Comparing Parent Company Liability in EU and US Competition Law

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It is a well-established principle of EU competition law that parent companies can be fined for antitrust infringements by their subsidiaries. Under the new EU Directive on Antitrust Damages Actions, parent company liability is likely to be extended to private antitrust suits. In the United States, in contrast, no fine will be imposed on a parent company unless the parent company itself was directly involved in an antitrust infringement. Moreover, courts are very reluctant to hold parent companies directly or indirectly liable in private antitrust suits. Against this background, I explore in this article how the striking difference between EU and US competition law can be explained. I show that one of the main purposes of holding parent companies liable in EU competition law is to solve an underdeterrence problem that occurs when subsidiaries lack sufficient assets to pay for fines or damages. I claim that the same function is fulfilled in US antitrust law by other enforcement instruments, in particular the individual liability of executives and employees. On this basis, I conclude that it is primarily the existence of these functional substitutes that explains why a need for parent company liability has not arisen in US antitrust law.