On December 12, 2022, the Dutch Arnhem-Leeuwarden Court of Appeal (the court) confirmed that a former director of Heiploeg, a North Sea shrimp supplier, was personally liable for over €13 million in damages ($13.8 million) as a result of the company's involvement in a cartel infringement.1 The court allowed Heiploeg's bankruptcy trustees to recover half of the cartel fine of €27 million imposed on Heiploeg by the European Commission (EC) in 2013.
Background
In 2013, the EC imposed fines of almost €29 million ($38.5 million) on four North Sea shrimp suppliers: Heiploeg, Klaas Puul, Kok Seafood, and Stührk.2 The EC found that the companies agreed to fix prices and share sales volumes of North Sea shrimps in the EU. Almost the entire fine was imposed on Heiploeg (€27 million/$35.9 million), which was declared bankrupt in 2014.
In the course of the bankruptcy proceedings, Heiploeg's trustees sought to recover the losses associated with the cartel infringement from the directors who were involved in the conduct. Most of these directors settled with the trustees, except for one who was sued for director liability and negligence under Dutch corporate law.3
Director's Personal Liability
The court found that the director played a crucial role in the price-fixing arrangements and personally caused Heiploeg to participate in the cartel. The evidence demonstrated that he knew (or must have known) about the cartel conduct, allowed it, and actively participated in it.4 He should have foreseen the risk of antitrust enforcement and serious financial and reputational damage, resulting in Heiploeg failing to perform its obligations vis-à-vis its creditors.
Although the director's serious mismanagement justified his personal liability under Dutch corporate law, he was only found liable for 48 percent of the fine, reflecting the duration of his tenure during the infringement period.5
Wilson Sonsini Takeaways
While the EC cannot impose fines on individuals for antitrust violations,6 directors should be mindful of their potential personal liability for a penalty imposed on their company under national corporate/civil law. Equally, corporations should be aware of the possibility of obtaining compensation from directors that caused a company to engage in anticompetitive conduct that attracted a fine from the EC.
The assessment of a director's liability heavily depends on the applicable corporate law and the relevant director's degree of involvement in the anticompetitive conduct.
This case demonstrates the importance of a company adopting a strong competition compliance program to prevent this type of potential liability.
[1]Arnhem Court of Appeal judgment, North Sea shrimp damage claim, December 6, 2022, available here.
[2]EC Press Release, Antitrust: Commission fines four North Sea shrimps traders € 28 million for price fixing cartel, November 27, 2013, available here.
[3]Dutch Civil Code, Articles 2:9 and 6:162.
[4]For instance, he was personally present at several meetings where the price-fixing agreements were made, sent emails confirming the infringing conduct, and sent a letter to a third-party stating that half of the turnover was made due to the infringing conduct.
[5]The director retired from the board in 2004, while the infringement continued until 2009.
[6]Council Regulation (EC) n°1/2003 of December 16, 2002, on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, Article 7.
