The potential civil liability of innocent subsidiaries as a consequence of the notion of undertaking in EU Competition Law - an implication from the recent case Skanska

Abstract: In EU Competition Law, the addressee of the prohibition indicated in the Treaty on the Functioning of the European Union (TFEU) is the undertaking. The Court of Justice of the European Union (CJEU) has applied the notion of undertaking using an economic and functional approach, determining that undertaking, as a single economic entity, may consist with several separate legal entities, including natural and legal persons. In addition, a parent company is considered to constitute a single economic entity where the former exercise decisive influence over the latter. As a result, the single economic entity doctrine enables CJEU and the European Commission (The Commission) to attribute antitrust liability of a subsidiary to its parent company. The exercise of decisive influence could also be presumed in case of a wholly subsidiary. The current methodology of the CJEU has been criticised continuously as vague and ambiguous, which leads to the contradiction with the fundamental principle of personal liability. Moreover, the consideration of the single economic entity as a perpetrator of competition law may result in the liability of a subsidiary for an infringement committed by its parent company. The recent judgment of the European Court of Justice (ECJ) in case Skanska implies that the single economic entity doctrine in TFEU is directly applied in actions for damages. The thesis analyses the methodology of the CJEU regarding the single economic entity doctrine in order to attribute liability of one legal person to another and potential civil liability of a subsidiary. The first chapter of the thesis examines the contemporary concept of the attribution of liability in light of the principle of parental liability. The thesis then analyses the recent case Skanska to determine its implication and potential legal consequences. Subsequently in the second chapter, the thesis scrutinises the reasonings of the CJEU when determining the contradiction of the attribution of liability and the principle of personal liability. The analysis shows that reasonings of the CJEU render the possibility of an innocent subsidiary as a constituent of an infringing economic entity. Subsequently, the role of decisive influence criterion will be analysed to examine the scope of the attribution of liability. Consequently, the thesis discusses, the recent preliminary reference by the Spanish Court in case Sumal and concludes with additional remarks.