Shifting the Burden: Rethinking Successor Liability in EU Antitrust Enforcement

Mergers & acquisitions (M&A) practices are often known for their frantic pace, a rhythm that can conflict with the careful consideration required for antitrust issues. Yet, while frequently underestimated in M&A deals, antitrust risks can become quite costly under the EU’s doctrine of successor liability.

Successor liability arises from the concept of undertaking which defines the infringer in EU antitrust law. On this basis, the Commission may attribute liability for antitrust infringements to a legal entity that was not operating the business at the time of the misconduct, including a buyer in an M&A transaction. While this approach broadens the scope of antitrust liability, it stands in tension with fundamental principles of corporate law, which generally preserve the legal separateness of entities and protect shareholders from company debts.

Traditionally, the doctrine of successor liability was applied in three situations: when the original infringer no longer existed, when companies were linked through structural ties, and when the transfer occurred under abusive, non-market conditions. Yet, the Court of Justice of the European Union (CJEU) gradually expanded the scope of successor liability through its case law, making its application increasingly unpredictable and creating significant legal uncertainty for M&A transactions. 

This uncertainty is illustrated by four factually very similar cases in which the CJEU nevertheless reached four different outcomes. In each case, a company involved in a cartel sold its infringing assets, raising the same legal question: after the transfer, which entity should bear the fine for breaches of EU antitrust law? In Hoechst [2009], liability remained with the original infringer despite the transfer of cartelised assets (para 16), while in Moreda liability was shifted to the newly merged successor notwithstanding a similar transfer of infringing assets (para 318). By contrast, in Parker Hannifin [2014], the Court held the acquirer of the cartel-related assets responsible, allowing liability to follow the transferred assets rather than the original infringer (para 41). Finally, in Prysmian [2020], liability was extended simultaneously to both the former and new parent companies (para 19). 

In reality, the apparent inconsistency of the CJEU’s case law on successor liability conceals a clear underlying objective that shapes the EU approach. Contrary to what some scholars suggest, the Commission’s concern here is not primarily deterrence, as it is in the doctrines of parental and subsidiary liability. Parental liability rests on the parent company’s control over the infringing entity at some point in time. By contrast, in cases of successor liability, assuming the infringing activity was discontinued, successors had no such control and thus could not have prevented the infringement. For this reason, deterrence offers little justification for extending liability to successors. Instead, the Commission’s principal aim with successor liability is to secure payment of the fine.

EU legislators should acknowledge this enforcement goal openly and shift the burden away from buyers in M&A transactions, placing it instead on sellers, who are considerably more likely to have exercised control over the infringement at some point in time. This could be achieved through a two-step approach: (1) introducing substitute liability and (2) establishing mandatory escrow accounts. 

As a first step, antitrust liability should be reframed as a form of substitute liability in the context of M&A successor liability. The law ought to recognize that buyers had no control over antitrust infringements committed prior to an acquisition, and acquirers should therefore be seen as paying on behalf of the perpetrator rather than being the perpetrator themselves. In practice, this would mean that the successor could be required to satisfy the fine not because it engaged in the infringement, but to ensure that it is collected when no other alternative is available. Borrowing from the 2017 amendments to the German Competition Act, specifically section 81 a, such an obligation would function as a financial guarantee rather than a sanction, placing the acquirer in the role of guarantor rather than culprit. 

This approach carries several advantages. It avoids stigmatizing successor companies as cartelists and shields them from reputational harm. It also protects acquirers from regulatory consequences such as repeat-offender status, license revocations, or blacklisting. Codifying this substitute liability would further enhance legal certainty, since buyers would know in advance that they may be pursued as substitute payers. For enforcers, the model is equally attractive: because it does not involve any allegation of wrongdoing, the procedural safeguards attached to fines need not apply. At the same time, it ensures more reliable collection, makes evasion more difficult, and simplifies enforcement by avoiding complex continuity tests and reducing litigation, as the substitute debtor cannot dispute intent or fault.

This brings us to the financial risks faced by acquirers in M&A transactions. Protection from reputational and regulatory consequences, as well as greater legal certainty, offers limited comfort when buyers may still be required to shoulder substantial antitrust fines. To address this concern, the second part of the solution is the introduction of mandatory antitrust escrow accounts to M&A deals.

Escrow accounts were originally a common law mechanism which serve as a financial safeguard and thus complement the benefits of substitute liability. Their trigger event should be the payment of antitrust indemnification claims brought by the buyer or third parties against the target. Crucially, though, to ensure that fines are paid following an M&A deal, such accounts must be subject to both a minimum amount and a minimum term. The reasoning is straightforward: if the funds are insufficient, antitrust fines cannot be paid, and the burden once again shifts from the seller to the buyer.

The escrow amount should cover a substantial portion, though not the entirety, of any potential antitrust fine. The key is to strike a balance: easing the buyer’s financial burden, while addressing moral hazard and avoiding excessive immobilization of the seller’s proceeds. As for the minimum escrow term, the most appropriate benchmark from a buyer’s perspective is the prescriptive period of antitrust fines, excluding disputed sums.

Overall, substitute liability in combination with mandatory escrow accounts could substantially reduce the antitrust related risks faced by acquirers in M&A transactions in Europe. By combining elements from both common law and civil law traditions, this approach would increase legal certainty for buyers, shield them from reputational and regulatory harm, and ensure that a significant share of fines is born by sellers. At the same time, it would facilitate enforcement by guaranteeing payment, even if this means temporarily restricting access to part of seller’s proceeds.

Nicolaus Casati is a graduate student at Sciences Po specializing in competition law.