As generally known, under European Cartel law (Art 101 TFEU) as well as under Austrian Cartel law (Sec 1 Cartel Act) agreements between undertakings, decision of association of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competitions (cartels) are prohibited. This cartel prohibition applies to activities between independent undertakings. This does, however, not apply between a controlling and a controlled undertaking, as such subsidiary would not enjoy economic independence. This concept is referred to as "single economic entity" – concept or anti-trust group privilege, which such "family" of undertakings may enjoy. The privilege is that between undertakings inside such single economic entity even agreements restricting competition are not prohibited or illegal.

This has been repeatedly adjudicated by European Courts and is expressly stated in the Austrian Cartel Act. This (rebuttable) presumption was clearly confirmed in cases, where a parent company holds (close to) 100% of the shares in a subsidiary. More generally, such single economic entity is present, if the subsidiary, though being a separate legal entity, cannot autonomously determine its market activities. It was deemed to be enough, if the parent company has a significant influence on the business policy of the subsidiary.

In a recent Court case (OGH 19.12.2019, 6 Ob 105/19p), the Austrian Supreme Court, though the case mainly dealt with questions of corporate law, elaborated in detail on this single economic entity concept. Competition law was used in the case to challenge the validity of shareholder decisions. In particular, the Supreme Court reviewed the question, whether such concept would also apply in relation to a jointly controlled undertaking ("JV"), concluding, that even a JV may form a single under-taking with each of its parent companies and the mere "negative" nature of the parent control would not preclude such findings, as even a minority share could allow a parent company to determine market behavior of the subsidiary. In the case at hand, the two parent companies were holding 32% and 68% of shares, respectively. How-ever, the Supreme Court also put restrictions on the application of the single eco-nomic entity concept. Such effects are confined to those aspects that are effectively covered by the joint influence by parent companies. The concept would not apply to such elements, where the JV retains a sphere of independent market decisions. In the case at hand, finally, the Supreme Court rejected the applicability of the single economic entity concept and found Art 101 TFEU generally applicable. However, after discussing the relationship between merger control and Cartel law, the Supreme Court concluded that the exercise of corporate rights by a JV parent is not subject to Art 101 TFEU, as they are immanent to the structural control between the parent companies and the JV. Consequently, they are not affected by the cartel prohibition.

While the Supreme Court has indicated that the concept of the single economic entity may also apply to jointly controlled undertakings, he has also limited this ruling to apply only to such aspects that effectively confer joint/negative control. Where the JV can autonomously decide its market behavior, the relationship between the JV and the parent companies is still subject to Art 101 TFEU.

The Austrian Federal Competition Authority ("FCA") has published in December 2019 - an interesting coincident – a guidance paper on the applicability of the "single economic entity" – concept or group privilege. Interestingly, the FCA's opinion deviates from the (later) Supreme Court decision. The FCA explicitly states that a mere negative control would not be sufficient to create a single economic entity and further concludes, that as sole control is necessary only one parent company of a JV could benefit from the privilege. It will be a challenge for legal advisors to consolidate the diverging positions of FCA and the Supreme Court.

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