General Court of EU, in a historic judgment, while confirming EC’s €300 mn fine on Prysmian for cartelization in high voltage underground/submarine power cables, also held Goldman Sachs (GS), an Investment bank, liable for violating A. 110 TFEU for influencing decisions through direct/indirect ownership in the company. 

In 2005, GS acquired 100% capital and voting rights in the company. Then, in 2007, 46% of its shares were floated through IPO. Later, GS gradually sold off its remaining stake and exited the investment.  However, it influenced decisions (i.e. appointing board members, calling meetings etc.) with voting rights of its shares, even though it held only 31.69% shares; it had major stakes in initial years of its involvement with the company. 

EC’s analysis has been upheld on the concept of ‘parental liability’ that a parent company can be held liable where its subsidiary does not decide independently on its conduct in the market but carries out its given instructions. GS had also failed to show that its shareholding was intended solely as a financial investment, rather than to manage and control the company. 

Hence, it was concluded that where such a case arises, it can be presumed that the parent company determines economic and commercial strategy of its subsidiary company, even if it does not hold all of share capital. It may have implications on investments in rival firms. 

For more: https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-07/cp180107en.pdf