ARTICLE
25 September 2021

Modernisation Of Austrian Cartel Act

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Preslmayr Rechtsanwälte OG

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The 2021 amendment is intended to adapt the Austrian Cartel and the Competition Act to the requirements of the present. In addition to changes for mergers and market power...
Austria Antitrust/Competition Law

The 2021 amendment1 is intended to adapt the Austrian Cartel and the Competition Act to the requirements of the present. In addition to changes for mergers and market power abuse regulations, the idea of sustainability is given space and the European ECN Directive is2 implemented.

I. Merger Control - Second domestic threshold

For many years, there has been criticism that (international) mergers also fall under Austrian merger control when the domestic threshold of EUR 30 million was reached by only one company. This meant that mergers were also subject to notification if the target company did not have any sales in Austria. This has now been amended to the effect that at least two of the companies concerned (e.g. the buyer and the target company) must each have a domestic turnover of at least EUR 1 million in Austria. This is expected to significantly reduce the number of notifiable mergers. However, due to a possible drafting error in the transitional provisions, it is not clear whether this regulation will apply with the announcement (at the beginning of September) or only for mergers notified after 31 December 2021.

For the substantive assessment of mergers, Austrian merger law previously applied a market dominance test, i.e. it was examined whether a merger created or strengthened a dominant position. This has now been extended to include the alternative criterion of whether "otherwise effective competition may be significantly impeded". This SIEC test (Significant Impediment to Effective Competition) corresponds to the practice in European merger law. Even if the SIEC test is positive, a merger can be approved under certain conditions. The fact that both tests are now to be or can be applied in parallel in Austria could raise complex questions in practice.

Furthermore, the Federal Competition Authority is now also required to forward a copy of the merger notification to the Federal Ministry for Digitalisation and Economic Location for review under the Investment Control Act3 The controls in this regard will thus be tightened. Finally, the filing fee for mergers has also been increased from EUR 3,500.00 to EUR 6,000.00. The increase is effective for mergers registered after 31 December 2021.

II. Abuse of market power in digital markets

In a new procedure, the official parties, i.e. the Federal Competition Authority and the Federal Cartel Prosecutor and regulators, can now initiate proceedings before the Cartel Court to establish the market dominance of a company on a multi-sided digital market. For this purpose, it is not even necessary to allege an abuse of such dominant position. In determining a dominant market position, for companies that are active as intermediaries on digital markets, it should also be considered whether the customers of their intermediary services are dependent on the business relationship in order to avoid serious economic disadvantages.

III. Sustainability

Certain restrictive practices were already permitted in the past if they contributed to improving the production or- distribution of goods or to promoting technical or economic progress while allowing consumers a fair share of the resulting benefit, without imposing unnecessary restrictions. Such appropriate consumer participation is now also deemed to be present if the profit resulting from the improvement of the production or distribution of goods-or the promotion of technical or economic progress contributes significantly to an ecologically sustainable or climate-neutral economy. This is intended to facilitate cooperative ventures that appear ecologically desirable or sensible for overcoming the climate crisis.

IV. ECN - European Competition Network

The so-called ECN Directive 2018 intended to strengthen the competition authorities of the member states in the enforcement of competition rules and thus ensure the smooth functioning of the internal market. In this sense, the following provisions have now been included:

  • The Federal Competition Authority can now impose fines of up to a maximum of 1% of the total worldwide turnover on undertakings which do not tolerate official acts of the Federal Competition Authority effected during a house search or damage or detach a seal affixed in the process. While under European competition law very high penalties were already threatened and imposed for breaking seals, under Austrian law this was previously only sanctionable under criminal law, i.e. against individual persons (Sec 272 Criminal Code).
  • Fines are to be imposed on entrepreneurs who operated the enterprise participating in the infringement at the time of the infringement, or who operate them as legal successors thereafter, or who continue to operate them in economic continuity. Furthermore, fines can also be imposed on parent companies that belong to the same economic unit as an undertaking involved in the infringement.

V. Informal inquiries

It is now also expressly regulated that undertakings may request the Federal Competition Authority to provide informal assessments on the prohibition of cartels or on merger control. If the Federal Competition Authority concludes that there are no grounds for further investigations within the scope of its discretionary powers, it can inform the undertakings of this fact, subject to new findings. In addition, the Federal Competition Authority can - as it has done in the past - issue general opinions on the exercise of its discretionary power to act.

Footnotes

1. Federal Act amending the Cartel Act 2005 and the Competition Act (Cartel and Competition Amendment Act 2021 - KaWeRäg 2021, BGBl I 176/2021).

2. Directive (EU) 2019/1 of the European Parliament and of the Council of 11.12.2018 on strengthening Member States' competition authorities with a view to ensuring more effective enforcement of competition rules and the proper functioning of the internal market, OJ L11/3, 14.1.2019.

3. Federal Act on the Control of Foreign Direct Investments (Investment Control Act - InvKG, BGBl I No. 87/2020.

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.

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