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The current state of EU law is that parent company’s liability for its subsidiaries’ competition infringements rests on the degree of control that the parent can exercise over the subsidiaries. A related antitrust problem is when a subcontractor engages in anticompetitive activity which benefits the contractor. Again, EU jurisprudence looks at the control which the contractor can exercise. This current state of law is unsatisfactory. There are at least three convincing grounds to use negligence in the supervision of the subsidiary’s (or subcontractor’s) conduct as an alternative basis for liability. First, Regulation 1/2003 frames liability for competition infringements in terms of an undertaking’s intentional activities or its negligence. Second, as domestic legal systems use negligence to establish criminal liability, the extension of liability for negligent oversight of a subsidiary’s affairs is not inconsistent with general principles of the European law. Third, there is a substantial argument for the extension based on efficiency reasons. We construct such an argument in the article. This argument parallels arguments for vicarious corporate liability. We conclude that the extension of parental and contractor liability in EU competition law to include liability for negligent oversight of subsidiaries and subcontractors provides for a more effective regime for the prevention of antitrust violations.

Punishing parents for the sins of their child: extending EU competition liability in groups and to subcontractors