An Economic Analysis of the Single Economic Entity Doctrine in EU Competition Law

According to well-established case-law of the European Court of Justice, in the European Union, parent companies can be fined for antitrust infringements by their subsidiaries. Furthermore, under a new EU Directive, signed into law on 26 November 2014, parent company liability is likely to be extended to private antitrust damages actions. In the United States, in contrast, courts are very reluctant to hold parent companies liable for antitrust infringements by their subsidiaries, whether criminally or in private suits. Against this background, I explore in this article whether parent company liability in the antitrust context is justified from an economic perspective. I build on works dealing with the economic analysis of antitrust enforcement, corporate torts, vicarious liability, criminal penalties, and limited as well as unlimited shareholder liability to assess the efficiency of parent company liability for antitrust infringements by subsidiaries. Based on an analysis of both the legal framework and the economic situation, I explain under what circumstances it is justified to hold parent companies liable and how parent company liability relates to other antitrust enforcement instruments. I conclude with implications for future antitrust enforcement policy