EU Court Affirms That Parent Companies, Including Private Equity Firms, May Be Held Jointly and Severally Liable With Less Than Full Share Ownership of Portfolio Companies That Breach EU Competition Laws
On July 12, 2018, the General Court of the European Union dismissed Goldman Sachs’s appeal of a decision finding it jointly and severally liable for the cartel conduct of a portfolio company held by funds controlled by Goldman Sachs. The General Court confirmed that the presumption that a parent company “exercises decisive influence” over a subsidiary, and therefore can be held jointly and severally liable for a subsidiary’s conduct, may apply even when a parent holds less than 100% of the share capital of its subsidiary. The General Court also held that the presumption of parental liability can also extend to portfolio companies of private equity firms when a private equity firm exercises such decisive influence. The decision also outlined the type of de jure or de facto board governance rights that could lead to a finding of decisive influence regardless of the quantum of shares or voting rights held.