Liability for anti-competitive practices within group structures

Olivier DELGRANGE & Francesca CIAPPI

By two decisions of October 6th, 2015, the French Cassation Court (Cour de cassation)[1]  clarified how to evaluate liability for anti-competitive practices within group structures.

A few years ago the French Cassation Court already set some criteria to be taken into account in order to evaluate the holding company’s role in the termination of a well-established business relationship[2]: the Court held that the fact that a holding company defined the commercial strategy of the group or that it had a vested interest in the commercialization of the goods of the group was insufficient justification for holding this company jointly and severally liable with its subsidiaries. Only if it had been proven that the holding company had, in fact, taken part in the business relationship between its subsidiaries and their business partner – which was not the case – the holding company could have been held liable for anti-competitive practices[3].

In the first October 6th decision, two companies of the same group performing the same activities entered into business relationships at the same time with the same business partner and put an end to them on identical terms, without any notice period and with the same reasons being given to justify the termination of their relationships. Their business partner sued both companies for compensatory damages which were to be determined, according to him, on the basis of the combined turnover of both companies. Since the two companies had entered into two separate business relationships and it had not been proven that they acted together, the French Cassation Court decided that compensatory damages for the consequences of each termination were to be determined separately[4].

In the second October 6th decision, the French Cassation Court also clarified how to evaluate liability for restrictions on passive sales, one of the anti-competitive practices prohibited by article 81 of the Treaty establishing the European Community (EC)[5]. The commercial strategy of an English holding company was to prevent its subsidiaries operating in the United Kingdom and in Ireland from selling their goods abroad in order to discourage parallel exports. Since its subsidiaries always followed its instructions, thus taking part in the holding company’s anti-competitive practices, the French Court considered that the subsidiaries were to be held personally liable for their illicit acts[6].

 

 

[1] The Cour de cassation is one of France’s courts of last resort with scope of certifying questions of law and review in determining miscarriages of justice.

[2] The termination of a well-established business relationship (“Rupture brutale de relations commerciales établies”) without reasonable notice is an anti-competitive practice under French law (art. L442-6-I-5° Code de commerce).

[3] Cour de cassation, commercial section, September 11th, 2012, n° 11-17.458 ; see also Court of Appeal of Paris, January 30th, 2014, n° 12/02755.

[4] Cour de cassation, commercial section, October 6th, 2015, n° 14-19.499.

[5] Now article 101 first paragraph of the Treaty on the Functioning of the European Union (TFEU).

[6] Cour de cassation, commercial section, October 6th, 2015, n° 13-24.854.

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