Today the European Court of Justice rendered its preliminary ruling in case C-882/19 (Sumal) finding that a victim of an infringement of EU competition law is entitled to claim damages from a subsidiary of the infringing company. To that end, the claimant must prove that the subsidiary and the parent company formed an economic entity at the time of the infringement.

The ruling builds on a settled string of case law of the CJEU according to which two or more legally separate entities can be regarded as one undertaking based on the possibility of one of them to exercise decisive influence over the others. The practical implications are that a parent company may be fined for antitrust violations committed by its subsidiaries.

Similarly to the Skanska case from 2019, in Sumal the Court has found that this logic applies to private actions for damages. As such actions are considered an integral part of the system for enforcement of EU competition rules, the concept of an ‘undertaking’ under Article 101 TFEU cannot, according to the Court, have a different meaning in the context of public and private enforcement proceedings.

Thus, it is possible to engage the civil liability of a subsidiary on the condition that the victim proves that it forms an economic unit with its parent company. This conclusion should be based on (1) the economic, organisational and legal links that unite the two legal entities and (2) the existence of a specific link between the economic activity of that subsidiary and the subject matter of the infringement for which the parent company was held responsible (e.g. the anti-competitive agreement concluded by the parent company covers the same products marketed by the subsidiary).

The Skanska and Sumal rulings essentially facilitate injured parties to seek compensation for antitrust violations, allowing them to file claims in their domestic or other preferred jurisdiction and/or to target group entities with sufficient assets.

The reasoning of the CJEU is applicable in the Bulgarian legal context and entirely domestic cases without the need of legislative amendments. The Bulgarian Competition Protection Act provides that an “undertaking” is any natural, legal person or impersonified entity that carries out economic activity, regardless of its legal and organizational form. Upon the implementation of the antitrust damages directive (2014/104/EU) in Bulgaria in 2018, a legal definition of “infringer” was introduced, i.e. the undertaking or association of undertakings which has committed an infringement of competition law.

The press release of the CJEU is available here.

* The opinions expressed in this article are not a legal advice and should not be relied or acted upon as such.