Relevant jurisdiction in matter of private antitrust litigation? Part II

The focus of this post series falls on the actions for damages caused by global cartels (See Part I). This part seeks to determine the means by which a non-EU cartelist can be sanctioned under Article 101 TFEU in order to define the circle of prospective addressees of an infringement decision and by deduction the circle of potential defendants in a case for damages. There are a number of theories to assist with this.

  1. A.    Economic Unit Theory

The first important case in this line of jurisprudence is Imperial Chemical Industries. In this case the CJEU established that:

Where an undertaking established in a third country, in the exercise of its power to control its subsidiaries established within the community, orders them to carry out a decision to raise prices, the uniform implementation of which together with other undertakings constitutes a practice prohibited under article [101(1) TFEU], the conduct of the subsidiaries must be imputed to the parent company.

The importance of the Economic Unit Theory lies in providing a means by which to exert jurisdiction over a defendant formally domiciled outside the EU, who controls business entities located within the EU.

  1. B.    Effects-Based Theory

The effects-based theory was first proposed in the Alcoa judgment from the U.S. This approach relies on the idea that the anticompetitive ‘effects’ inflicting on the domestic interests may be caused by conduct that occurs fully outside the territory of the national state. However this theory risks creating a potentially unlimited jurisdiction:

It is settled law […] that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends; and these liabilities other states will ordinarily recognize’.

The effects-based theory requires that an allegedly illegal conduct ‘can be foreseen to have any appreciable anticompetitive effects on U.S. commerce’.

  1. C.   Implementation Theory

The CJEU adopted a more reserved version of the ‘effects-based’ jurisdiction, namely the ‘Implementation Theory’ established in Wood Pulp[1].

5. Any agreement whose object or effect is to restrict competition by fixing prices for an intermediate product is capable of affecting intra-Community trade, even if there is no trade in that product between Member States, where the product constitutes the raw material for another product marketed elsewhere in the Community.

6. If an agreement is to be capable of affecting trade between Member States, it must be possible to foresee with a sufficient degree of probability, on the basis of a set of objective factors of law or fact, that the agreement may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States in such a way that it might hinder the attainment of the objectives of a single market between States.

It must be observed that the Implementation Theory is coherent with the principle of territoriality, since the cartelist cannot be sanctioned under Article 101 TFEU, unless their conduct interferes with the attainment of the objectives of the internal market in a foreseeable manner.

It can be concluded that a non-EU cartelist can be sanctioned under Article 101 TFEU, if it engages in anticompetitive activities in the EU through either:

–        An extended arm, an agent or a non-autonomous subsidiary, or

–       An implementation device that could be foreseen with a sufficient degree of probability to have an appreciable effect on the pattern of trade between Member States.

In part (III) I will discuss who may be the persons behind the ‘extended arm’ or ‘implementation device’ who can actually be sued for damages before a certain national court.

Emanuela Matei
Institute of Competition Law


[1] The Commission Decision in Wood Pulp adopted a different view in tune with the U.S. Effects-Based Doctrine.

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