In three judgments of 19 December 2013, recently published, the Labour Court of Essen (the Court) rejected all damages claims lodged by different ThyssenKrupp group companies (the plaintiffs) against Mr Uwe Sehlbach, former ThyssenKrupp Executive Board Member (as from 2009) and Managing Director of a ThyssenKrupp subsidiary (until 2009). The plaintiffs argued that Mr Sehlbach had violated his duties and obligations arising from his employment contracts by not properly leading and coordinating the group companies belonging to his business area and by violating his duty to avert and minimise damage to his employer by omitting to resolve and terminate competition law infringements by the company. The plaintiffs also argued that Mr Sehlbach had been aware of competition law infringements taking place at one of the plaintiffs, ThyssenKrupp GfT Gleistechnick GmbH (GfT Gleistechnik), as Mr Sehlbach had been the company's Managing Director during the period concerned.

GfT Gleistechnik had been directly involved in bid-rigging and illegal pricing and quota agreements at the expense of Deutsche Bahn AG. In particular, GfT Gleistechnik had agreed with competitors at least between 2001 and 2008 on prices charged to Deutsche Bahn AG for normal rails and was therefore fined € 103 million by the German Federal Cartel Office (FCO) in July 2012 (see VBB on Competition Law, Volume 2012, No. 7, available at www.vbb.com). In addition, GfT Gleistechnik was fined another € 88 million by the FCO in July 2013 for having engaged in bid-rigging in the supply of rails, points and sleepers to local public transportation companies, private, regional and industrial railway companies and construction companies in the period from 2001 to 2011 (see VBB on Competition Law, Volume 2013, No. 8, available at www.vbb.com).

The plaintiffs claimed compensation from Mr Sehlbach for the damage arising out of both rail track cartels including the total amount of fines imposed on GfT Gleistechnik, i.e. € 191 million. The Court rejected all claims, finding that Mr Sehlbach had uncovered and disclosed suspicious cartel conduct at GfT Gleistechnik to superior group executives already in 2004 and once again in 2006 during internal compliance audits. No actions had however been taken by the group.

As regards Mr Sehlbach's liability for the illegal pricing and quota agreements in view of his monitoring obligations as Managing Director, the Court found that the management of sales activities had been the responsibility of GfT Gleistechnik's other Managing Director. Whilst the Court acknowledged that Mr Sehlbach had indeed been obliged to monitor also his fellow Managing Director, the overriding responsibility for the failure of doing this was with the group superiors who did not act following the compliance audits in 2004 and 2006.

The Court further clarified that pursuant to the rationale of the German Act Against Restraints of Competition, the maximum liability of individuals for competition law infringements is € 1 million.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.