Vicarious Liability in Groups of Companies and in Supply Chains - Is Competition Law Leading the Way?

Vibe Ulfbeck

doi:10.7559/mclawreview.2019.2361

Abstract

The article discusses the concept of vicarious liability in the area of competition law. It argues that this concept is to some extent embedded in the concept of the undertaking under competition law with the consequence that parent companies – under certain conditions – can be held liable for competition law infringements committed by subsidiaries. The liability can be termed “vicarious” because it is imposed regardless of whether the parent company was involved in or ought to have had any knowledge of the competition law infringements committed by the subsidiary. Whereas such liability has until recently only been imposed for administrative fines, the Skanska decision changes this. Following this decision it must be assumed that parent companies can also be held vicariously liable for civil liability incurred by a subsidiary. It is pointed out that it is a separate question whether the Akzo-presumption rule, established with regard to the imposition of fines for competition law infringements, can also be applied in a pure civil liability case concerning parental liability. Next, the article discusses whether the results reached in the area of competition law can be transferred to other areas of the law. In this regard, the article analyses recent case law with regard to parental liability for workers’ injuries and environmental damage and compares these areas of the law to competition law. Finally, the article discusses whether the concept of the undertaking can be extended to apply also in situations where companies are not tied by ownership but by contract. In this regard the article focuses on the (possibly) emerging concept of supply chain liability.

Highlights

In competition law, it has been established since long that a parent company and a subsidiary may be regarded under certain conditions as a “single economic unit” – an “undertaking” – with the consequence that the parent company can be held liable if the subsidiary has incurred administrative liability for competition law infringements
If the supplier is not regarded as an independent supplier in the market for the purpose of art 101(1), it seems reasonable to ask if the corollary of this lack of independence from the contractor could be vicarious liability of the lead firm for competition law infringements committed by the supplier
On the basis of the above, it can be concluded that parent companies may incur vicarious liability for competition law infringements caused by the acts and omissions of their subsidiaries, if the parent company and subsidiary must be regarded as an economic unit

Summary

Introduction

It has been established since long that a parent company and a subsidiary may be regarded under certain conditions as a “single economic unit” – an “undertaking” – with the consequence that the parent company can be held liable if the subsidiary has incurred administrative liability (through imposition of fines) for competition law infringements. This parental liability has been much criticised, it must be assumed that with the Skanska decision, the liability of the parent company for the acts and omissions of the subsidiary (“vicarious liability”) has been widened. It asks whether a similar pattern of development can be found in other areas of the law and whether the solutions adopted in competition law can be transferred to these other areas (section 3) and thirdly, whether the concept of an undertaking could be applicable to companies linked by ownership and to companies linked by contract (section 4)

Phase 1

Phase 2

Phase 3

Developments in case law

Conclusion