On January 27, 2021,[1] the Court of Justice confirmed a 2018 General Court judgment,[2] upholding a 2014 Commission decision which found Goldman Sachs jointly and severally liable, together with its former subsidiary Prysmian, for Prysmian’s participation in a cartel. The judgment strengthens the parental liability doctrine with potential implications for financial investors.
On April 2, 2014, following a five-year investigation, the Commission fined 26 legal entities for their participation in a cartel in the high-voltage power cable sector. Relying on the Akzo Nobel parental liability doctrine[3]–that a parent company holding all or almost all of a subsidiary’s capital is presumed to have exercised a decisive influence over the conduct of the subsidiary–the Commission found Goldman Sachs jointly and severally liable with its indirect subsidiary Prysmian for violating Article 101(1) TFEU. This was because Goldman Sachs held all of the voting rights in Prysmian despite holding less than all of the capital (as detailed below). On appeal, the General Court endorsed the Commission’s approach.
The Court of Justice equally dismissed Goldman Sachs’ appeal. It confirmed that Goldman Sachs was rightly presumed to have exercised decisive influence over the conduct of the Prysmian subsidiary—not due to the level of its holdings in Prysmian’s capital, but because Goldman Sachs controlled all of the voting rights associated with Prysmian’s shares during the entire infringement period, even after its shareholding decreased to between 84.4% and 91.1%.[4]
In this regard, the judgment goes one step further than another recent Court of Justice judgment related to the same power cables cartel, Pirelli, where the parent was held liable on account of its more significant shareholding (98.75%) in the subsidiary.[5] Goldman Sachs sends a warning signal to financial investors: regardless of the level of shareholding—and absent any robust evidence that they did not exercise decisive influence— financial investors are jointly responsible for wrongdoings of acquired companies in which they retain all of the voting rights. It remains to be seen whether the courts will further expand this doctrine: for example, to cases with majority-only voting rights.
[1] The Goldman Sachs Group, Inc. v. Commission (Case C-595/18 P) EU:C:2021:73.
[2] The Goldman Sachs Group, Inc. v. Commission (Case T-419-14) EU:T:2018:445.
[3] See Akzo Nobel NV and others v. Commission (Case C-97-08 P) EU:C:2009:536, para. 60.
[4] The Goldman Sachs Group, Inc. v. Commission (Case C-595/18 P) EU:C:2021:73, paras. 34–36.
[5] Pirelli & C. SpA v. Commission (Case C-611/18 P) EU:C:2020:868, as reported in our November 2020 EU Competition Law Newsletter.