(Bloomberg) -- France's top court may have complicated future merger deals in the country, ruling that companies should be criminally liable for wrongdoing at firms they acquire.
The Cour de Cassation on Wednesday ruled that a buyer can face criminal fines or confiscation for an offense committed by the target before the transaction, a reversal of established French case-law. The case concerned a company that was involved in an accident nearly two decades ago, before it was purchased.
French judges reasoned that while the acquired company is legally dissolved during a merger, its economic activity continues. This new interpretation will prevent situations where mergers put an end to an acquired company's criminal liability, the Cour de Cassation said in a press release.
The French court based its decision on a recent ruling from the European Court of Human Rights, but said that the new precedent will only apply going forward.
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