The European Court of Justice (ECJ) replied to a request for a preliminary ruling submitted by the Spanish Supreme Court in the context of an action claiming compensation for damages due to an infringement of Competition Law filed by Transsaqui, S.L. against Volvo AB.
The action was brought against the Swedish parent company, but it was served at the registered office of its subsidiary in Madrid, Spain. However, the Spanish subsidiary refused to accept service of process, arguing mainly that the parent company’s registered office was in Sweden and that the Spanish subsidiary was not a director of the parent company, nor did it have the necessary powers to accept legal documents addressed to the parent. The Spanish commercial courts ruled that the service of process had been validly made and declared Volvo AB to be in contempt, continuing with the proceedings and handing down a condemnatory judgement against Volvo AB.
After the judgement declaring contempt was made final, Volvo filed an action for judicial review with the Spanish Supreme Court, which in turn filed a request for a preliminary ruling with the ECJ under Article 47 of the EU Charter of Fundamental Rights (the right to effective protection from the courts) and Article 101 of the Treaty on the Functioning of the European Union (TFEU).
In its judgement of 11 July 2024, the ECJ ruled on whether, in application of the principle of economic unity, an action for damages on grounds of competition against a parent company could be served at the registered office of its subsidiary.
In this regard, the ECJ explained that although the concept of an “enterprise” and an “economic unit” means that there is joint and several liability between the organisations from which an economic unit is formed at the time at which the infringement is committed (when the requirements set out in ECJ case law are met), this “enterprise” is not in itself a legal entity. The victim cannot therefore bring an action against the “enterprise” or “economic unit” but must instead address its complaint to one of the organisations from which it is formed.
The ECJ ruled that when the victim of a cartel chooses to direct their complaint against the parent company rather than the subsidiary, it cannot then allege the existence of an economic unit in order to summon or serve judicial documents intended for that parent company at the address of that subsidiary.
In conclusion, the claimants have the option of directing their complaint against the parent company, its subsidiary, or both on the grounds that they form an economic unit. If they choose to file an action against the parent company, the summons must be served at the parent company’s registered office and not that of its subsidiary, even though both companies (parent and subsidiary) form an economic unit.