Total wins landmark victory against EC position on parent company liability in competition law case
Clients Total S.A.
As lead European competition counsel for Total SA and its subsidiary Elf Aquitaine SA, Jones Day persuaded the Court of Justice of the European Union to overturn lower court judgments finding Elf Aquitaine liable in a cartel case. This is one of seven different cases Jones Day is handling on behalf of Total before the EU General Court and the CJEU involving alleged cartel activity in the chemicals industry. Jones Day teams in Paris, the U.S., and the UK also continue to defend the company against claims for damages brought by associations of consumers and/or businesses in ongoing follow-on actions.
In January 2005, the European Commission levied a €58.5 million fine on Elf Aquitaine and its 98%-owned subsidiary Atofina (now Arkema) for allegedly taking part in the monochloroacetic acid cartel. Elf Aquitaine and Arkema both challenged this decision before the General Court of the European Union, yet the decision was upheld in a ruling handed down in September 2009. Working closely with Total's legal counsel for competition law issues, Jones Day lodged the successful appeal before the Court of Justice of the European Union against the General Court’s ruling.
The issue of parental liability remains one of the most debated legal topics in antitrust and competition law. It raises fundamental questions with respect to procedural rights, compliance by the EU with the high standard guaranteed by the European Charter of Fundamental Rights and the European Convention on Human Rights ("ECHR"), and the implementation of EU competition law in a way that is consistent with civil and criminal law of the Member States. It also has enormous financial consequences for parent companies whose wholly-owned subsidiaries are found to have infringed Article 101 TFEU.
The CJEU ruling struck down the judgment of the General Court on the ground that the Commission's decision did not contain sufficient evidence to set aside the arguments raised by Elf Aquitaine SA to rebut the presumption that a parent company exercises decisive influence over its wholly-owned subsidiary.
Elf Aquitaine sought to obtain a clear acknowledgment from the Court of Justice that, when applying the presumption of liability standard set out in the Akzo case (which holds parent companies liable for infringements committed by their wholly-owned subsidiaries), the Commission has a duty to carefully examine the evidence presented by the parent company to rebut the presumption of liability. The Commission also has a duty to state, with sufficient detail, the reasons for rejecting the arguments set forth by the parent company. Without this requirement, parent companies would be stripped of the presumption of innocence vis-à-vis the actions of their subsidiaries, in violation of both the Charter of Fundamental Rights and the European Convention on Human Rights, and the Commission would be exempted from its duty to state reasons under EU law.
Elf Aquitaine v. Commission, Case No. C-521/09 P, and Arkema v. Commission, Case No. C-520/09 P (European Court of Justice)