Indice
The corporate group, despite being the world’s largest economic player, is a quasi-legal phantom. The ‘quasi’ refers to the development of sectoral regulatory through which an attempt has been made to consider the corporate group as an entity that is subject to undivided responsibility.
In this respect, the most important are the European antitrust regulations. In carrying out its competition law enforcement functions, the Commission uses the single economic entity doctrine for the purposes of attributing liability to the parent company if its subsidiary infringes antitrust law. The hypothetical prerequisite for the Commission to do so is that the subsidiary and the parent company belong to the same economic unit, i.e. the single firm. The economic unity doctrine applied to group relations – which, as rightly observed, is nothing more than an expression of the generic notion of ‘firm’ – is the result of a series of decisions of the Commission and the case law of the European Court of Justice, which for a long time now have formed the legal basis for the extension of the offence to the group as a whole. Gradually, European case law has created a rebuttable presumption (iuris tantum) as to the effective exercise of dominant influence by the parent company, used by the Commission in the case of total or quasi-total control of the subsidiary’s capital[i], which results in a reversal of the burden of proof, considered by the ECJ as an element falling within the canons of reasonableness[ii]. The presumption thus operates on the assumption that parent and subsidiary form a single firm. It is therefore up to the parent company to prove the charge brought against it by the Commission.
There has certainly been no shortage of criticism of this approach[iii], which points out that the presumption – in the specific case where the parent company holds 100 per cent of the stakes – must be considered almost absolute due to the parent company’s difficulties in proving the contrary, thereby resulting in the parent company being de facto directly liable for the anticompetitive conduct of its subsidiaries.
The regulatory short-circuit between the notion of firm and separate legal personality in the group context also arises with respect to another issue, that has been extensively discussed in legal doctrine[iv], namely the distinction between the power (capacity) to exercise decisive influence and its effective exercise, which has been rendered almost incomprehensible by the approach taken by the ECJ and the Commission. In summary, from a theoretical point of view, the clarification that, even in the event of a wholly-owned shareholding, this is a mere and not an absolute presumption, thereby ensuring that antitrust law and the traditional principles of company law are to some extent legally compatible. From a practical point of view, however, EU case law has highlighted a very different factual reality: subsidiaries are not autonomous, especially when another entity holds a 100 per cent of their shareholding.
The need to extend the responsibility of the parent company to its subsidiaries is also gaining ground in other sectors, such as the labour, environmental and criminal law sectors. The trend appears to be to achieve direct accountability by the back door, while still retaining – it remains unclear for how long – the principle that subsidiaries are legally independent.
Yet in the European context, the attempt to regulate the phenomenon dates back many years. In December 1984[v], after several years of study, it was precisely the European Commission that proposed the drafting of the Ninth Directive on corporate groups, which was shelved due to the lack of consensus of some countries, particularly France and Great Britain. The objective of the directive was to protect the subsidiary from being subjected to external management power, in the knowledge that companies that are managed by a third party were deprived of their economic independence and that the interest of the group tended to take precedence over that of the individual companies. The project was specifically aimed at groups whose subsidiaries are in joint-stock companies, in order to protect the interests of the majority shareholders, creditors but also workers[vi].
It took almost twenty years for the issue to resurface at the european level.
In 2002, a group of experts appointed by Commissioner Bolkestein submitted a report – which then became the subject of a Commission Communication to the Council and the European Parliament – outlining the need to modernise company law and strengthen corporate governance in the European Union, in which the aim of achieving an EU-wide regulation of the phenomenon was again proposed. It was, however, emphasised by the Commission that it was not one of its objectives to reintroduce the Ninth Directive, as it no longer considered it appropriate to introduce a separate piece of legislation for groups, but rather to intervene in issues concerning specific sectors, i.e. transparency, information and the group interests, in terms of establishing rules on the protection of creditors and minority shareholders. Particular interest was shown in the creation of abusive pyramid schemes, and even more so in those incorporating listed companies.
In later years, other initiatives were implemented at EU level[vii], but the project to create a comprehensive EU legal framework for groups still remains a long way off.
Also of great interest from the perspective of mapping and monitoring corporate group structures is the recent Directive (EU) 2025/25, which entered into force on 30 January 2025. It aims to promote the digitalisation of company-related information and facilitate stakeholder access to such data, acknowledging the existing challenges in the interconnection of relevant databases. This initiative follows the path already set out by previous Directives (EU) 2017/1132 and 2019/1151.
Also worth mentioning are Directives (EU) 2014/95 and 2025/872 (DAC9). The former concerns non-financial disclosure obligations for large enterprises and thus for large corporate groups, i.e., those with more than 500 employees. The latter, DAC9, more explicitly addresses the group phenomenon, as it represents an attempt by European institutions to counter downward tax competition among states hosting group-affiliated companies. In doing so, it offers a crucial interpretative framework: from a tax perspective, it is not the states that compete with one another, but rather multinational corporations that push them into a race to the bottom—effectively dictating not only parts of fiscal policy but also of the economic and social policies of the host countries.
The numerous EU-level initiatives that separately address various aspects of group enterprises demonstrate a high level of political interest in the issue, and highlight how the standardisation of information and databases is becoming a key tool to ensure that national institutions are not forced to passively endure the pathological distortions of globalised markets.
The point worth emphasising for the purposes of this paper is that the policy direction that is being followed involves the creation of ad hoc rules for the protection of specific interests – such as the tax revenues of the states where multinationals are headquartered – orbiting around the corporate group, and neglecting – setting aside, at least for now – the very essence of the single group firm phenomenon, thus the need to consider the group as a single entity as a single entity to which legal liability for the exercise of business activity can be attributed, and consequently the need to provide a universal definition of a corporate group.
For these reasons, it is considered that the work of the European Commission through its case law represents the most tangible step to date in recognising the responsibilities of the parent company. This is clearly an underlying principle of group relations, which is practically the opposite of the German legal system, which expressly regulates the right of the holding company – through the provision of a domination agreement – to issue directives to the subsidiary, sometimes even prejudicial ones, in the name of the overriding group interest.
In general terms, it can be said that both regulatory attempts and the legal debate suffer from the inability to reconcile autonomy and external direction, thereby weakening theoretical approaches.
The prevailing models of corporate groups in the European context are the German and the Italo-French models.
The former is based on the distinction between “contractual groups,” which entail liability for the holding company and thus tend toward a substantial identity overlap between the companies, and “de facto groups,” which instead presuppose a prohibition on the parent company from exploiting the subsidiaries and, as a consequence, do not impose direct liability on the parent for the benefit of the stakeholders of the controlled companies.
The Italo-French model is theoretically grounded in the idea that the control exercised by the parent company is inevitable—thus rejecting the de facto group model from the outset—and justifies such control through the logic of “compensatory advantages,” provided that the interests of the subsidiaries are not harmed.
It would be redundant to once again point out the clear terminological contradictions evident even in the brief overview of group models just mentioned. In the case of Italy, it is worth mentioning a theoretical approach[viii] that proposes using the company’s bylaws to hold group management accountable, by binding those who govern the group to their duties. After all, as has been highlighted, the activity of direction and coordination is already codified in primary legislation (Article 2497 of the Civil Code).
This approach shifts the focus to the intercompany level and moves toward a kind of formalisation of the actual form of control exercised by the parent company.
However, it is unlikely that corporate bylaws can effectively function as instruments to supervise the actions of the parent company. First and foremost, because external direction precedes the creation of the subsidiary, making it difficult to rely on the self-regulation of those who benefit from control—namely, the parent company. For this very reason, transposing the organisational model of the group into corporate bylaws—that is, incorporating the activity of direction and coordination into the actual corporate structure—would amount to a merely formal compliance measure, as generic and vague as possible.
But this is not the only issue. As previously mentioned, the only domain in which intra-group organisational models are actually defined is the contractual domain—that of commercial exchange—where parent and subsidiary companies assume reciprocal legal rights and obligations, with all the related economic, labour and financial consequences.
In this regard, it is worth reiterating that the tangible manifestation of the unified group enterprise lies in intra-group transactions, a phenomenon that can be described as a “dynamic system of reciprocal supply relationships”[ix].
It is precisely the dynamic nature of intra-group contractual relations that renders any ex ante definition of group organisational models ineffective.
This practice instinctively recalls the phenomenon of cross-shareholdings, which are subject to specific legal limits to prevent abuses of dominant position and improper balance sheet manipulation.
However, such issues can also easily arise from reciprocal supply arrangements, which clearly affect all the elements that determine a company’s value: economic, commercial, financial, and balance sheet-related.
[i] An approach recently reaffirmed by the Court of Justice of the European Union; Division IV; Judgment of 10 April 2014, Joined Cases C-247/11 P and C-253/11 P.
[ii] Court, 18-7-2013, case C-501/11, Schindler Holding Ltd, § 108; 29-9-2011, case C-521/09 P, Elf Aquitaine, § 59.
[iii] Opinion of Advocate General Bot, delivered on 26-10-2010, joined cases C-201/09 P, C-216/09 P, ArcelorMittal Luxembourg: ‘[…] I am none the less still convinced that the liability of the parent company cannot be established solely on the basis of a presumption derived from the holding of capital. If a 100% holding is sufficient to establish the existence of a group link, I do not think that it can in itself presume the actual exercise of a power to issue instructions constituting connivance in the commission of the infringement. To my mind, it is necessary for the Commission to produce further evidence capable of showing that the subsidiary had no autonomy, in order to preserve the fundamental rights recognised to undertakings…. however, the presumption of liability is essentially an exception to the principle of the presumption of innocence’.
[iv] Federico Ghezzi and Maria Teresa Maggiolino, L’imputazione delle sanzioni antitrust [The levying of antitrust sanctions], in ‘Rivista delle società’ [Company review], 2015.
[v] For the text of the directive, see in ‘Società’ [Company], 1987, pp. 1308 ff.
[vi] For these and other aspects of the project, see AA.VV., Percorsi di diritto societario europeo [Routes in European Company Law], Elisabetta Pederzini (edited by), Giappichelli, Turin, 2016, p. 66-67.
[vii] European initiatives that, in various ways, address the issue of corporate groups are indeed numerous. Below is a non-exhaustive list: Regulation (EC) No. 2157/2001 on the Statute for a European Company (SE); Directive 2003/123/EC on business aggregation; Directives 2006/68/EC and 2012/30/EU on the protection of shareholders and creditors of public limited companies, from their incorporation to their operation; Directive 2013/34/EU on annual financial statements and consolidated financial statements; Directive 2014/95/EU on non-financial reporting obligations for large companies and, consequently, large corporate groups; Regulation (EU) 848/2015 on cross-border insolvency proceedings; Directives (EU) 2017/1132 and 2019/1151 on the standardisation of company law among Member States and the interconnection of business registers; Directive (EU) 2019/2121 on cross-border conversions, mergers and divisions; and Directive (EU) 2025/872 (DAC9) aimed at countering harmful tax competition among Member States.
[viii] See Giuliana Scognamiglio, I Gruppi di società: poteri e responsabilità, in Il diritto societario europeo: quo vadis?, Giuffrè, 2023, p. 247 ss.
[ix] A scenario that falls within the more general provision set out in the third paragraph of Article 2359 of the Italian Civil Code, which establishes that subsidiaries are to be considered as companies ‘under the dominant influence of another company by virtue of specific contractual ties with it’.