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Extending the Presumption of Decisive Influence to Impute Parental Liability to Private Equity Firms for the Anticompetitive Conduct of Portfolio Companies

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On January 27, 2021, the Court of Justice of the European Union (“CJUE”) adopted a judgement rejecting the Goldman Sachs Group’s (“Goldman Sachs”) appeal seeking to set aside the judgment of the General Court of the European Union (“GCEU”) of 12 July 2018, by which it dismissed the Goldman Sachs’ action seeking, first, the annulment of the Commission’s Decision imposing a fine to Goldman Sachs for the participation of one of its indirectly owned subsidiaries in the power cable cartel during the period it was under Goldman Sachs’ control and, secondly, a reduction of the fine imposed on it. The CJEU confirmed the fine of EUR 37,303,000 million imposed to Goldman Sachs on a joint and several basis. Despite the fact that the investor holding was left with a minority stake in the company after an initial public offering (“IPO”), the totality of voting rights held, as well as a sufficient representation at the board of directors and other management powers were of a decisive influence over the subsidiary’s economic and commercial strategy. The judgment is of major interest to private equity funds and other financial investors, whose business mainly consists of buying and selling stakes in other companies under a purely financial investment perspective. They need to implement strategies to ensure that they might not be found liable under the European Union (“EU”) competition law provisions for any anticompetitive practices of their portfolio companies.