Managing director liability for cartel fines and investigation costs

If managing directors or board members breach their duties with regard to the management of a company, they are liable to pay damages to the company they represent pursuant to Section 43 (2) of the German Limited Liability Companies Act (GmbHG) or Section 93 (2) sentence 1 of the German Stock Corporation Act (AktG). Whether this also applies when the damage consists of a cartel fine imposed on the company or when there is a serious risk of such a fine being imposed, is, however, controversial. The Federal Court of Justice (BGH) has now referred the question of whether such an obligation to pay damages in the case of cartel fines might even violate European law to the ECJ for a preliminary ruling (BGH, decision of February 11, 2025, KZR 74/23, as yet unpublished).

Facts of the case

The background of the proceedings was a price cartel in the steel industry. The Federal Cartel Office had imposed a fine of 4.1 million Euros on a participating limited liability company (GmbH) and a separate fine of 126,000 Euros on the managing director personally. This reflects the structure of antitrust law, according to which fines imposed on individuals are typically significantly lower than those imposed on companies.

The GmbH argued that participation in the price cartel constituted a breach of duty by the managing director. It therefore demanded compensation from him for both the fine imposed on it and the IT and legal expenses it had incurred during the proceedings regarding the fine for the GmbH's legal defense.

Reasons for the decision

The Düsseldorf Regional Court and Higher Regional Court dismissed the claim. They followed a widely held view in legal literature, arguing that allowing the company to seek recourse against the acting board member would undermine the purpose of cartel fines. The graduated amount of the fines towards the company versus the person acting personally shows that it is precisely not the board member who should be personally penalized. Moreover, the deterrent effect of the corporate fine would be significantly weakened if the company were allowed to shift the financial burden to a third party, especially if - as is often the case - the managing director is covered by manager liability insurance and therefore an insurance company would ultimately bear the cost.

For the moment, the BGH refrains from expressing its own opinion on this question and refers it to the ECJ, asking whether a company’s recourse in such a constellation would be incompatible with European law. The ECJ has previously emphasized that the Member States must ensure that national competition authorities can impose effective, proportionate and dissuasive fines on companies that intentionally or negligently violate the prohibition on cartels under Art. 101 TFEU. Even the tax deductibility of such fines is considered likely to significantly weaken the deterrent effect. Against this background, the BGH referred the question to the ECJ, whether the possibility of recourse is also likely to reduce the deterrent effect. Should the ECJ answer this in the affirmative, it could lead to the conclusion that—on the basis of European law alone—Sections 43(2) GmbHG and 93(2) sentence 1 AktG must be interpreted to exclude recourse claims for cartel fines and the related legal and administrative defense costs.

Practical tip

Fines, as well as internal investigation and legal defense costs in cartel proceedings, often amount to significant sums. The ECJ's forthcoming decision will determine whether these costs must be borne by the companies or the managing directors involved. This decision of the ECJ will therefore be eagerly awaited not only by the companies concerned, but also by managing directors and board members and their D&O insurers.