EU General Court Confirms Institutional Investors Face Parental Liability for Antitrust Fines

9 August 2018
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Key takeaways:
  • The EU General Court recently upheld a fine imposed by the European Commission on a private equity investor on the basis of their joint and several liability for the unlawful activities of an indirectly-owned portfolio company.
  • The Commission imposed the fine despite the cartel predating the investment, and the absence of any allegation that the PE investor had any knowledge of, or involvement in, the anticompetitive behaviour.
  • The judgment shows that the concept of parental liability in EU competition law is applied broadly and there is limited scope to argue against that as a financial investor.
  • A financial investor may still be held liable even in case of a minority shareholding if the associated governance rights (e.g. board representation) amount to ‘decisive influence’ over the portfolio company.