European Court of Justice rules that the principle of economic continuity also applies when the EU cartel prohibition is privately enforced
On 14 March 2019, the European Court of Justice (ECJ) ruled in a preliminary ruling that shareholders that have acquired all shares of subsidiaries that participated in a cartel, while these subsidiaries have since been dissolved and their economic activities have been continued by their shareholders, are liable for damages in damage claim proceedings.
In the case at hand, three companies were involved in a Finnish cartel that operated in the asphalt market between 1994-2002. However, these companies had since been dissolved in voluntary liquidation procedures and their sole shareholders had acquired their subsidiaries’ assets and continued their economic activities. Therefore, the ECJ was asked to rule whether these shareholders could be held liable for damages caused by that cartel in private enforcement proceedings.
In his opinion of 6 February 2019, AG Wahl already advised the ECJ to rule in this case that the principle of economic continuity should also apply when a private party claims damages in relation to a cartel so that such party may seek compensation from a company that has continued the economic activity of a cartel participant. In this respect, reference is made to our earlier blogpost (link). The ECJ followed the opinion of AG Wahl in its judgment.
The ECJ considers that EU competition law produces legal effects and rights between individuals, stresses the principle of effectiveness and that EU competition law applies to undertakings. The ‘undertaking’ concept refers to an economic unit, even if in law that economic unit consists of several natural or legal persons. In the context of public enforcement proceedings, the ECJ reiterates that it was already ruled that a restructuring of an undertaking does not necessarily create a new undertaking free of liability when these two are identical from an economic point of view.
Like AG Wahl, the ECJ stresses that actions for damages for infringement of EU competition rules are an integral part of the enforcement system, which are intended to punish anticompetitive behaviour and deter undertakings from such conduct. If undertakings could escape such penalties by changing their identity through restructurings, sales or other legal or organisational changes, this objective of EU competition law would be jeopardised. Accordingly, the ECJ considers that the concept of ‘undertaking’ constitutes an autonomous concept of EU law and as such cannot have a different interpretation in private enforcement proceedings.
As such, the ECJ rules in the present case that shareholders that have acquired all shares of subsidiaries that participated in a cartel, while these subsidiaries have since been dissolved and their economic activities have been continued by their shareholders, are liable for damages in damage claim proceedings.