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Parental Liability for Private Equity Investors in EU Competition Law - Wrong Incentives set by the Goldman Sachs case?

Berzl, Lisa Katharina LU (2023) JAEM01 20231
Department of Law
Faculty of Law
Abstract
The ECJ’s judgment of 27 January 2021 in the case C-595/18 P (the ”Goldman Sachs case”) has caused a big buzz in the ever growing Private Equity sector. It confirmed the ruling of the GCEU of July 2018 case T-419/14 which in turn confirmed the Commission’s decision according to which Goldman Sachs has been held liable for an antitrust infringement committed by one of its portfolio companies. In all these decisions the liability has been based on the single economic unit doctrine – a dogmatic construct developed by the ECJ in its case law. In EU competition law, this doctrine is used, inter alia, for the attribution of liability for antitrust infringements within a corporate entitity. Thereby, the test is whether one economic entity... (More)
The ECJ’s judgment of 27 January 2021 in the case C-595/18 P (the ”Goldman Sachs case”) has caused a big buzz in the ever growing Private Equity sector. It confirmed the ruling of the GCEU of July 2018 case T-419/14 which in turn confirmed the Commission’s decision according to which Goldman Sachs has been held liable for an antitrust infringement committed by one of its portfolio companies. In all these decisions the liability has been based on the single economic unit doctrine – a dogmatic construct developed by the ECJ in its case law. In EU competition law, this doctrine is used, inter alia, for the attribution of liability for antitrust infringements within a corporate entitity. Thereby, the test is whether one economic entity exercises decisive influence over another, so that the latter does not take independent economic decisions. If so, both entities form an economic unit. In the Goldman Sachs case, the PE Investor tried to challenge this assumption by pointing out several corporate specific factors, which allegedly reveal that Goldman Sachs did not in fact influence the decisions of its portfolio company. The ECJ, however, rejected the arguments in its entirety. It went even beyond the previous rules established by its case law for the assumption of decisive influence and extended the presumption of exercise of decisive influence on the majority of voting rights. In addition, it set relatively low standards for the Commission to proof the actual exercise of decisive influence – after the ruling, also PE Investors which are minority shareholders will be cautious. The thesis critically analyzes the judgments and questions in particular, whether the standards set in them are beneficial for the enforcement of EU competition law. (Less)
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author
Berzl, Lisa Katharina LU
supervisor
organization
course
JAEM01 20231
year
type
L1 - 1st term paper (old degree order)
subject
language
English
id
9130740
date added to LUP
2023-07-10 10:54:23
date last changed
2024-03-07 13:08:59
@misc{9130740,
  abstract     = {{The ECJ’s judgment of 27 January 2021 in the case C-595/18 P (the ”Goldman Sachs case”) has caused a big buzz in the ever growing Private Equity sector. It confirmed the ruling of the GCEU of July 2018 case T-419/14 which in turn confirmed the Commission’s decision according to which Goldman Sachs has been held liable for an antitrust infringement committed by one of its portfolio companies. In all these decisions the liability has been based on the single economic unit doctrine – a dogmatic construct developed by the ECJ in its case law. In EU competition law, this doctrine is used, inter alia, for the attribution of liability for antitrust infringements within a corporate entitity. Thereby, the test is whether one economic entity exercises decisive influence over another, so that the latter does not take independent economic decisions. If so, both entities form an economic unit. In the Goldman Sachs case, the PE Investor tried to challenge this assumption by pointing out several corporate specific factors, which allegedly reveal that Goldman Sachs did not in fact influence the decisions of its portfolio company. The ECJ, however, rejected the arguments in its entirety. It went even beyond the previous rules established by its case law for the assumption of decisive influence and extended the presumption of exercise of decisive influence on the majority of voting rights. In addition, it set relatively low standards for the Commission to proof the actual exercise of decisive influence – after the ruling, also PE Investors which are minority shareholders will be cautious. The thesis critically analyzes the judgments and questions in particular, whether the standards set in them are beneficial for the enforcement of EU competition law.}},
  author       = {{Berzl, Lisa Katharina}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Parental Liability for Private Equity Investors in EU Competition Law - Wrong Incentives set by the Goldman Sachs case?}},
  year         = {{2023}},
}