertainment of AWAL and Kobalt Neighbouring rights businesses from Kobalt Music Group Limited to a Phase 2 merger investigation.

The CMA’s first phase investigation found concerns about the loss of potential competition in the wholesale digital distribution of recorded music in the UK

The CMA considered that, absent the merger, Sony and AWAL could have competed more vigorously in the future, in particular in relation to the wholesale digital distribution of recorded music in the UK.

The CMA is required to issue its final report is 2 March 2022.

 

https://www.gov.uk/cma-cases/sony-music-entertainment-slash-kobalt-music-group-merger-inquiry

CAT orders gown supplier to explain why its products claims were reasonable in competition damages claim

 

 

 

 

CAT orders gown supplier to explain why its products claims were reasonable in competition damages claim

The Competition Appeal Tribunal has ordered Churchill Gowns to respond to allegations in its competition law damages claim that its action is barred because it fraudulently misled its customers about its products and its director knowingly, or recklessly, spread misleading information.

The subject-matter of the dispute is of more than legal interest for barristers and academics as it concerns a claim against companies Ede & Ravenscroft, William Northam and Irish Legal & Academic of compelling academic institutions to purchase academic dress exclusively from them.

Churchill has been asked to explain why it maintains that it had reasonable grounds to claim that its gowns were made entirely from recycled plastic bottles.

The case is a sober reminder of the perils of disclosure.  The claimant disclosed over 4,600 documents into a data room and produced redacted versions of over 400 which it renumbered after the defendant started reviewing them.  The CAT ruled that Churchill Gowns should revisit 514 documents to identify 400 documents which it claimed were confidential and then tally their names with the numbered redacted copies of the same.

The dispute is listed for trial in January.

1351/5/7/20, Churchill Gowns Limited and Student Gowns Limited v Ede & Ravenscroft Limited and Others

CMA consults on revised procedures for Competition Act settlements

 

CMA consults on revised procedures for Competition Act settlements

The Competition and Markets Authority (CMA) is consulting on its guidance on settlement procedures in Competition Act 1998 (CA98) cases.

At present, if a settling business appeals against the settlement decision, it will lose the benefit of the settlement discount.  The CMA proposes to replace this with a statement that the settling party will not challenge or appeal against the infringement decision to the Competition Appeal Tribunal.

The proposed revisions follow Roland (U.K.) Limited's unsuccessful appeal against the fine imposed by the CMA, as part of a settlement agreement, on Roland for resale price maintenance in breach of Article 101 TFEU and Chapter I of CA98.

The CMA believes that the proposed changes will help bring finality to the settlement process.  Similar requirements are imposed in some settlements of sector regulatory enforcement cases by the UK sector regulators including the Financial Conduct Authority.  However, concerns have been raised from the perspective of the right to a fair trial under Article 6 ECHR.

The CMA invites comments by 5pm on 28 September 2021.

https://www.gov.uk/government/consultations/consultation-on-draft-ca98-procedures-guidance

CAT grants collective proceedings order application in MasterCard competition law collective proceedings claim

 

 

The Competition Appeal Tribunal (CAT) has given its judgment on the remitted collective proceedings order (CPO) application by Mr Walter Hugh Merricks CBE (Merricks).  This is a milestone judgment certifying the first collective damages action for breach of competition law under the UK’s bespoke collective actions regime.

Merricks sought permission to act as the class representative to bring opt-out collective proceedings under section 47B of the Competition Act 1998 (Competition Act).  The collective proceedings concern follow-on actions for damages arising from the European Commission's 2007 decision finding that MasterCard's EEA multilateral interchange fees breached Article 101(1) TFEU.

The CAT dismissed Merricks’ application for a CPO in July 2017. The Court of Appeal and Supreme Court upheld Merricks' appeal.  The Supreme Court remitted the CPO application to the CAT for reconsideration.

The CAT authorised Merricks as the class representative under section 47B(8) of the Competition Act provided that a suitable undertaking as to liability for adverse costs is given by his litigation funder.

The CAT ruled that the claim for compound interest could not be fairly resolved in collective proceedings.  It considered that compound interest would result in a claim for a “gargantuan amount”.  The CAT expects a plausible methodology to be put forward at this stage, “even if it may need refinement later”.

The CAT also ruled that a claim for damages cannot be brought in the name of a deceased person under section 47B of the Competition Act.  The CAT held that a claim by an individual for loss caused by Mastercard's infringement of competition law will, on their death, vest in their estate.  

The CAT will hear further submissions from the parties as to the domicile date and date for opt-in and opt-out notifications to be set out in the CPO.

Walter Hugh Merricks CBE v Mastercard Incorporated and others [2021] CAT 28