EU Court Rules Parent Liable for Conduct of Subsidiary

The European Union’s highest court upheld a €20.99million ($30.6 million) fine against Dutch chemical giant Akzo Nobel NV and four wholly owned subsidiaries for their alleged participation in a cartel over vitamin B4, used mainly in animal feed.  Instead of requiring the parent company to play a direct role in violating competition rules, EU law only mandates that the parent be part of the “economic unit” that has taken part in the anti-competitive activities.  This is approach is believed to be justified because the parent maintains “a decisive influence over” its wholly owned subsidiaries.  The high court further pointed out that EU competition law deals with undertakings, which include “any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed.”  Thus, the court ruled that because Akzo owns 100 percent of the four units, a rebuttable presumption exists that the parent company controls their actions in the marketplace and as such remains jointly and severally liable for any of their anti-competitive behavior. 

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