In an anonymised judgment of 27 June 2013, the Austrian Supreme Court increased from € 4,500 to € 100,000 a fine imposed by the Austrian Cartel Court on a company ("the defendant") for violating the prohibition to implement a concentration without prior notification to the Austrian Federal Competition Authority ("FCA").
In 2007, an indirect subsidiary of the defendant increased its shares in a Hungarian company from 25.1% to 50% and retained the Hungarian office of a large international law firm specialising in competition law and international transactions to advise on all issues relating to the acquisition of the shares. Following the law firm's advice, the proposed concentration was notified and cleared in Hungary. However, the law firm did not identify a filing requirement in Austria and no notification in Austria was made.
Following a request by the FCA to fine the defendant, the Cartel Court imposed a fine of € 4,500, stating that the requirement to notify in Austria had been difficult to detect given the very low revenues generated by the target company in Austria. This decision was appealed by the FCA, which requested the imposition of a much higher fine in the amount of nearly € 5 million. The FCA argued, amongst other things, that the defendant as a large undertaking operating internationally should have been aware of the requirement to notify the transaction in Austria.
The Supreme Court, at final instance, increased the fine to € 100,000. The Supreme Court noted a recent judgment by the Court of Justice of the European Union ("ECJ") in which the ECJ held that an undertaking could be held liable where it had relied on erroneous advice from legal counsel about the lawfulness of its behaviour as regards Article 101 TFEU (see VBB on Competition Law, Volume 2013, No. 6, available at www.vbb.com). However, the Supreme Court considered that this judgment was not relevant for the case at hand since the judgment concerned incorrect legal advice regarding a cartel, not a merger.
When setting the fine, the Supreme Court took into account aggravating and mitigating factors.
As aggravating factors, it took into consideration the high financial power of the defendant, the fact that failure to notify is considered a serious infringement and that the defendant was at fault as it should have realised that its subsidiary's external counsel had not requested worldwide and national turnover figures and could thus not have effectively examined all notification requirements. In this context the Supreme Court held that the legal test under EU and national merger control laws of whether a proposed transaction is or is not notifiable forms part of the basic knowledge that should be had by all companies facing cross-border mergers involving companies generating revenues in various countries.
As mitigating factors, the Supreme Court took into consideration that the defendant's infringement was administrative in nature, as the concentration did not fulfil the conditions for prohibition under Austrian law. Furthermore, the Supreme Court highlighted that there was no significant enrichment by the defendant and that the failure to notify did not have negative effects on competition in Austria.
The Supreme Court refused to set the fine by mere calculation based on the overall turnover of the defendant and found instead that a fine of € 100,000, far below the fine requested by the FCA, sufficiently took into account the facts of the case at hand.
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