June 2025 – Cartel fines, which can amount up to 10% of a company's global group turnover, represent one of the most significant enforcement instruments in European competition law. With both the frequency and the magnitude of such cartel fines on the rise, companies are increasingly exploring the possibility of seeking recourse from managing directors. The admissibility of such damage claims is currently subject of preliminary ruling proceedings before the European Court of Justice ("ECJ").
1. Facts of the case
The Cartel Senate of the German Supreme Court ("BGH", case no. KZR 74/23) referred a case to the ECJ involving a former managing director of a German limited liability company who simultaneously served as CEO of a German joint-stock corporation within the same corporate group. Between 2002 and 2015, the companies participated in a price-fixing cartel, leading the German Federal Cartel Office to impose fines of EUR 4.1 million on the limited liability company and EUR 126,000 on the director personally.1
The limited liability company filed a civil claim against its former director, seeking compensation for the cartel fine imposed. The joint-stock corporation demanded compensation for legal and IT-related costs incurred in connection with its defence against the fine. Additionally, both entities sought a declaratory judgment establishing the director's liability for all future damages arising from the cartel conduct, including potential damage claims brought against the companies by third parties.
The dispute before the ECJ centres on whether the managing director can be held personally liable for the cartel fine imposed on the company due to a breach of the director's duty of care. There is no case law of the ECJ regarding this question.
2. Directors' liability for cartel fines
- Basics of directors' liability
In the case at hand, German law applies to the director's liability, which corresponds to common legal standards known in other jurisdictions. In general, directors may be held internally liable by their company for financial losses suffered due to the unlawful and culpable violation of their duty of care.2 The directors' obligations include to fully comply with mandatory statutory provisions, including antitrust laws.
In the German proceedings, the claimants argued that both the cartel fine and the associated costs constitute financial damage caused by the defendant's participation in the price-fixing cartel, which constitutes a breach of the director's duties. At first glance, all the prerequisites for a damage claim appear to be satisfied. However, this gives rise to the question of whether such compensation would undermine the very purpose of the cartel fine imposed on the company.
- Purpose of cartel fines
According to the case law of the ECJ, Member States must ensure that the national competition authorities are able to impose effective, proportionate, and dissuasive fines on companies. These fines are intended to sanction unlawful conduct to deter companies from committing future infringements. The determination of the fine considers company-specific factors such as group turnover, market impact, size, and financial position.
If a company were entitled to seek compensation for the financial loss of an antitrust fine, it would ultimately not bear the sanction itself, which would undermine the punitive and deterrent objectives of the fine. This consideration was one of the main reasons why the German courts of first and second instance dismissed the claims for payment brought against the director.3
The BGH referred the matter to the ECJ to clarify whether the objectives of antitrust law necessitate limiting the application of national company law such that managing directors cannot be held personally liable for cartel fines imposed on the company. In line with EU law, the ECJ's ruling will be binding for the BGH, as well as for any other national court before which the same issue is raised.
In light of established case law, it seems likely that the ECJ will uphold the principle of effectiveness of cartel fines, which would preclude companies from shifting the financial burden of such fines onto their managing directors.
3. Further damages and D&O insurance
- Further damage claims
Notably, the considerations outlined with respect to the limitation of damage claims apply exclusively to antitrust fines imposed by public authorities and do not extend to other losses incurred by the company as a result of violations of competition law, such as damage claims brought by third parties affected by the cartel.
In the German case referred to the ECJ, the first and second instance courts granted the claim for a declaratory judgement, holding that the director shall be personally liable for future damages arising from the cartel, including claims for damages brought by third parties. This is of particular significance, as the cartel law violations spanned more than a decade, potentially giving rise to substantial third-party claims and, consequently, considerable recourse claims against the director.
- Protection through D&O insurance?
A director may be potentially protected by Directors and Officers ("D&O") insurance, which can provide coverage for both claims brought against the director by the company and the director's legal costs incurred in defending against such claims. In the German case, a D&O insurer acted as an intervening party in the proceedings, as the director was covered under the group's D&O policy.
4. Key takeaways
- The ECJ's preliminary ruling, expected to be handed down in 2026, is highly anticipated, as it may provide much-needed clarity on whether directors may be held internally liable by their company for cartel fines imposed on the company.
- In light of the ECJ's existing case law, there is a general tendency toward upholding the effectiveness of cartel fines, which implies that such fines must ultimately be borne by the fined company itself. The rationale is that the fines would lose their intended deterrent effect if they could be passed on to the managing director by way of damage claims.
- Irrespective of the issue of cartel fines, the German BGH is set to rule on whether the director may be held liable for any further damages incurred by the company as a result of cartel law violations, such as third-party claims brought against the company. The German lower instance courts have already decided that the director is personally liable for such damages. The decision of the BGH will hold significant implications not only for Germany but also for other jurisdictions.
Footnotes
1 Notably, under German law cartel fines can be imposed
directly on individuals.
2 The same legal standard applies to the liability of members of the supervisory board. The question whether directors may be held liable applies mutatis mutandis to members of the supervisory board.
3 For the declaratory claim regarding the liability for
future damages, see point 3.
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