Posts by: Boris Marschall

Who Will Be the Next EU Competition Commissioner?

On November 1, 2019 a new college of European commissioners is due to take office. Practitioners are eager to know who will be in charge of competition.

Designation of the EU commissioners

The new team will have one commissioner per Member State except the UK, which is preparing to exit the EU by October 31. All governments have designated their candidate except Italy, which first needs to complete the formation of a new national government coalition.

Once Italy has designated its candidate, Commission President-elect Ursula von der Leyen will communicate the planned attribution of portfolios among the commissioners-designate in the coming weeks. Later in September/October, the European Parliament will hold “hearings” and vote to confirm or reject the group of candidates.

Candidates and portfolio attributions can still change until the very end of the confirmation process.

Vestager should be senior vice president

Following the European elections, negotiations between national governments and between political groups have resulted in a plan to reshape the power structure of the Commission. Part of that plan is that current competition commissioner Margrethe Vestager will get one of two senior vice presidency posts, and her responsibilities could encompass several policy fields in a sort of “super-portfolio”; but it is still unclear which policies she would oversee.

Potential competition commissioners

Before the elections, Vestager had expressed the wish to continue her work with DG COMP. As senior vice president of the Commission, she could be in charge of competition herself, or she could oversee another commissioner in charge of that portfolio, but it cannot be excluded, either, that competition falls outside her remit completely. No commissioner has overseen competition for two consecutive terms since the reappointment of Karel Van Miert in 1995.

Other countries, notably Poland and Italy, have expressed their interest in the competition portfolio. While it seems that Poland is finally getting agriculture, Italy’s chances will largely depend on the profile of its future candidate.

EU: Parent Companies Are Liable for Cartel Damages Caused By Their Liquidated Subsidiaries

In a landmark judgment (Case C‑724/17, Vantaa vs. Skanska Industrial Solutions and others), the European Court of Justice (ECJ) decided on March 14, 2019 that companies cannot use corporate restructuring to escape their liability for cartel damages.

Background

The Skanska case concerned a cartel in the asphalt market in Finland. Seven companies were ultimately fined for their participation in the cartel. After the cartel became public, the municipality of Vantaa, which had bought asphalt during the cartel period, requested compensation from the cartelists. However, several companies had already been dissolved in “voluntary liquidation procedures.” Their sole shareholders (among them Skanska) had then acquired the dissolved companies’ assets and continued their economic activity.

The liquidation of the companies involved in the cartel did not prevent the Finnish authorities from imposing fines on their parent companies. They applied the “principle of economic continuity,” which is well established in the law on fines for EU competition law infringements. However, Skanska disputed that this principle should also apply in civil damages matters. It argued that it could not be held liable because it was not personally involved in the cartel.

The Decision of the European Court of Justice

The ECJ did not follow the arguments of Skanska and the other defendants and found that the defendants could be held liable for the harm caused by their former subsidiaries.

According to the ECJ, the EU prohibition of cartels will be effective, punitive and deterrent only if the associated right to seek private damages is also effective. The identification of the liable entity for a damage claim is governed by EU law and must be based on the same interpretation of the “concept of undertaking” as for the imposition of fines. This means, in particular, that companies cannot circumvent the right of victims to claim damages by dissolving the legal entity which participated in the cartel.

Practical Implications

The Skanska judgment is the latest of a series of judgments in the EU that have strengthened the rights of claimants in antitrust damages actions. It has closed the door for defendants to use corporate restructurings to escape their responsibilities. While Skanska concerns a very specific situation of legal succession, the ECJ’s reasoning implies that the entire case law on the “concept of undertaking” may be applied in private damages cases. As a consequence, corporate parents may be held liable for infringements of group companies to a far greater extent than previously thought.

The Skanska judgment will also have implications for M&A transactions. Since the “concept of undertaking” attaches liability to assets rather than to a particular legal entity, the buyer of a business in an asset deal needs to consider the possibility of being held financially accountable for antitrust infringements of the seller. This aspect should be part of any due diligence.