Managerial liability and the principle of effectiveness go to Luxembourg
A preliminary assessment of a preliminary reference
Translated title
Managerhaftung und das Effektivitätsprinzip gehen nach Luxemburg
Publication date
2025-08-01
Document type
Working Paper
Author
Organisational unit
Publisher
SSRN
Part of the university bibliography
✅
Language
English
DDC Class
340 Recht
Keyword
indemnification for fines
antitrust
competition law
optimal sanctions
D&O insurance
principle of effectiveness
paradox of compensation
Abstract
The German Federal Court of Justice has made a preliminary reference to the CJEU on the question whether a company may claim compensation from a culpable manager for corporate fines imposed on the company by antitrust authorities. Such indemnification for, or recovery of, the corporate fine reduces the economic burden on the undertaking and therefore conflicts with the principle of effectiveness under EU law, which requires fines on the undertaking not only to be proportionate but also dissuasive and deterrent. Proponents of indemnification and recovery argue that the reduction of deterrence on the company is compensated by the increase in deterrence on individuals. This article explains that this is not the case, inter alia, because of the presence of D&O insurance.
Version
Draft
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