EU Court Ruling Highlights Antitrust Risks For Investment Funds

A recent decision by the European Court of Justice ("ECJ"), the European Union's highest court, underscores the importance of antitrust compliance for investors that hold portfolio companies.

On January 27, 2021, the ECJ upheld a decision to hold a private equity ("PE") investor liable for an antitrust violation committed by a controlled entity, concluding that there was no need to show that the investor knew of or contributed to the infringement. According to the ECJ, it was sufficient to show that the investor had control ("decisive influence") over the portfolio company, and that this control could be demonstrated by various indicia. The PE investor claimed that it had only a minority interest in the infringing company and no direct involvement in the unlawful conduct. Based on these principles, the investor was determined by the ECJ to be jointly and severally liable for the antitrust violation.