"A Plague on Both Your Houses": Antitrust Liability Tough to Shake off in Transactions

"A Plague on Both Your Houses": Antitrust Liability Tough to Shake off in Transactions

In a judgment delivered on 3 March 2011 in Cases T-117/07 Areva v European Commission and T-121/07 Alstom v European Commission, the General Court of the European Union (the ' the Court confirmed the general rule that when a wholly-owned subsidiary that has infringed competition law is sold to a new owner, that subsidiary remains liable for any infringement that it commits before the sale and the previous owner is jointly and severally liable with that subsidiary for that infringement relating to behaviour up until the sale.

The Court also held that where a decision has imposed a cartel fine jointly and severally on a number of companies, the companies must contribute in equal amounts to the payment of the fine unless the Commission determines that they are not in fact liable for the infringement in equal measure.

The practical impact is that the new owner, while not legally liable for the fine related to conduct prior to the acquisition, will be financially impacted if the subsidiary has to pay a joint and several fine together with the previous owner for pre-acquisition conduct.

Both these findings highlight that adequate due diligence and consideration of the allocation of any potential liability for antitrust infringements remain paramount when acquiring an entity suspected of anti-competitive conduct. While any contractual allocation cannot affect the Commission’s determination of joint and several liability, parties should make adequate provision to allocate liability between themselves in any event.

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