Private equity and competition law: liability for infringements by portfolio companies

On 2 April 2014, the European Commission fined eleven producers of underground and submarine high voltage cables a total of EUR 301 million for participation in a cartel. In line with the Commission’s established practice, the liability for these fines extended to parent companies that exercised decisive influence over the cartel participants, including Goldman Sachs, which was found to have exercised such influence on the cable producer Prysmian for several years when the infringement was committed.

This case acts as an important reminder that private equity houses may be held jointly liable for infringements of competition law by their portfolio companies. This may entail exposure not only to the risk of significant fines but also to private actions brought by those claiming to have suffered loss as a result of the cartel.

This briefing considers the implication of this decision and steps that can be taken to mitigate the associated risks.