Parental Liability in EU Competition Law

Abstract

In enforcing European Union (EU) competition law, the European Commission (the Commission) relies upon a unique doctrine of parental antitrust liability: it imposes fines upon the parent company of an infringing subsidiary where the former exercised decisive influence over the commercial policy of the latter. This contentious aspect of EU competition law enforcement disregards corporate personality and the principle of limited liability and has engendered acute criticism that the doctrine is unfair, ineffective, obscure, disproportionate, contrary to due process, and based upon an extremely flimsy justificatory foundation. Such criticism raises serious, unanswered questions concerning the legitimacy of the Commission’s antitrust enforcement efforts. This monograph critically assesses the extent to which the existing EU-level doctrine of parental antitrust liability is legitimate in design and operation and what can be done to rectify effectively any identified problematic shortcomings. Employing a four-pronged legitimacy framework, it contends that, although the general concept of parental liability can be justified in principle in EU competition law, the current EU-level doctrine of parental antitrust liability suffers from a distinct and problematic lack of legitimacy. Specifically, the doctrine displays significant deficiencies with respect to the criteria of effectiveness, fairness, and legality. A reformulated approach to parental antitrust liability for EU competition law violations is constructed and fully rationalised. Erected around the notion of parental fault, that approach represents a solid normative account of how to impose parental antitrust liability at EU level in a manner that is theoretically robust, effective in practice, fair in substance, and legally sound.