On December 20, 2018, the ICA adopted its final decision in the car financing case (“Decision”).[1] The ICA, which had initiated its investigation following a leniency application, found certain captive banks of automotive groups operating in Italy liable for a single, complex and continuous infringement that allegedly took place from 2003 to 2017. The ICA issued a record-breaking fine against the investigated companies of approximately €670 million in total.

Case Summary

The infringement consisted of parallel exchanges of information, which included (i) direct bilateral and multilateral information exchanges among captive banks, and (ii) indirect multilateral information exchanges among captive banks through trade associations. Independent financial firms also participated to the latter exchange, but were not considered as parties to the infringement and were not charged with any accusations. The ICA did not state that the indirect exchanges were unlawful per se, but that they were part of the single complex infringement because captive banks derived additional information.

According to the ICA, the exchange was aimed at eliminating or greatly reducing the uncertainty regarding the captive banks’ respective commercial policies. The periodic exchanges encompassed data about past, present and future prices, costs and volumes of financing, and further information, which was mainly used to prepare annual budgets and marketing plans by each captive, and to regularly monitor each competitor’s activities.

The ICA concluded that the infringement constituted a hardcore restriction of competition under Article 101 TFEU.

The captive banks’ parent companies were also considered to be liable for the conduct of their respective captive banks, although to varying degrees.

Among the several sections of the Decision, the following two are particularly notable.

Relevant Market

The ICA identified the relevant market affected by the infringement as the market for the “sale of cars through loans granted by captive banks (both financing activities in the strict sense and leasing)”. The ICA maintained that captive banks compete with each other in this market, because the cost of financing is a relevant part of a car’s price and influences consumer choice. Therefore, captive banks actively participated in the competition among car manufacturers of their respective industrial groups as a fundamental marketing tool to support car sales.

The ICA considered it irrelevant that the investigated captive banks did not sell cars. Moreover, the market analysis departed from Commission and ICA precedents, which had previously identified two distinct markets (retail loans and leasing)[2] as well as the absence of competitive relationships among captive banks.[3]

Parental Liability

The ICA held that the parent companies exercised decisive influence over their respective captive banks during the infringement period, so they all belonged to a single economic entity for the purposes of competition law. Accordingly, the ICA imputed the infringement to the captive banks’ parent companies, based on the parental liability doctrine.

The ICA not only maintained that parent companies were “liable for” the infringement, even when no substantial charge was moved against their conduct, but it clearly stated that they “had taken part in” the infringement.

The ICA held parent companies holding 100% (or almost all of the shares) of their subsidiary liable. For the first time at national level, it also held parent companies with much lower shareholdings, such as parent companies each having a 50% shareholding in their joint venture, liable.

However, the ICA: (i) did not fine the parent companies that did not hold 100% (or almost all of the shares) of their subsidiary; (ii) did not consider these parent companies jointly and severally liable for the infringement committed by their subsidiaries; and (iii) did not even take into account the turnover of these parent companies for the purposes of calculating the fine against their subsidiaries. The ICA justified this exception to the general rule of joint and several liability of parent companies based on the new ICA’s approach at national level.

The Decision appears to suggest that the ICA’s likely future enforcement policy may be harsher against parent companies, including those not holding 100% of their subsidiary. The Decision renews the debate concerning parental liability and, consequently, raises side concerns in the context of private enforcement, especially following the implementation of Directive No. 104/2014. It remains to be seen whether the national courts will clarify the scope and purposes of parental liability and endorse the ICA’s approach.

[1]              Car financing (Case I811), ICA decision of December 20, 2018.

[2]              Peugeot/Bnp Paribas/Opel Vauxhall Fincos (Case COMP/M.8460), Commission decision of August 8, 2017; and Intesa/Capitalia/Imi Investimenti/ Unicredito/Fidis Retail (Case COMP/M.3067), Commission decision of April 25, 2003.

[3]              DNB/Nordea/Luminor Group (Case COMP/M.8414), Commission decision September 14, 2017; Costituzione del gruppo bancario ICCREA (Case C12169), ICA decision of August 1, 2018; and Unione di Banche Italiane/Nuova Cassa di Risparmio di Chieti-Nuova Banca delle Marche-Nuova Banca dell’Etruria e del Lazio (Case C12087), ICA decision of April 12, 2017.