National law university odisha corporate law I national law university odisha
WITH REFERENCE TO US AND EU CASES LAWS IN THE ANTITRUST
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- Continental Can v. Commission 23
- 1. Ownership
| WITH REFERENCE TO US AND EU CASES LAWS IN THE ANTITRUST REGIME The evolution of the concept of “single economic entity” in European Union can be traced back to the European Commission (EC) case of Mausegatt v. Haute Autorite 22 , where it was observed that affiliation to the group deprives the subsidiary company of the ability to act according to an economic scheme of its own The given conditions of such a subsidiary’s operations are prescribednot by the market but by the instructions of the principle company. It is an accepted concept that they form a single economic entity whenever a company exerts a dominant control or decisive influence over another company and are therefore part of the same undertaking. The same principle is applicable for sister companies. This practice of treating two or more legal entities within European law as one single economic entity stems from the landmark case of Continental Can v. Commission 23 , where the European Court of law observed the circumstances that this subsidiary company has its own legal personality does not suffice to exclude the possibility that its conduct might be attributed to the parent company. This is particularly true in cases where the subsidiary company does not determine its course of business autonomously but essentially follows the direction of its parent company.” 24 The following conditions must be satisfied in considering whether two companies belong to the same economic entity. 1. Ownership (where a company owns all or large part of another company). 2. Economic Independence (a company which is completely financially dependent on another would most likely have to obey the other company's instructions). 3. Degree of instructions given and the obedience of those instructions (whether the degree of instructions given is partial or absolute in nature). In the European Union, the Court has clarified that a presumption exists that decisive influence is exercised for wholly owned or nearly owned subsidiaries and therefore single 22 Mausegatt v Haute Autorite [1996] ECR 22 EU. 23 Continental Can v Commission [1973] ECR 215 EU. 24 Mausegatt v Haute Autorite [1996] ECR 22 EU. NATIONAL LAW UNIVERSITY ODISHA CORPORATE LAW Ii economic entity can be used. 25 However, the mere ability to exercise decisive influence is not sufficient for partially owned entities instead, evidence must be adduced to demonstrate that that power has actually been used. While the parent company and its wholly-owned subsidiary are independent for incorporation or formal title purposes, they are managed by a common decision-making centre and share a single economic power aggregation. Download 0.88 Mb. Share with your friends:
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