Rights of the Defence in the Context of Parental Liability – Ballast Nedam Infra BV v. European Commission judgment illustrates how a formal point of procedure can be an effective weapon to pierce the fortress created by the strict case law on parental liability for cartel infringements.

Case law confirms that the parent company of a wholly-owned subsidiary is presumed to exercise a “decisive influence” over the subsidiary. This means the parent company can be held jointly and severally liable for any anti-competitive behaviour of the subsidiary.

Very few parent companies have succeeded in rebutting this presumption. One example is Gosselin Group v. Commission joined cases T-208/08 and 209/08, in which the European General Court annulled a Commission decision on substance. Although Portielje held almost all of Gosselin’s capital, it managed to rebut the presumption that it exerted a decisive influence over Gosselin.

Despite the fact that rebuttal is a rare occurrence, a recent General Court judgment, Ballast Nedam Infra BV v. European Commission T-362/06, shows that the Court attaches great importance to the parent company having the opportunity to rebut the presumption. If a Statement of Objections does not state specifically that the Commission intends to rely on the presumption, the Court found that the subsequent Decision will be annulled. This judgment is in line with the General Court’s decision in Koninklijke Grolsch NV v. Commission T 234/07, in which the General Court annulled the Commission’s decision, holding that it did not include an “adequate statement of reasons” with respect to each of the addressees.

In Ballast Nedam, a wholly-owned subsidiary of Ballast Infra BV was involved directly in the antitrust infringement until 1 October 2000. From that date onwards, following a corporate reorganisation, Ballast Nedam Infra BV itself became involved directly in the infringement. In its Statement of Objections, the Commission did not say that it intended to impute Ballast Nedam Infra BV with joint and several liability for the infringement of its subsidiary during the period up to 1 October 2000. Accordingly, the part of the fine imposed on Ballast Nedam Infra BV in respect of the period prior to 1 October 2000 was annulled by the General Court. The fact that the Commission did not become aware of all the details of the business until after it had issued the Statement of Objections was not found to be sufficient defence. Once the Commission became aware of the relevant details, the Court stated, it should have addressed an additional Statement of Objections to Ballast Nedam Infra BV, giving it the opportunity to rebut the presumption of parental liability.

Although the presumption still stands, this case does show that companies have the right to challenge it, and that the General Court will ensure that right is upheld.