Investment bank Goldman Sachs (GS) was found jointly and severally liable for violating Article 110 TFEU as they indirectly owned/held a stake in Prysmian (company which indulged in cartel activities relating to high voltage underground and submarine power cables). Prysmian were involved in cartel activity since 1999 and in 2005, GS-owned fund acquired 100 % of the capital in Prysmian and also held voting rights in the company. In May 2007, 46% of Prysmian’s shares were floated through IPO. GS gradually sold off its remaining stake in Prysmian and exited the investment in May 2010. This case discussed parent liability briefly and discussed that a parent company can be held responsible where its subsidiary does not decide independently upon its own conduct on the market but also carries out instructions given by parent company. For proving liability, you need to see whether the parent company is exercising decisive influence over the commercial conduct of the subsidiary and if it is involved in its management and control. We see hat GS had the possibility to exercise decisive influence over the subsidiary where it is able to all the voting rights associated with the subsidiary shares in the initial years of its involvement with the company. Even though the shares held after 2007 were only 31.69% but it was seen that GS had the power to appoint various board members of Prysmian and to call board meetings, etc. Hence, it was concluded that the concept of parental liability in EU Competition law is broadly applied and there is very less scope so as to avoid the fine based on a financial investor defense. If the parent company is holding any rights which give them the ability to intervene with the company business, then the company becomes liable.
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This post has been authored by Aastha Sharma, a Third Year Student of West Bengal National University of Juridical Sciences, Kolkata.
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