What constitutes a „close connection” between claims against parent company and subsidiary under the Brussels Ibis, allowing both to be sued in the court of one of the companies’ domiciles? Can the “close connection” be a rebuttable competition law presumption?
ILF’s Hungarian member, Smartlegal Schmidt&Partners summarizes this issue in the article.
National proceedings
AB and MTB are breweries active in the Greek beer market. AB was owned by the Dutch Heineken, which exercised a dominant influence over AB.
In 2014, the Greek Competition Commission found that AB had abused its dominant position on the Greek beer market, and it shall be regarded as the infringement of the EU and Greek competition rules. The Greek Competition Commission stated, inter alia, in that decision, that there was no evidence of Heineken’s direct involvement in the infringements.
MTB initiated legal proceedings, among others, before the Amsterdam District Court against the Greek AB and Dutch Heineken to compensate MTB for the entire loss which it had suffered because of that infringement.
The Amsterdam District Court found that it had jurisdiction over the claims against Heineken, but not over the claims against the AB, because these claims are not ‘so closely connected’, within the meaning of Article 8(1) of Brussels Ibis.
However, the Dutch Second Instance Court held that it could not be excluded that Heineken and AB constituted a one and single undertaking under the competition rules and therefore ordered the Amsterdam District Court to start a new procedure.
Subsequently, the Dutch Supreme Court, acting on appeals, decided to stay the proceedings and asked the CJEU whether Article 8(1) of Brussels Ibis Regulation must be interpreted in a case such as the present case as not precluding the court for the domicile of the parent company from relying exclusively, in order to establish its international jurisdiction, on the presumption that where a parent company holds directly or indirectly all or almost all of the capital of the subsidiary that infringed the competition rules, it exercises a decisive influence over that subsidiary.
Decision of the CJEU
In its decision, the CJEU first recalled Article 8(1) of Regulation, according to which a person domiciled in a Member State may be sued, where he or she is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
According to the case-law of the CJEU, for judgments to be regarded as irreconcilable, it is not sufficient that there be a divergence in the outcome of the dispute, but that divergence must also arise in the context of the same situation of fact and law.
The CJEU has already held that the requirement concerning the existence of the same situation of fact and law must be regarded as satisfied where several undertakings that participated in a single and continuous infringement of EU competition rules, established by a decision of the Commission, are subject, as defendants, to claims based on their participation in that infringement, despite the fact that the defendants in question participated in the implementation of the cartel concerned in different places and at different times.
The Advocate General observed the same finding must also be made in the case of claims based on a company’s participation in an infringement of EU competition law brought against that company and against its parent company, in which it is alleged that they together formed one and the same undertaking.
In the present case, the joint and several liability of the parent company and its subsidiary for the infringement of EU competition rules was not established in a final Commission decision, but it does not preclude the application of Article 8(1) of Regulation to such claims.
In line with the principle of legal certainty, parent company and its subsidiary, domiciled in another Member State may reasonably foresee that, in the event of an infringement of EU competition law committed by one of them, one of them may be sued before the courts of the Member State in which the other company is domiciled to respond to claims based on that infringement.
The CJEU laid down that there is a rebuttable presumption that a parent company, which holds all or almost all the capital of the first company, has decisive influence and liability and does in fact exercise a decisive influence over the conduct of its subsidiary.
However, the defendants can also rely on firm evidence to suggest that the parent company does not hold directly or indirectly all or almost all the capital of its subsidiary, or that that presumption should nevertheless be rebutted.
Consequently, the CJEU laid down that the Article 8(1) of Brussels Ibis must be interpreted in a case such as the present case as not precluding the court for the domicile of the parent company from relying exclusively, in order to establish its international jurisdiction, on the presumption that where a parent company holds directly or indirectly all or almost all of the capital of the subsidiary that infringed the competition rules, it exercises a decisive influence over that subsidiary, provided that the defendants are not deprived of the possibility of relying on firm evidence suggesting either that that parent company did not hold directly or indirectly all or almost all of the capital of that subsidiary, or that that presumption should nevertheless be rebutted.
Comment
Article 8 of Brussels Ibis provides that a person in an EU Member State can be sued together with another person in the court of the other person’s domicile in closely connected claims.
In the present case, the CJEU developed the court’s earlier case law on competition law, i.e. the Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Evonik Degussa GmbH and Others[1] infringements and held that the sole fact that there is a presumption under competition law that the parent company exercised decisive influence over the subsidiary’s operations can in itself give rise to international jurisdiction.
However, the almost unrestricted application of the presumption could mean that plaintiffs could easily choose the place of litigation, which would lead to undesirable forum shopping.
In the light of the above, we can agree with that the CJEU also gave an escape route from this presumption, therefore, it can be rebutted in the assessment of the jurisdiction under Article 8 of the Brussels Ibis in accordance with the findings already laid down in the CJEU’s cases Harald Kolassa v. Barclays Bank plc[2] and Universal Music International Holding BV v Michael Tétreault Schilling and Others[3].
The CJEU, therefore, has defined a narrow possibility to rebut the presumption, however, it did not go into details about the rebuttal.
Considering the above, it will be up to the case law to determine to how this narrow possibility of rebuttal is interpreted.
In the article, we analysed the decision of CJEU issued under Case C‑393/23
The article was written by dr. Péter Korózs.
SMARTLEGAL is a team of agile business & litigation lawyers in Budapest, Hungary, helping international corporate clients and individual entrepreneurs doing business in Hungary. For more information please visit our website at Smartlegal.hu
[1]CJEU Case C‑352/13
[2] Case C‑375/13
[3] Case C‑12/15