5 - Corporate Governance and Competition Law Sanctions

Summary

The authors analyze corporate governance and competition sanctions. Despite their extensive powers, shareholders cannot (legally) interfere directly in the management of a company. It is hard to imagine that any competition law infringements attributed to the company could happen without the knowledge, or even more the active participation, of its directors or other executives. Consequently, if a competition law fine or other sanction is applied on the company, directors appear to be particularly well placed to be sued for compensation for this harm caused in their management activity. On the other hand, shareholders are the main beneficiaries of successfully completed cartels, i.e. those which remain undetected by competition authorities. The chapter investigates whether the financial burden of infringement sanctions should be borne by the company as the main potential beneficiary of excess profits, or should be fully, or at least partially, transferred to the directors who effectively committed or overlooked the breaches. Clarifications are gained from the study of managerial liability in the context of competition law infringements, followed by a deeper analysis of the consequences of the damages suffered by the company in the form of competition law fines or compensations paid as a result of private enforcement