Group of Companies May Be Single Economic Entity
16th January, 2014
When a subsidiary in a group of companies does something, what is the legal position of the holding company that owns the subsidiary?
In some circumstances, the courts might hold the parent company responsible for the actions of the subsidiary – especially if the subsidiary does not conduct its business and make decisions independently of the parent company.
Where the companies constitute, in effect, a ‘single economic unit’, the courts may treat them as a single entity. The same reasoning applies where a joint venture is formed with two companies each owning a 50 per cent interest in the joint venture company.
That reasoning led to a failure by a large chemical company to avoid sanctions imposed by the European Court of Justice for a breach of EU competition law. Two companies held equal shares in a joint venture company and had set up a members’ committee to supervise its business. Both companies were held jointly and severally liable for the JV’s anti-competitive conduct as they had exercised, through the members’ committee, decisive influence over its conduct on the market.
If you have concerns that the business practices of your competitors or your firm may be in breach of competition law, contact Mark Briegal on 01244 405563 or email [email protected]
You might also be interested in...
16th November, 2018
It is reported that a quarter of all complaints dealt with by the Legal Ombudsman revolve around costs therefore to avoid complaints and confusion, it is important to be clear from the outset. The new Transparency Rules (which the SRA have now confirmed will come into effect on 6 December 2018) require that accurate and relevant information is... Read More »
5th November, 2018
Aaron & Partners LLP has once again seen improved rankings in The Legal 500 – a comprehensive guide... Read More »
10th October, 2018
In the lead up to World Mental Health Day on 10 October 2018, we have been posting a series of short articles discussing mental health and stress in the workplace. In this final article, we will be providing tips, to employers and employees, for managing stress and dealing with mental ill health in the workplace. Click here to... Read More »