A recent ruling has provided competition damage claimants with an advantageous option to sue in a parent company’s jurisdiction, while still allowing defendants to challenge this choice. 

The Court of Justice of the European Union (CJEU) confirmed that the presumption of decisive influence of a parent company over an (almost) wholly owned subsidiary is applicable when determining the jurisdiction for damage claims. 

The court of the parent’s domicile can apply this presumption a priori to assume jurisdiction over a damages action resulting from a competition law infringement by an (almost) wholly owned subsidiary established in another EU Member State. However, defendants retain the right to rebut this presumption. 

Background

The CJEU’s preliminary ruling was requested by the Supreme Court of the Netherlands in a damages action brought by Greek-based Macedonian Thrace Brewery SA (MTB) against Dutch-based Heineken NV (Heineken) and its indirectly owned (98,8%) Greek-based subsidiary, Athenian Brewery SA (AB). MTB filed a claim against both defendants in the Dutch courts (Heineken’s domicile) to hold them jointly and severally liable for an infringement committed by AB on the Greek beer market. 

The legal basis of the damages action was Heineken’s and AB’s alleged joint and severable liability under the EU Damages Directive.[1] The Hellenic Competition Commission (HCC) had established AB’s infringement of Article 102 TFEU and the corresponding Greek competition law provision by a decision adopted in September 2014. 

Heineken itself did not operate in the Greek beer market and was not included as an addressee in the HCC’s decision. MTB’s damages action against Heineken was based solely on the decisive influence that it allegedly exercised over AB’s conduct in Greece. Heineken and AB dispute the existence of this decisive influence and, consequently, the jurisdiction of the Dutch courts over the claim against AB. 

Application of the presumption of decisive influence to the choice of jurisdiction

In principle, jurisdiction under Article 4 of Regulation Brussels I bis [2] (the Regulation) is based on the defendant’s domicile. 

However, Article 8(1) of the Regulation provides that, where several claims are so closely connected that it is expedient to hear and determine them together, a court in the place where any one of the defendants is domiciled has jurisdiction. The aim of this provision is to avoid irreconcilable judgments resulting from separate proceedings. 

The Supreme Court of the Netherlands asked the CJEU whether it can apply the rebuttable presumption of decisive influence to assume jurisdiction over the joint claim against Heineken and AB based on Article 8(1). 

According to settled case law, there is a rebuttable presumption in substantive competition law that a parent company exercises decisive influence over the economic activity of a subsidiary where it owns (almost) 100% of its capital. As a single economic entity, the parent and subsidiary can then be held jointly and severally liable for an infringement committed by the latter. 

The CJEU had to decide whether the rebuttable presumption of decisive influence is applicable in procedural competition law as well and thus can lead to a close connection in the sense of Article 8(1). 

The CJEU reiterates that this presumption also applies in actions for damages resulting from competition law infringements. The CJEU’s ruling is based on an analogy between the application of the presumption of decisive influence in both substantive and procedural competition law. The concept of an “undertaking” and, consequently, that of an “economic unit” inherently involves the application of joint and several liability among the entities that form the economic unit. These are autonomous legal concepts within EU competition law and maintain a consistent scope in both the imposition of fines by the European Commission under Regulation No 1/2003 and actions for damages for infringements of EU competition law in Member States.[3] 

The CJEU had previously confirmed in case law that when the European Commission (EC) establishes one single and continuous infringement by several undertakings, these entities can be sued jointly as defendants in the place where any one of them is domiciled. Following AG Kokott’s opinion, the CJEU holds that this principle must also apply when a claim is brought against both the company infringing competition law and its parent company. 

The fact that the HCC’s decision did not confirm the joint and several liability of Heineken and AB in the present case does not preclude the application of Article 8(1). The CJEU highlights the risk of irreconcilable judgments if Article 8(1) were not applicable, as decisions taken by a competition authority of another Member State are not binding for a national court. 

The need for legal certainty and the right to rebut the presumption

Regarding the requirement of legal certainty and foreseeability,[4] the CJEU points out that parent companies and subsidiaries can reasonably foresee being sued in the courts of the Member State where the other company is domiciled. The CJEU holds that Article 8(1) must be interpreted strictly to prevent the artificial creation of conditions for its application. 

National courts should not deprive defendants of their right to rebut the presumption based on firm evidence suggesting either that:

1. the parent company did not hold directly or indirectly all or almost all the capital of the subsidiary, or 
2. the presumption should nevertheless be rebutted. 

Footnotes

[1] Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union Text with EEA relevance.

[2] Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

[3] Judgment of 6 October 2021, Sumal, C‑882/19, EU:C:2021:800, paragraphs 43 and 44.

[4] Judgment of 13 July 2006, Reisch Montage, C‑103/05, EU:C:2006:471, paragraph 25.