Single Economic Entity And Corporate Separatedness Doctrine: A Juxtaposition – Anti-trust/Competition Law


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Under company laws, a company is considered to be a separate
legal entity distinct from its holding / parent company. However,
the doctrine of ‘piercing the corporate veil’ is an
exception to the rule and the courts use this exception to
‘penalise’ companies.

Competition laws, on the other hand, validate the ‘single
economic entity‘ doctrine where entities within the same
‘group’ may be considered as one for the purposes of
claiming advantage from scrutiny of competition regulators.

This paper aims to provide a brief overview as to the interplay
between the applicability of the SEE Doctrine vis-à-vis the
corporate separatedness doctrine (piercing the corporate veil),
which has not been discussed by any regulator / authority / court
in India.


1.1 The law governing companies globally, and in India,
recognises a company to be a personality, distinct from its
shareholders. In the celebrated case of Salomon v Salomon &
Co. Ltd
1., Lord Halsbury LC, had stated:

[A] company must be treated like any other independent
person with its rights and liabilities [legally] appropriate to
itself … whatever may have been the ideas or schemes of those who
brought it into existence.

1.2 As a rule, a subsidiary remains a separate legal entity,
distinct from its holding / parent company. However, the doctrine
of ‘piercing the corporate veil’ is an exception to the
rule that a company is a legal entity, separate from its

1.3 In the Escorts2 case, the Indian Supreme
Court had opined that “the corporate veil may be lifted
where the statute itself contemplates lifting the veil, or fraud or
improper conduct is intended to be prevented, or a taxing statute
or a beneficent statute is sought to be evaded or where associated
companies are inextricably connected as to be, in reality, part of
one concern.

1.4 Thus, it may be safe to say that the Courts lift the
“corporate veil” when the device of incorporation has
been used for illegal or improper purpose such as to defraud
creditors, to evade an existing obligation, to circumvent a statute

1.5 The Single Economic Entity doctrine (‘SEE
‘), on the other hand, goes beyond the company
law concept of a company having a ‘separate legal
personality’ and recognises that different juristic persons
may, in certain cases, be acting and behaving as one.

1.6 This paper aims to provide a brief overview as to the
interplay between the applicability of the SEE Doctrine
vis-à-vis the corporate separatedness doctrine (piercing the
corporate veil), which has not been discussed by any regulator /
authority / court in India. In fact, not just in India, there is
not much commentary on the juxtaposition in international
jurisprudence either.


2.1 Section 3 of the Competition Act, 2002
(‘Act‘) provides for anti-competitive
agreements and states:

No enterprise or association of enterprises or person
or association of persons shall enter into any agreement in respect
of production, supply, distribution, storage, acquisition or
control of goods or provision of services, which causes or is
likely to cause an appreciable adverse effect on competition within

2.2 Section 2(h) of the Act defines the term
‘enterprise’ as:

A person or a department of
the Government, who or which is, or has been, engaged in any
activity, relating to the production, storage, supply,
distribution, acquisition or control of articles or goods, or the
provision of services, of any kind, or in investment, or in the
business of acquiring, holding, underwriting, or dealing with
shares, debentures or other securities of any other body
either directly or through one or more
of its units or divisions or subsidiaries
whether such unit or division or subsidiary is located at the same
place where the enterprise is located or at a different place or at
different places, but does not include any activity of the
Government relatable to the sovereign functions of the Government
including all activities carried on by the departments of the
Central Government dealing with atomic energy, currency, defence
and space.
” [emphasis added]

2.3 The Act is unique in as much as, it provides a definition of
an ‘enterprise’. From the definition prescribed under
Section 2(h), it entails that the enterprise is one which acts
either directly or indirectly through its divisions or
subsidiaries, thereby going beyond the company law concept of a
company having a ‘separate legal personality’ and
recognising that different juristic persons may, in certain cases,
act and behave as one single entity. Thus, for competition law
analysis, a ‘legal entity’ is distinct from an
‘economic entity’. We will delve into the distinction in
more detail later in the opinion. 

2.4 Having said that, The Act is also pretty clear that in order
to establish a contravention under Section 3, an agreement is
required to be proven between two or more enterprises. Which means
that agreements between entities constituting one enterprise cannot
be assessed under the Act. This is also in accord with the
internationally accepted doctrine of ‘single economic


3.1 The jurisprudence of the Indian competition watchdog –
the Competition Commission of India
(“CCI“) in relation to the SEE doctrine
is still at a nascent stage and the CCI may well accept the
internationally accepted principles of SEE, should the facts of a
matter merit so. In light of the same, we set out below, a brief
overview of the position in respect of the SEE Doctrine in the
jurisdictions where the SEE doctrine has been used for a long time
by the competition authorities – U.S. and EU.

3.2 Position in the U.S.

3.2.1 Section 1 of the U.S. antitrust legislation – the
Sherman Act, prohibits ‘every contract, combination…or
conspiracy in restraint of trade’4. This has been
understood by American courts as requiring a concerted action
between two or more independent firms in the market. It exempted
unilateral action5.

3.2.2 The U.S. single entity doctrine provides business units
with a defence against the imposition of antitrust penalties. The
notion of single entity was most explicitly evinced in the U.S.
Supreme Court’s decision in 1984 in the Copperweld
case6. There the Supreme Court held that a parent
corporation and its wholly owned subsidiary constituted a single

3.2.3 Following divergent case law interpretations on the scope
of single entity, the U.S. Supreme Court revisited and clarified
its analysis in the important 2010 American Needle

3.2.4 American Needle did not explicitly overrule
Copperweld but re-interpreted its meaning to propose a
rule of reason test rather than a per se approach
to affiliated corporations8. In words of one group of
commentators, ‘before American Needle, lower courts
agreed that complete common ownership was a sufficient condition
for single entity status but not, perhaps a necessary one.
Following American Needle, complete common ownership now
appears to be a necessary condition for single entity status, but
not a sufficient one’9.

3.2.5 The American Needle opinion does not explicitly
proclaim a single ‘single-entity’ testing framework. The
opinion rather presents the conditions for a judicially refined
single entity analysis framework10. American
distinguishes three conditions:
control (absence of independent decision-making
centres); interests (absence of concurring
entrepreneurial interests); and competitive links
(lack of actual or potential competition)11. [emphasis

3.3 Position in EU

3.3.1 Single entity analysis in EU law is enshrined under a
broader ‘undertaking’ concept12. The basic
elements of the single entity component have been interpreted quite
consistently over time by EU Courts. In the Shell
case13 the General Court stated that a single entity is
an ‘economic unit which consists of a unitary organisation of
personal, tangible and intangible elements which pursues a specific
economic aim on a long-term basis and can contribute to the
commission of an infringement of the kind referred to in that

3.3.2 While the notion of business links refers to a parent
company effectively influencing commercial policy, personal links
relate to the sharing of directors or executives among different
legal persons15 [entities].

3.3.3 When dealing with a group of undertakings, the constituent
factor one should bear in mind is not whether those undertakings
have a separate legal personality, but whether or not they act
together on the market as a single unit16.

3.3.4 Single unit market conduct implies that a subsidiary or
affiliate has no real freedom to determine its course of action on
the market17.

3.3.5 Thus, it emerges that the assessment of single economic
unit status in the EU depends crucially on control and conduct
factors, including among others, parental control over the board of
directors, instructions imposed on the subsidiary to be carried
out, the amount of profit taken by the parent and other elements
referring to real decisive influence by a parent over its
subsidiary18. Reliance may also be placed on an
erstwhile decision of the European Court of Justice, which, in the
Beguelin Import case19, held that one
undertaking could comprise several corporations which can be
organised in a simple parent company and subsidiary scheme or in
even more complex schemes with several levels of subsidiaries.


4.1 As mentioned previously, the jurisprudence in relation to
the SEE Doctrine in India is still evolving with the CCI setting a
confusing precedent by confirming this principle in a merger case
and denying it in a cartel case involving the same set of parties
(more specifically set out in the following paragraphs).

4.2 In the Lamborghini case20, the CCI
accepted the concept of single economic entity and opined that
[A]greements between entities constituting one enterprise
cannot be assessed under the Act. This is with accord with the
internationally accepted doctrine of ‘single economic
entity’ … As long as the opposite party and Volkswagen India
are part of the same group, they will be considered as a single
economic entuty for the purpose of the

4.3 In the appal before the Competition Appellate Tribunal
(‘COMPAT‘)22, it was observed
that an internal agreement between subsidiaries, which are part of
the same group23, cannot be considered as an agreement
for the purpose of Section 3 of the Act, thereby endorsing the view
of the CCI24.

4.4 Similarly, in the Honda case25, the CCI
observed that “an internal agreement / arrangement between
an enterprise and its group / parent company is not within the
purview of the mischief of section 3(4) of the Act…At the same
time, the Commission would like to emphasize that the exemption of
single economic entity stems from the inseparability of the
economic interests of the parties to the agreement. Generally,
entities belonging to the same group e.g. holding-subsidiaries are
presumed to be part of a ‘single economic entity’ incapable
of entering into an [anti-competitive] agreement, the presumption
is not irrebuttable

4.5 The SEE doctrine was also analysed by the COMPAT in the
Public Insurers case27 where four public-sector
insurance companies raised a preliminary plea that they were
exempted from Section 3 of the Act as they formed a ‘single
economic entity’ with 100% shareholding vested with the
Government of India, which controlled the management and affairs of
the said companies. The decision in this matter was that even
though the overall supervision of the insurance companies was with
the central government, each of the companies placed a separate bid
in response to the tenders floated by the government. Further, it
was also observed that the Ministry of Finance did not exercise
de facto control over the business decisions of the
companies and as such, cannot be considered as a single economic
entity. The decision in the Public Insurers case seems to
suggest that a common shareholder, management or enterprise may
not be sufficient for the SEE doctrine to apply.

4.6 The latest case(s) where the SEE doctrine has been opined
upon have been the Grasim case(s). Through two cases having the
same set of facts and between the same parties, by giving diverging
opinions, the CCI has set a confusing precedent. We set out below,
a brief summary of both cases:

4.6.1 Grasim Industries:
Merger Case

In 2015, the CCI approved the merger of Aditya Birla Chemicals
and Grasim Industries. At that time, the companies had argued that
they fall within the SEE doctrine with common leadership, executive
management, marketing, procurement and HR team. The regulator had,
at that time, accepted this argument.

4.6.2 Grasim Industries:
Cartel Case

In this case, the CCI found Grasim Industries and Aditya Birla
Chemicals guilty of bid-rigging a Delhi Jal Board tender. The
regulator in this case, rejected the argument of the companies that
there could not be collusion amongst them since they were part of
the same group and hence, constituted a single economic entity.

In considering this matter, the regulator pointed out that
though Grasim and Aditya Birla Chemicals had common shareholders,
employees etc, they participated in the tender as separate

4.7 In light of the above averments, it can be said that there
is an element of uncertainty and inconsistency in the CCI’s
approach when dealing with the SEE doctrine and the CCI does not
have a fixed template for analysing the applicability of the SEE
doctrine, which may differ according to the facts of the case.
However, from the limited cases that have been adjudicated upon by
the CCI and COMPAT on the applicability of the SEE doctrine, there
seems to be a degree of significance on the factors set out

(a) Whether the entities constitute a “group” within
the meaning of Explanation (b) to Section 5;

(b) Legal control – for this, the regulator may

(i) Parent / subsidiary relationships;

(ii) The shareholding pattern, i.e, the shares held, whether
directly or indirectly;

(iii) Voting rights held (including negative voting rights) by
parent entity;

(iv) Control in the appointment and removal of board members/
senior management employees;

(v) Compliance of directives by subsidiaries;

(vi) Parent’s control over the business operations or

(vii) Whether the parent entity is in charge of preparing rules
that govern the subsidiaries;

(viii) Siblings – A sibling relationship exists when two
distinct legal entities have a common owner; etc

(c) Inseparability of the economic interest of the
– for this, the regulator may consider:

(i) Whether the subsidiaries are economically dependent on the
parent entity;

(ii) Identity of Interests – i.e. whether the parent and
subsidiaries’ interests are common or different;

(iii) Absence of actual or potential competition or
complementarity‘ among the products / services of
the concerned entities, give the presumption of a single

(d) The parent’s ability to influence pricing policy,
production and distribution activities, sales objectives, gross
margins, sales costs, cash flow, stocks and marketing etc.


5.1 In light of the above, we would like to state that it is not
uncommon for companies within a group to be closely associated. In
some instances, there may be some form of operational unity, or an
overlap in management. However, this in itself does not mean that
they may be considered as one legal entity, instead, each company
is treated in law as having its own separate legal personality.

5.2 The position in a jurisdiction, closer to home, provides a
bit more clarity. Singapore, as a colonial jurisdiction, has
evolved into one of the most modern and progressive
jurisdiction(s). The rapid development of Singapore’s
regulatory and compliance roadmap, combined with an equally ardent
enforcement environment, reflects Singapore’s growth and
progress as a nation.

5.3 In 2014, the High Court of Singapore in its decision in the
Manuchar Steel30 case, addressed the exact
issue – being a question as to whether there is a legal
principle that treats some companies as having the same corporate
personality on the grounds of being a “single economic

5.4 In the said case, the Singapore Court indulged in an
analysis of international cases and analysed the single economic
entity concept to a multidirectional version of the ‘piercing
the corporate veil’ doctrine. However, even then for corporate
veil cases, it determined that “the law eschews disregard
of the separate corporate legal personality of a company… except
in exceptional circumstances, and only where there has been some
form of abuse. Respect for the separate corporate legal
personality…is sacrosanct in nearly every other

5.5 Thus, to conclude, it may be stated that the applicability
of the SEE Doctrine vis-à-vis the corporate preparedness
doctrine is still a grey area and it is advisable to seek legal
assistance to determine whether one or both of the aforementioned
doctrines may be applicable to a given set of facts.


1. 1897 AC 22: (1895-99) All ER Rep 33 (HL)

2. LIC v Escorts Ltd. (1986) 1 SCC

3. Exclusive Motors Pvt Limited v Automobili
Lamborghini S.P.A
, Case No. 52 of 2012 (CCI) Para

4. 15 U.S.C., Section 1 (2012) [Sherman Act]

5. Chirayu Jain, ‘Single Economic Entity Doctrine
in India
‘, at page 11

6. U.S. Supreme Court, Copperweld Corp. v Independent
Tube Corp.
(1984), 104 S. Ct. 2739)

7. U.S. Supreme Court, American Needle, Inc. v
National Football League
(2010), 130 S. Ct. 2206

8. Pieter Van Cleynenbreugel, ‘Single Entity
Tests in U.S. Antitrust and EU Competition Law
‘, at page

9. J. Stone and J. Wright, ‘Antitrust Formalism
is Dead! Long Live Antitrust Formalism! Some implications of
American Needle v NFL
‘, Cato Supreme Court Review (2010),

10. Pieter Van Cleynenbreugel, supra note 6,
page 19

11. American Needle, supra note 5,

12. Cases 56/64 and 58/64, Etalissements Consten
S.a.R.L. and Grundig-Verkaufs-GmbH v Commission of the European
Economic Community
[1966] ECR 299, 340

13. Case T-11/89, Shell International Chemical
Company Ltd v Commission of the European Communities
ECR II-757

14. Ibid, at para 311

15. A. Montesa and A. Givaja, ‘When Parents Pay
for their Children’s Wrongs; Attribution of Liability for EC
Antitrust Infringements in Parent-Subsidiary Scenarios
W. Comp. 29 (2006) at page 569

16. CFI T-9/99, HFB Holdings fur Fernwarmetechnik
Beteiligungsgesellsschaft GmbH & Co KG and Others v Commission
of the European Communities
[2002] ECR II-1487, para

17. Case 48/69, Imperial Chemical Industries Ltd v
Commission of the European Communities
[1972] ECR 619, para

18. Case 107/82, Allegemeine
Elektrizitats-Gesellschaft AEG-Telefunken AG v Commission of the
European Communities
[1983] ECR 3151, para 50-52

19. Beguelin Import Co. v S.A.G.L. Import Export
[1971] ECR 949, para 8

20. Supra note 1

21. Supra note 1

22. Exclusive Motors Pvt Ltd v Automobili Lamborghini
, Competition Appellate Tribunal, Appeal No.

23. Explanation (b) to Section 5 lays down the definition
of “group” to mean “two or more enterprises
which, directly or indirectly are in a position

  1. exercise twenty-six
    percent or more of the voting rights in the other enterprise;
  2. appoint more than fifty
    percent of the members of the board of directors in the other
    enterprise; or
  3. control the management or
    affairs of the other enterprise.

24. Supra, note 20, at para 11, page

25. Shamsher Kataria v Honda siel & Ors,
Competition Commission of India, Case No. 03/2011

26. Ibid, at para 20.6.5, page

27. National Insurance Companies Ltd & Ors v
Competition Commission of India
(2017) Comp LR 1

28. Grasim Industries Limited and Aditya Birla Chemicals
(India) Limited, Competition Commission of India, Combination
Registration No. C-2015/03/256

29. Delhi Jal Board v Grasim Industries Ltd &
Ors, Competition Commission of India
, Ref. Case No.s. 03 &
04 of 2013

30. Manuchar Steel Hong Kong Limited v Star Pacific
Line Pte Ltd
, [2014] SGHC 181

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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


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