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Rough draft ventures invests in 101 edu12/3/2023 ![]() The Commission undertook a first attempt at clarifying the law in the draft horizontal guidelines, which were published in 2010, but the relevant language was dropped in the final version of the current guidelines. For instance, the ancillary restraints notice allows non-competes between joint ventures and their parents only if subject to narrow limitations, and Article 2(4) of the Merger Regulation suggests that parents of a joint venture are “ undertakings that remain independent”. Treating parents and joint ventures as a single undertaking similarly appears difficult to reconcile with the merger control rules. This relates to the CJEU’s pronouncement in EI du Pont de Nemours and Company that a joint venture and its parents could be considered as forming a single undertaking “ only for the purposes of establishing liability”. While the more recent case law seems at first glance to leave no room for the application of Article 101(1) to agreements between a joint venture and its parents when decisive influence is exercised, legal uncertainty persists. In order to hold parent companies responsible for cartel infringements of joint ventures, the Commission considered that joint ventures and their parents exercising decisive influence form part of one and the same undertaking. On the other hand, more recently in cases relating to parental liability for cartel infringements, the Commission has endorsed a much broader concept of the term. For instance, in order to apply Article 101 in Gosme/Martell-DMP and Welded steel mesh, the Commission treated them as separate undertakings. On the one hand, there are a few old cases relating to instances where the Commission has challenged agreements or concerted practices involving joint ventures and their parents. Their conflicting incentives relate to how broadly the term ‘undertaking’ should be interpreted. The main difficulty in understanding the case law arises from the fact that there are two separate strands of case law. What looks like a straightforward question becomes less clear when looking at the case law and becomes even more blurred when also considering the merger control rules relating to the assessment of joint ventures. Where does this lack of clarity come from? An agreement or concerted practice between two entities forming part of the same undertaking therefore falls outside the scope of Article 101(1). This is because Article 101(1) presumes some form of coordination between at least two separate undertakings. The assessment boils down to whether a joint venture and its parents constitute separate undertakings. The applicability of Article 101(1) to agreements and concerted practices involving joint ventures and their parents is a recurring topic which is likely to have given a headache to many of our readers during their careers. In the draft horizontal guidelines (DHGL) that were published for public consultation on 1 March 2022, the European Commission has made another attempt to clarify the applicability of Article 101(1) TFEU to agreements between joint ventures and their parents. ![]()
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