Competition Act, 1998 (Act No. 89 of 1998)NoticesGuidelines for the Determination of Administrative Penalties for Prohibited Practices8. Liability of a holding company liability for administrative penalty |
| 8.1 | The Commission may impute liability for payment of the final administrative penalty on a holding company (parent company) where its subsidiary has been found to have contravened the Act. In determining the applicability of this section the Commission will consider whether: |
| 8.1.1 | The parent or holding company wholly owned the subsidiary; |
| 8.1.2 | The parent or holding company directly controlled the subsidiary or had decisive or material influence over the commercial policy of the subsidiary. Material influence in this instance is analogous to that considered under section 12(2)(g) of the Act which refers to, "the ability to materially influence policy of the firm in a manner comparable to a person who, in ordinary commercial practice, can exercise an element of control referred to in paragraphs (a) to (f). "; |
| 8.1.3 | The parent or holding company had knowledge of the subsidiary's participation in the contravention; or |
| 8.1.4 | The parent derived substantial benefit from the activities of the subsidiary. |
| 8.2 | In order to determine whether the parent or holding company had material influence over its subsidiary, the Commission will, based on the facts and on a case-by-case basis, analyse the overall relationship between the parent or holding company and its subsidiary. The Commission will consider whether the parent or holding company had the ability materially to influence policy relevant to the behaviour of the subsidiary in the marketplace. Such policy will include the strategic direction and ability of the parent or holding company to define and achieve commercial objectives through its subsidiary. |
| 8.3 | When determining the appropriate penalty in cases where the Commission has imputed liability of payment of the administrative penalty on the parent or holding company, the statutory cap at step 4 above, will be based on the subsidiary's annual turnover during the preceding financial year. At step 6, the statutory cap will be based on the annual turnover of the parent or holding company during the preceding financial year. |
| 8.4 | In the case of full functioning joint venture (and any other joint ventures) which contravened the Act, the Commission may impute liability, jointly or severally, for payment of the final administrative penalty on the parent companies of the joint venture. The Commission will do so if the parent companies of the joint venture are shown to have decisive or material influence over the commercial policy of the subsidiary13. Material influence is the same as discussed in paragraph 8.1.2 above. The Commission will take account of, based on the facts and on a case-by-case basis analysis, the overall relationship between the parent companies and the joint venture and whether the parent companies had the ability materially to influence the strategic and commercial policy of the joint venture.14 |
| 8.5 | If the Commission imputes the liability of paying the administrative penalty on the parent or holding company, the statutory limit in step 6 will be calculated on the consolidated annual turnover of that parent or holding company during the preceding financial year. |
| 8.6 | In instances where a division or business unit of the firm has contravened the Act, the firm legally responsible for the division or business unit may be held liable for the final administrative penalty. |
| 13 | El du Pont de Nemours and Company v. European Commission, Case C-172/12 P |
| 14 | Coöperatieve Verkoop- en Productievereniging van Aardappelmeel en Derivaten Avebe BA v. Commission of the European Communities, Case T-314/01 |