Important Compliance Message – Do Not Obstruct Raids
As recently reinforced, companies obstructing dawn raids will be severely
punished, thus competition law compliance programmes in the EU must adequately
train personnel in how to deal with raids, and obstruction issues must be
reinforced on the day of a raid.
On May 24, 2011, the European Commission (EC) fined Suez Environnement and
its subsidiary Lyonnaise des Eaux France (LDE) EUR8 million for the breach of a
seal affixed by the EC during a dawn raid at LDE’s premises. The seal was
affixed at the end of the first day of the raid (in April 2010) to secure a room
overnight. Upon returning the next morning, EC officials found the seal had been
broken. LDE and Suez Environnement admitted that an LDE employee had breached
the seal, but argued that it was an unintentional act.
Unintentional or not, the EC took a very strong line stating, “the breach of
a seal is a serious infringement of EU competition law, because this undermines
the effectiveness of inspections.” This is entirely consistent with its
previously expressed views, not least in the infamous E.ON case from 2008, in
which E.ON was fined EUR38 million for breaking a seal. In the current case, the
fine, although still large, was reduced due to the cooperation of LDE and Suez
Parental Liability for Competition Law Infringements
The EU General Court provided a reminder on May 17, 2011, that parents are
responsible for the behaviour of their subsidiary companies, since the latter
are usually not treated as independent companies.
In judgments involving the Elf Aquitaine group, the court confirmed, in
accordance with existing case law, that there is a rebuttable presumption that a
subsidiary wholly owned by its parent company does not freely determine its own
conduct on the market. Such a presumption also applies where a parent company
owns almost all of the share capital of its subsidiary. Elf Aquitaine held more
than 97% of the shares of its subsidiary Arkema France, and did not furnish
evidence capable of rebutting the presumption of parental control. Arkema
France's breaches of competition law could therefore be imputed to Elf
The court also confirmed that, when setting fines, the EC has the power, but
is not obliged, to impute the responsibility for an infringement committed by a
subsidiary to its parent company. This issue can be important for example
following a disposal, since a vendor which is treated as having controlled a
former subsidiary can find itself the subject of a fine for competition law
breaches of that subsidiary (for the period up to completion of the sale).
EC Focuses on Financial Services
The EC is actively investigating the financial services sector, and it is
likely that more cases will be forthcoming. Two current cases involve specific
companies and a key area of EC concern, financial data/market infrastructure.
The Standard & Poor’s investigation concerns the distribution of International
Securities Identification Numbers developed by the International Organisation
for Standardisation (ISO). The second case involves Thomson Reuters and concerns
the restrictions the company imposes on the use of Reuters Instrument Codes (RICs).
In addition, the EC has opened at least two general investigations. One is
into Credit Default Swaps (CDS) – the first time it has looked at the markets
for derivatives. Part of the CDS investigation involves 16 investment banks and
Markit, the leading provider of financial information in the CDS market. The
second part involves nine large banks – all of them also part of the first
investigation – and the agreements they concluded when a company called The
Clearing Corporation was sold to Intercontinental Exchange (ICE). The second
investigation, according to press reports, is looking at whether banks
manipulated the daily London interbank offered rate (Libor), which is an issue
also being examined by other regulators.
The financial crisis has forced a regulatory focus on financial services in
the EU, and these cases and EC statements indicate that competition law
enforcement will strongly back this up over the next few years. Companies active
in this sector would be well-advised to audit their EU activities so as to
pre-empt any concerns.
Additional EU/UK competition law news coverage can be found in our
We publish a newsletter and bulletins on
U.S. antitrust developments, as well as regular publications on
numerous other topics.