In two decisions, the Saarbrücken Regional Court rejected the liability of management bodies for cartel fines imposed on a company (7 HK O 6/16 and 7 HK O 21/19, unpublished). Bathroom equipment manufacturer Villeroy & Boch claimed damages from four ex-board members with regard to a fine imposed by the European Commission for the claimant's participation in the bathroom fittings cartel (2010) and legal fees.(1)
In June 2010 the European Commission fined the claimant Villeroy & Boch for its participation in sales price agreements in the so-called 'bathroom fittings cartel'. The European Commission imposed fines totalling €622 million on 17 bathroom equipment suppliers.
Management not liable for cartel fines
Villeroy & Boch based its damage claims on the allegation that the defendant ex-board members had breached their prevention and supervision obligations because, among other things, they had failed to set up a compliance system that prevents cartel infringements effectively.
In addition to the cartel fine, the company also claimed damages for legal fees caused by the cartel infringement. The claims were rejected due to limitation. Contrary to the claimant's submissions, the limitation period had already started before the European Commission's 2010 decision. The first attorney's bill issued in connection with the European Commission's investigation constitutes the first relevant partial damage in the sense of the so-called 'principle of the damage unit' and is decisive for the beginning of the limitation period.
Besides the specific question of limitation, the court further raised fundamental doubts as to the liability of management bodies for a company's cartel fines. According to the court, the European Commission's decisions imposing fines under competition law are directed only at undertakings and not at individuals. According to German company law, company representatives can be held liable in cases of breach of obligations. However, a pass on of fines resulting from an infringement of competition law to management bodies and as a result, probably to directors' and officers' insurers, would be in contradiction to the provisions and objectives of European law.
The question of whether the claimant will appeal the Saarbrücken Regional Court's decisions and continue proceedings in the next instance is open at present.
Although the issue of liability of management bodies for cartel fines is of considerable practical relevance and interest, it has hardly been the subject of German court decisions so far. Several proceedings are currently pending, so further decisions can be expected soon. However, the Saarbrücken Regional Court's two decisions are likely to attract a high level of interest. They are of interest not only because they are among the first decisions ever on the issue of liability, but also because of the fundamental doubts expressed by the court against the liability of management bodies for cartel fines.
The Dusseldorf Regional Labour Court recently came to a similar conclusion in connection with fines from the rail cartel complex and generally rejected management's liability for cartel fines. However, the Federal Labour Court later overruled this decision due to the labour courts' lack of jurisdiction. The decision is now pending before the Dortmund District Court.
The Regional Court Munich I recently ruled that companies can claim damages for legal fees resulting from the breach of the obligation to set up a compliance system (10 December 2013 - 5 HK O 1387/10, which concerned bribery payments). Whether this must be viewed differently with regard to legal fees arising from competition law infringements in the future cannot yet be assessed.
However, attention should be paid to such claims' statute of limitation, especially if proceedings – as is common in competition law – drag on over a longer period. If necessary, timely measures should be taken to suspend the limitation period in order to secure claims without endangering the success of internal company investigations.
Endnotes
(1) European Commission press release of 23 June 2010 and European Court of Justice, Case C 625/13 P, judgment of 26 January 2017.
