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Alternative Market Briefing

Other Voices: Investors and managers can be held liable for the anticompetitive practices of portfolio companies

Wednesday, July 25, 2018

By: Mélanie Thill-Tayara, Laurence Bary, Dechert LLP

The General Court of the European Union recently held, in Goldman Sachs v. Commission, that purely financial investors such as investment funds may be held jointly and severally liable for competition law violations implemented by their portfolio companies when they can exercise "decisive influence" over the company, irrespective of whether they were aware of the infringement or actually influenced the market behaviour of the subsidiary. This decision has several major practical implications for investment funds and private equity funds.

Case Background

In April 2014, the European Commission imposed fines totaling almost €302 million on producers of underground and high-voltage power cables, for engaging in illicit market sharing and customer allocation over a period of almost ten years beginning in 1999 (COMP/39.610 - Power Cables). Notably, the entities fined by the Commission included not only the companies directly involved and their industrial owners but also an investment firm, Goldman Sachs ("the Investor"), whose private equity arm owned Prysmian, one of the producers that was found to have participated in the cartel. The Investor was held jointly and severally liable for €37.3 million of the €104.6 million fine imposed on Prysmian, a share corresponding to the four-year period during which it held a stake in Prysmian.

An investment fund of the Investor had acquired 100% of ......................

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