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No liability for the managing director for antitrust fines imposed on the company

No liability for the managing director for antitrust fines imposed on the company

No Restitution of Fines to the Company

(Higher Labor Court in Düsseldorf, partial judgment dated January 20, 2015 – 16 Sa 458/14; 16 Sa 459/14, 16 Sa 460/14)

Higher fines, more fines: in 2014 the Federal Cartel Office (BKartA) imposed fines of over 1 billion EUR against 67 companies and 80 private individuals for violating antitrust laws. In addition to the fines, companies are threatened with compensation claims from the injured parties.

Executive directors should take responsibility for their company. According to a ruling by the Higher Labor Court in Düsseldorf from January 20, 2015, this does, however, have limits.

The Higher Labor Court in Düsseldorf has dismissed the claim of a company involved in the so-called “rail cartel” against a former managing director for the restitution of the fine imposed by the Federal Cartel Office.

Due to unlawful antitrust agreements for the sale of rails, the Federal Cartel Office imposed fines of 191 million EUR. The company also came to terms with a customer affected by the antitrust agreements and paid the customer 100 million EUR in damages. The company demanded the repayment of the antitrust fines and of the damages from the former managing director.

The Higher Labor Court dismissed the claim for restitution of the antitrust fines with a partial judgment. The function of the corporate fine is to counterbalance the advantage won by the company by violating antitrust laws. If the fine were to be passed on to the acting person, this function would be circumvented. The fine imposed on the company by the Federal Cartel Office is therefore not to be reimbursed by the managing director.

The court also pointed out that antitrust law differentiates, and with good reason, between fines against companies and fines against individuals. Fines against individuals are limited to 1 million EUR, whereas fines of up to 10 percent of total revenues can be imposed against companies. This limit favoring the managing director would have no consequences if the corporate fine were to be passed on to him/her. Due to the fundamental importance of this legal question, the court permitted the appeal to the Federal Court.

Practical recommendations:
Managing directors can only breathe a brief sigh of relief, as significant liability risks remain: On the one hand, personal liability for a fine for violating antitrust law is considered under §§ 130, 9 Regulator Offences Act (omission of regulatory measures) as well as due to a direct claim by third parties for damages (Dornbracht decision of the Higher Regional Court in Düsseldorf from November 13, 2013, valid as of September 23, 2014). On the other hand, under § 43 of the Limited Liabilities Companies Act (GmbHG) liability to the company remains if the company suffers damages (e.g. payment of antitrust damages to third parties) caused by the managing director’s failure to prevent the corporation from violating the law. As a result, there is no avoiding the need to have a risk-commensurate compliance organization in place within the business.

By Dr. Christian Quack

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