Private equity firms: liability for anti-trust fines title

It has long been established under EU competition law that parent companies can be held liable for the anti-trust fines imposed on subsidiary entities. In a recent decision, the European Commission confirmed that investors (be they industry or private equity investors) can also be found liable where they exercise ‘decisive influence’ over a company and its decisions.

On 2 April 2014, the European Commission fined 11 producers of underground and submarine high-voltage power cables a total of €302m (£250m) for participation in a 10-year market and customer-sharing cartel. The cartel involved the world’s largest producers of high-voltage power cables. The European Commission decided that the participants had reserved their home markets from competition, allocated other territories between them and agreed price levels to effectively fix tender outcomes.

The decision is noteworthy because it also held that one of the parent companies (Goldman Sachs, the investment bank) was liable for actions of its subsidiary (Prysmian). Prysmian was acquired by Goldman Sachs Capital Partners in 2005 from Pirelli. Goldman Sachs sold down its investment in Prysmian during its ownership…

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