In April, the European Commission announced fines totaling €302 million against several companies that were found to be involved in a cartel running the market for undersea electrical cables. Goldman’s specific fine was €37 million, for the involvement of its portfolio company Prysmian. Now, Goldman is appealing the ruling, details of the appeal are undisclosed.
The cables in question are used worldwide to connect parts of the power grid. An EU investigation found that the companies involved with supplying and deploying these cables had, in effect, divided up the world market among themselves and were not bidding competitively outside of their agreed to territories. Goldman’s then portfolio company Prysmian was part of this group, as PEI reported at the time.
EU rules recognize liability as falling on the parent company, not the portfolio company which meant that the fine went to Goldman itself. Prysmian was part of the Goldman Sachs Capital Partners portfolio.
At the time, Goldman said it was considering its options in terms of an appeal. Sources have suggested that Goldman may be pushing to have the fee bumped down to the private equity fund. The appeal was made on Thursday at the General Court in Luxembourg. Historically, such appeals have been unsuccessful, and the court can take up to three years to make a decision. The ruling will be significant for how private equity firms monitor the activities of portfolio companies under EU jurisdiction going forward.
Goldman declined to comment on the appeal. In April, the firm told Private Equity International that “it is important to recognise that the Commission has chosen to hold GS jointly and severally liable with Prysmian solely under its parental liability doctrine (on the basis that certain GS-sponsored funds acquired Prysmian in 2005 and divested their interest gradually until their final exit in 2010). Notably, there is no suggestion that Goldman Sachs or its people had any knowledge or involvement in the purported collusive behavior. Goldman Sachs is considering its rights of appeal.”