Parental liability & investment firms A Dutch perspective Jolanda Strijker-Reintjes Fabian Kroon

Flour cartel (1) First time to fine an investment company in NL Not the usual suspect, not 100%, no AKZO Attribution of liability in 2 phases (2 separate decisions) Bencis is an interesting case especially for this webinar. I would like to point out three reasons: First time to fine an investment company (following the trend set by the Commission - the latest of which is Goldman Sachs (power cables cartel)). Not a usual suspect, not 100%. An extra report, and an seperate fine for the parent. No joint liabity! Extra report later on seems ok. But the seperate fine: no EU case found like this. The district court of Rotterdam agreed with ACM. Bencis lodged an appeal against this judgement. The appeal is still pending.

Flour cartel (1) Only parental liability within portfolio company 2001 2004 2007 Liability attributed to X en Y Investment firm X Investment firm Y Decision 1 Decision 2 Duration cartel Duration cartel 2010 2014 Portfolio company Portfolio company Fines to the parent companies capped on 10% of turnover in preceding year. Kendrion (C-50/12), r.o. 57: In the present case, as the General Court observed in paragraph 87 of the judgment under appeal, the amount which the Commission considered appropriate in order to penalise Fardem Packaging’s participation in the cartel for a period exceeding 20 years was not the EUR 2.20 million referred to in the operative part of the contested decision, but EUR 60 million, that is an amount higher than the EUR 34 million established for Kendrion for the period in which Kendrion and Fardem Packaging constituted a single undertaking for the purpose of Article 81 EC. As the General Court observed in paragraph 89 of the judgment under appeal, the reason why the Commission, in the contested decision, imposed a fine of EUR 34 million on the appellant and a fine of EUR 2.20 million on Fardem Packaging was because of the application to Fardem Packaging of the 10% ceiling laid down by Article 23(2) of Regulation No 1/2003. In that context, the General Court was fully entitled to hold, in paragraphs 92 and 93 of the judgment under appeal, that, where two separate legal persons, such as a parent company and its subsidiary, no longer constitute an undertaking within the meaning of Article 81 EC on the date on which a decision imposing a fine on them for breach of the competition rules is adopted, each of them is entitled to have the 10% ceiling applied individually to itself and that, in those circumstances, Kendrion could not claim to benefit from the ceiling applicable to its former subsidiary. Tokai Carbon (T-71/03), r.o. 390: It follows that the objective sought by the introduction of the 10% ceiling can be realised only if that ceiling is applied initially to each separate addressee of the decision imposing the fine. It is only if it subsequently transpires that several addressees constitute the ‘undertaking’, that is the economic entity responsible for the infringement penalised, again at the date when the decision is adopted, that the ceiling can be calculated on the basis of the overall turnover of that undertaking, that is to say of all its constituent parts taken together. By contrast, if that economic unit has subsequently broken up, each addressee of the decision is entitled to have the ceiling in question applied individually to it. Appeal to ‘equal treatment’

Flour cartel (2) To understand the discussions I pointed out in my first slide we first need to zoom in on the organisation of undertaking X. But second also understand the procedure that in this case led to two decisions adressing different entities within undertaking X. Without understanding some of the procedures it is difficult to understand the topic [XXX] on equal treatment. I will try to explain both with the help of two images. Firstly the organisational chart of undertaking X. Which looks as follows. To start of with } company A is an investment firm. C1 and C2 are investment funds which togetherheld roughly 84 % of shares in a portfollio company made up out of companies E, F and G. As said in the introduction, this cartel case is peculiar because the ACM took two seperate decisions concerning differnet parts of udnertaking X. In the first decision te ACM concluded that one the cartellists was company G. This was 2010. G and E were held jointly and severally liable for the infringement of G. E was held liable on the basis of the AKZO-presumption that applied to the relationships EF and FG. Now during the proceedings concerning Decision 1 some of the other cartellists complaint that ACM had not treated all cartellists equally in setting the liabilities. Their argument was that ACM did not go all the way to the top of companies making up undertaking X. To be able to that obviously those different companies have to make up one economic unit, thus one undertaking. According to the complainants that was the case. By now holding A liable the ACM did not use the same attribution as in the case of the other cartellist. The complainants were in fact not investment firms, however ordinary parent companies. On the basis of these complaints ACM decided to start a seperate investigation into the liability of A, the investment firm. This led to Decision 2 in which ACM held A liable for the infringements of G. Basically because the companies, from a competition law perspectve, belonged to the same undertaking. Company A, the investment firm, did not agree and does still not agree. The legal proceedings concerning Decision 1, however went ahead during the investigation and decision-making concerning Decision 2. These proceedings led to the final confirmation in highest instance that ACMs conclusions in Decision 1 were right - there was a cartel and G and E can be held jointly and severally liable. Decision 2, in which ACM in addition also attributed liability to the investment firm (company A), is still subject of legal proceedings. We are at the last stage now. In first instance the court decided that ACM rightly attributed liability to the

Why address investment firms? No general legal reason to exempt investment firms from parental liability Principle of equal treatment = another reason to not exempt investment firms Decisive influence on the business comes with responsibility Investment firm ≠ pure financial investor Bencis is an interesting case especially for this webinar. I would like to point out three reasons: First time to fine an investment company (following the trend set by the Commission - the latest of which is Goldman Sachs (power cables cartel)). Not a usual suspect, not 100%. An extra report, and an seperate fine for the parent. No joint liabity! Extra report later on seems ok. But the seperate fine: no EU case found like this. The district court of Rotterdam agreed with ACM. Bencis lodged an appeal against this judgement. The appeal is still pending.