1. Dr. Ralf Sauer, LL.M. (Yale), Legal Service, European Commission
73th Lunch Talk of the GCLC Joint and several liability for cartel fines: Lessons from Siemens Austria and Gigaset
Dr. Ralf Sauer, LL.M. (Yale), Legal Service, European Commission

2. Strictly personal views
Disclaimer
Strictly personal views
Commission not competent to determine liability shares (same for Commission staff)

3. Overview of the presentation
I) Development of the debate at EU level
II) The question of competence: Siemens Austria
III) Factors for determining liability shares

4. Development of the Debate (1)
Joined Cases T-122/07 to T-124/07, Siemens AG Österreich
Gas-insulated switchgear (GIS) cartel - litigation
Schneider Electric (parent) vs. SEHV/Magrini (former subsidiaries) before the Tribunal de Commerce de Grenoble
Nat'l judge: incompetent because of lack of findings in COM decision
Late introduction in proceedings (cf. §§ 30, 198; see also AG Opinion, § 115): No plea in the application
Oral argument and COM Observations post-hearing

5. Development of the Debate (2)
The GC judgment in Siemens AG Österreich
Decision produces "internal effect" between co-debtors (§ 156); exclusive COM competence to determine internal shares; not for the nat'l courts (§ 157)
Without contrary indication, decision distributes liability "in equal measure" (§§ 158, 159)
Liability shares in decision direct basis for recovery claim (§°158)
Exercise of unltd. jd: equal shares (§§ 245, 247, 262, 263)
Obiter dicta; no explicit reflection in operative part

6. Development of the Debate (3)
Case C-231/11 P, Siemens AG Österreich
COM appeal
Opinion of AG Mengozzi ( )
ECJ Judgment ( )
Case C-451/13, Gigaset
Reference by the Bundesgerichtshof
Submissions
Withdrawal

7. Development of the Debate (4)
Joined Cases T-117/07 and T-121/07, Areva and Alstom v COM
Decision drops SO objection against two subsidiaries
Adverse effect on parent company: loss of co-debtors (§ 257)
Requires exercise of rights of defence (§ 258)

8. Distribution of Competences (1)
COM appeal in Case C-231/11 P, Siemens AG Österreich; Observations in Case C-451/13, Gigaset
Lack of competence under Article 23(2) of Reg. 1/2003 (and hence no obligation to make findings)
EU competition rules relate to the undertaking
Article 23(2) of Reg 1/2003: fines (= external relationship), not liability shares/recourse (= internal relationship)
Each entity constituting part of the undertaking is liable for entire fine: no need to determine internal shares in order to enforce Articles 101, 102 TFEU
Parallel to the liability of members of an association, Article 23(4) and recital 30 of Reg 1/2003: national law

9. Distribution of Competences (2)
Parental liability: exercise of decisive influence does not require direct participation or any kind of fault/knowledge (hence, any factors relating to the infringment as such not relevant for external liability as part of undertaking)
COM discretion in determining the entities held liable as part of the undertaking: need to include all entities bearing internal responsibility? Need to justify other solutions? Reduction of fine in case of mistake?
Practical implications: resources, longer admin/court procedures (Article 41 of the Charter); more litigation
National courts better placed: experience with JSL, corporate law and liability clauses; focused debate in case of conflict

10. Distribution of Competences (3)
The ECJ judgment in Siemens AG Österreich
Object of EU competition law = undertaking (§§ 42, 43)
Rules/principles not also applied to the entities constituting the undertaking (§§ 44, 55, 56): e.g. power to impose sanctions (§ 58); principle that penalty must be specific to the offender/offence (§ 56)
Nat'l courts: competence to determine shares "in a manner consistent with EU law, by applying the national law to the dispute" (§ 62)
COM/EU courts: no power to determine liability shares (§§ 66, 68, 74); but duty of cooperation by COM to contribute relevant information (§ 63) (which?)
No default rule in EU law imposing equal shares (§§ 69, 70)

11. Factors for determining liability shares (1)
Why relevant?
"unfettered discretion"/"complete freedom" to recover fine from any of the co-debtors, up to the whole amount of the JLS (T-40/06, Trioplast, § 165; T-217/06, Arkema France, § 276)
Accounting officer may decide to split (e.g. equal shares)
In case of litigation: accounting officer typically asks for special declaration when amount is split
No link to the potentially different allocation of internal liability shares

12. Factors for determining liability shares (2)
Source of legal principles (ECJ, C-231/11 P, Siemens AG Österreich)
Neither Reg. 1/2003 nor EU law in general contain rules for internal allocation of debt (§ 61); nevertheless determination "in a manner consistent with EU law" (§ 62)
COM decision as legal framework (co-debtors, JSL) (§ 63); but does not have to determine liability shares (§ 66)
COM information? (§ 63)
Contractual arrangement (§ 62)
National law (§§ 62, 70), in particular taking into account degree of responsibility/fault

13. Factors for determining liability shares (3)
Bundesgerichtshof (Judgment of , KZR 15/12 Calciumcarbid)
Contractual arrangement: even tacitly, even after JSL has arisen (when subsidiary is sold)
Case-specific, overall assessment of the relevant facts
In particular, individual share of responsibility and the "facts relevant for the determination of the fine"
Type of involvement: direct participation (intentional) vs. lack of sufficient oversight (negligent)
Share in relevant turnover

14. Factors for determining liability shares (4)
Economic benefit (if proven; not mere increase in value of the participation): for reasons of deterrence; not decisive on its own
Overall turnover/financial means of each entity (deterrence)
10% cap/ITP/proportionality: applied to the individual liability shares (cf. association of undertakings)
Effective enforcement of competition law: may justify not to accept liability shares of zero
Default rule: equal shares
No bad faith exclusion of recourse: e.g. (failure to) challenge of COM decision; "overpayment" without prior opportunity for co-debtors to pay/provide guarantee

15. Factors for determining liability shares (5)
Criteria and limits
No direct guidance from primary or secondary Union law – different object (e.g. principle of personal responsibility); but possibly indirect guidance
Effet utile/deterrence: secured by fine against the undertaking/JSL; payment by/enforcement against one co-debtor sufficient (ECJ, Siemens Austria, §§ 59,60; AG Opinion, § 56)
Concept of the undertaking: each part as "legal embodiment" (AG Kokott) and as such co-responsible – no zero share?
Parental liability: responsibility to ensure proper conduct; economic benefit from potential profits (see next slide)

16. Factors for determining liability shares (6)
Case T-77/08, The Dow Chemical Company, § 101
Moreover, the Court considers that as a result of the parent company’s power of supervision, the parent company has a responsibility to ensure that its subsidiary complies with the competition rules. An undertaking which has the possibility of exercising decisive influence over the business strategy of its subsidiary may therefore be presumed, in the absence of proof to the contrary, to have the possibility of establishing a policy aimed at compliance with competition law and to take all necessary and appropriate measures to supervise the subsidiary’s commercial management. Mere failure to do so by the shareholder with a power of supervision over such matters cannot in any event be accepted as a ground on which he can decline his liability. Accordingly, since any gains resulting from illegal activities accrue to the shareholders, it is only fair that that those who have the power of supervision should assume liability for the illegal business activities of their subsidiaries.
Case T-103/08 Versalis and ENI, § 70
AG Sharpston, C-50/12 P, Kendrion, § 80

17. Factors for determining liability shares (7)
No direct application of 10% cap (C-408/12 P, YKK, § 59); EU law does not rule out insolvency; Article 23(4), 5th subpara, not applicable
Deterrence uplift: for the parent alone?
COM decision: factual findings, e.g. reporting lines, mgmt overlaps, direct participation/instructions by parent
National law
Contractual arrangement (internally; with the acquirer)
Individual responsibility (causation, fault): European Group of Tort Law, Principles of European Tort Law, Rule 9:102; Study Group on a European Civil Code/Research Group on EC Private Law, Draft Common Frame of Reference, Art. III-4:106

18. Factors for determining liability shares (8)
Direct participation of the subsidiary
Parent company: direct participation? Instructions? Knowledge?
Parent company: lack of care (organisation, supervision) – presumption?
Violation of instructions/compliance program by subsidiary
Economic benefit (T-77/08, Dow Chemical, § 101)
Default rule: European Group of Tort Law, Principles of European Tort Law, Rule 9:102
No objection from EU law perspective (ECJ, Siemens Österreich, § 71)
Only last resort following case-specific factual assessment
Split by heads or split parent/subsidiaries?

19. Many thanks for your attention