Board members and managing directors not personally liable for company cartel fines

On 27 July 2023, the Düsseldorf Higher Regional Court (OLG) ruled on a controversial issue concerning the personal liability of board members and managing directors. According to the decision, they are not personally liable for cartel fines of the company.

However, managing directors and board members are liable for civil claims of third parties who have been harmed due to the cartel.

 
Facts
According to the press release of the Higher Regional Court, the case concerned two affiliated stainless-steel companies which had sued their former managing director and chairman of the executive board, respectively, for damages due to his involvement in a cartel. Between July 2002 and the end of 2015, the defendant had exchanged sensitive competition-relevant information with competitors. As a result, the German Federal Cartel Office imposed fines (totalling around 355 million euros) on ten stainless steel companies, two industry associations and seventeen individuals. The plaintiff companies now demanded damages in the amount of the fine imposed on them of 4.1 million euros and reimbursement of more than one million euros for clarification and legal costs. They also demanded that the defendant be held liable for all future damages resulting from its involvement in the cartel.


Decision
The OLG confirmed the ruling of the lower court as follows.

• No recourse for fines: The OLG found that no recourse can be asserted against the defendant regarding the fines imposed on the limited liability company (LLC). The individual liability of managing directors and board members for corporate fines was ruled out to uphold the principle of antitrust law, which provides for separate fines for acting persons and companies. This applies even more if the board members and managing directors are covered by a "directors and officers liability insurance" and if the amount of coverage is far higher than the fine imposed on the company.
• No recourse for legal fees: In addition, the costs for internal investigations and defense directly related to the fine proceedings against the company are also not to be reimbursed.
• Liability for civil claims by third parties: Nevertheless, there remains liability on the part of the managing director and board members for civil claims by third parties who were harmed by the cartel. The asserted statute of limitations was rejected because all meetings within the framework of continuous conduct and the statute of limitations only began with the last meeting, according to the OLG.

Comment
The judgment is not yet final. The Senate has allowed an appeal to the Federal Court of Justice. To date, no supreme court decision has been issued on this question of the personal liability of board members and managing directors for a company's fines, which is disputed in the literature and case law. The Dortmund Regional Court, for example, took a different position in June.

Despite the decision, board members and managing directors must pay particular attention to maintaining compliance with antitrust law. For example, in the well-known Neubürger case, the LG Munich had ruled that a former board member had to pay damages of 15 million euros to his former employer for failing to ensure that a functioning compliance management system was in place.

The press release of the OLG Düsseldorf on the present decision of 27 July 2023 can be found here. The text of the decision is not yet available.