A. Doctrine of the Single Economic Entity

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A relevant topic that has been addressed by the ECJ is whether or not different companies or entities can constitute only one legal entity from an economical point of view. The typical example of this discussion is the case of a parent company and one or more subsidiary companies. In order to define whether the companies act independently or as a whole, several factors need to be considered such as ownership, decision autonomy, assumption of risks, etc.

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In the Viho Europe BVcase, the ECJ established that one of the companies involved (Parker) used to hold one hundred per cent of the shares of its subsidiaries in Germany, Belgium, Spain, France and the Netherlands and that the sales and marketing activities of the subsidiaries were directed by an area team appointed by the parent company and which controlled sales targets, gross margins, sales costs, cash flows and stocks. This team also laid down the range of products to be sold, monitored advertising and issued directives concerning prices and discounts. The ECJ therefore concluded that Parker and its subsidiaries formed a single economic unit where the subsidiaries did not enjoy real autonomy in determining their course of action in the market, but carried out the instructions issued by the parent company.

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The crucial importance of the definition of the single economic entity is the legal norm and rules to be applied. If it considered that the companies are separate undertakings, then the legal norm to apply shall be Art. 101 TFEU if collusion circumstances have occurred. On the other hand, if it is found that the undertakings formed only one economic entity, then the application of the Art. 101 TFEU shall be excluded, but Art. 102 TFEU could apply then when an abuse of a dominant position has occurred.

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Also, it is important to note that, in case a fine needs to be imposed, it will likely be imposed against the parent company as well as over the subsidiary company that performed the fault. In practical terms, this issue can have a significant relevance since, in many cases, the economic capacity and assets of the parent company are a lot more considerable than those of the subsidiary company.

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In the Akzo Nobel NV case, the ECJ ruled that, it is sufficient for the Commission to prove that the subsidiary is wholly owned by the parent company in order to presume that the parent exercises a decisive influence over the commercial policy of the subsidiary. The Commission will be able to regard the parent company as jointly and severally liable for the payment of the fine imposed on its subsidiary, unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market”.

B. Agency Agreements and Single Economic Entity Doctrine

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Another relevant scenario that has been analysed by the ECJ is whether companies under an Agency Agreement can form a unique entity from an economic perspective. In this analysis, the ECJ has considered the level of risk assumed by the parties to the contract, specially, by the distributor. In the CEPSA Estaciones de Servicio SA case, the ECJ held that the decisive factor for the purposes of determining whether a service-station operator is an independent economic operator is to be found in the agreement concluded with the principal and, in particular, in the clauses of that agreement, implied or express, relating to the assumption of the financial and commercial risks linked to sales of goods to third parties. The ECJ also held that the question of risk must be analysed on a case‑by-case basis, taking into account the real economic situation rather than the legal categorisation of the contractual relationship in national law. 

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The ECJ also pointed out that the fact that the operator bears only a negligible share of the risks does not render Art. 101 TFEU applicable since such an operator does not become an independent economic operator when selling fuel to third parties. In that case, the relationship between the operator and the supplier is identical to that between an agent and his principal.In other words, the lower the level of risk assumed by the distributor, the higher the possibility that the two companies can be considered a single economic unit is.

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