ECJ judgment: no jurisdiction for antitrust damages at the registered office of a parent company only indirectly harmed

In its judgment of 4 July 2024 (CURIA - Documents (europa.eu); C-425/22 - MOL), the Court of Justice of the European Union (“ECJ”) deals with the interpretation of the jurisdiction provision in Article 7(2) of Regulation (EU) No 1215/2012 (“Brussels I Regulation”) in connection with legal actions involving antitrust damages. According to Article 7(2) of the Brussels I Regulation, if a tort is committed in another EU Member State, a person can be sued in the courts for the place where the harmful event occurred.

The case in question involved a claim for damages brought by a Hungarian company group (“MOL”) against a truck manufacturer subsequent to the European Commission’s decision on the truck cartel. The ECJ had received a request from the Hungarian Supreme Court (“Kúria”) to decide whether under the European rules on jurisdiction in the Brussels I Regulation a parent company can sue for antitrust damage incurred by its subsidiaries in other countries at the parent company’s registered office.

ECJ’s decision – “economic unit” on applicant’s side relevant for determining forum?

A key question was whether MOL as the parent company was able to claim international jurisdiction of the courts at its registered office in Hungary based on the “economic unit” theory. Thus the Kúria referred to the ECJ the question of whether the registered office of the parent company can be treated as the place where the harmful event occurred for the purposes of Article 7(2) of the Brussels I Regulation if compensation for damage suffered by the subsidiaries is sought.

In its application for combined consideration of the damage suffered by its company group, the applicant relied on the assertion that together with its subsidiaries it constituted an economic unit within the meaning of the case law of the European courts. It inferred the international jurisdiction of the Hungarian courts from Article 7(2) of the Brussels I Regulation, since for all the companies concerned its registered office, as the centre of the economic and financial interests of the group it formed with its subsidiaries, was the place where the “harmful event”, within the meaning of that provision, occurred.

It is generally assumed that a parent company and its subsidiary form an economic unit if the subsidiary is essentially subject to decisive influence by the parent company and does not act independently (see to that effect judgments of the ECJ of 27 April 201 7, Akzo Nobel and Others v Commission, C‑516/15 P, paragraphs 52 and 53, and of 6 October 2021, Sumal, C‑882/19, paragraph 43). However, the consequences of the existence of an economic unit when applying various European regulations have not yet been clarified.

Prior to this, the ECJ had only found that the concept can apply on the side of the defendant. In the Skanska (C-724/17) and Sumal (C-882/19) cases, the ECJ ruled that under certain conditions the parent company can also be sued if the subsidiary has engaged in anti-competitive behaviour (and vice versa). This is justified by the fact that the parent company and subsidiary/subsidiaries form a single undertaking due to their economic unity, and that this undertaking is the perpetrator of the infringement (see judgments of the ECJ of 27 April 2017, Akzo Nobel and Others v Commission, C‑516/15 P, paragraphs 52 and 53, and of 6 October 2021, Sumal, C‑882/19, paragraph 43). This idea in itself cannot be automatically transferred to the side of applicants.

In its judgment of 4 July 2024, the ECJ also made clear that the economic unit is not decisive in the context of jurisdiction under Article 7(2) of the Brussels I Regulation. Instead, it maintained that the relevant criterion under Article 7(2) Brussels I Regulation is where the direct damage caused by the anti-competitive acts occurred. It is also decisive where the initial damage took place, and not the place where the injured party suffered financial loss as a result of initial damage incurred in another EU Member State (see ECJ’s judgments of 9 July 2020, Verein für Konsumenteninformation v Volkswagen AG, C-343/19, paragraphs 26, and 19 September 1995, Marinari, C-364/93, paragraphs 14 and 15). However, only the latter would be conceivable in the case of the applicant parent company MOL. Since the direct financial effects of the antitrust infringement occurred at the subsidiaries in various EU Member States, the forum was not at the registered office of the parent company in Hungary but at the courts of the Member States in which the subsidiaries have their registered office or where the products affected by the cartel were purchased.

Bottom line and outlook

In its decision, the ECJ stresses the importance of clear and uniform application of the rules on jurisdiction within the EU and excludes extending jurisdiction due to the existence of an “economic unit” when it comes to establishing jurisdiction in accordance with Article 7(2) of the Brussels I Regulation.

This interpretation by the ECJ does not prevent parties who have supposedly been harmed by a cartel from asserting their claims for damages against cartel members domiciled in the EU. This is because under Article 4(1) of the Brussels I Regulation there is always a possibility to sue parties responsible for damage at their registered office. Under Article 8(1) of the Brussels I Regulation, persons can also be jointly sued at the place where another defendant is domiciled if the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.