The existence of Corporate Groups – several independent incorporated companies connected mostly by a chain of participations to form what is practically one commercial unit – has long been a reality throughout the world. In Europe the Corporate Group has a special importance because if the acquisition or founding of subsidiaries were not legally possible, companies would not, in practice, be able to avail themselves of their right of free establishment under Articles 43 and 48 EC [ex Art. 52 and 58 ECT]. The connection between the right of establishment on the one hand, and the nationality of the companies on the other, leads precisely to the establishment of small and large corporate groups. Furthermore, the acquisition of a majority in another company and the integration of the acquisition into the commercial aims of the group is one of the most important means by which ownership of companies becomes concentrated. Finally, the significance of the effects of taxation and tax laws on the creation and centralisation of company groups should not be underestimated. This is an undisputed fact, and equally a legal reality. Groups which operate on a worldwide scale such as General Motors, Shell, Bayer and Siemens are obvious examples of this reality, a reality already recognised by the EU in 1983 in the Seventh Directive on Company Law dealing with consolidated group annual accounts. In the real world of management and of the capital and financial markets, only the consolidated accounts are of significance; the annual accounts of individual components of the group have become practically meaningless, while those of the parent company have, at least, a significance as a basis for the allocation of profit. Naturally, the EU rules on control of concentrations apply precisely to the formation and expansion of company groups.

The project “Corporate Group Law for Europe” is a joint effort of European specialists in company law, the “Forum Europaeum”. This Forum consists predominantly of legal scholars who, at the same time, enjoy close ties with corporate practice. We should welcome the initiative and appreciate the tremendous amount of careful work that went into producing this document.

The Forum Europaeum Konzernrecht (hereafter the Forum Europeum) in its Corporate Group Law for Europe puts forward principles and proposals for a harmonised European corporate group law.

In the field of product and environmental liability, the justification for limited shareholders' liability has been discussed with renewed fervor in the U.S. In 1995 the lower instance courts allowed product liability claims from silicone breast implant patients against Dow Chemical, a company holding 50% of the shares of the defendant. In June 1998 the United States v. Bestfoods Supreme Court decision defined and clarified the conditions for the liability of controlling shareholders for environmental damage caused by their subsidiaries in accordance with § 107 (a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Although mergers and acquisitions activity in Europe has reached unprecedented levels, almost doubling in the past year alone, hostile takeovers are still the exception, not the rule, especially in Germany. The British telecommunication concern Vodafone's 141 billion Euro takeover bid for its German counterpart, Mannesmann, in December 1999 was the first successful hostile bid for a major German company in post-war history.