Revisiting Parental Liability in EU Competition Law

Why are parent companies held liable for the infringements committed by their subsidiaries under EU competition law? This article examines the jurisprudence of the EU Courts with a view to illuminating the rationale underpinning parental liability. Taking a closer look at the “single economic unit/undertaking” explanation endorsed by the Courts post-Akzo, it demonstrates that this doctrine lacks the exegetical power assigned to it, insofar as it is based on a fallacious reasoning. With this in mind, two alternative justifications for parental liability are then discussed: the “failure to exercise vigilance” theory and the “enterprise” rationale. As the article illustrates, both justifications have their advantages and limitations. Ultimately, the final choice lies with the EU Courts, but it is submitted that, all things considered, the “failure to exercise vigilance” argument offers a better-or at least more realistic-solution to the problem of developing a coherent explanation for parental liability in EU competition law.