Merger control in Austria: overview

A Q&A guide to merger control in Austria.

The Q&A gives a high level overview of merger control, regulatory framework and regulatory authorities, relevant triggering events and thresholds in Austria. It also covers notification requirements, procedures and timetables, publicity and confidentiality, third party rights, substantive test, remedies, penalties, appeals, joint ventures and proposals for reform.

For information on restraints of trade, monopolies and abuses of market power in Austria, visit Restraints of trade and dominance in Austria: overview.

This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Merger Control Q&As visit www.practicallaw.com/mergercontrol-mjg. For a full list of jurisdictional Restraints of Trade and Dominance Q&As visit www.practicallaw.com/restraintsoftrade-mjg.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-guide.

Contents

Regulatory framework

1. What (if any) merger control rules apply to mergers and acquisitions in your jurisdiction? What is the regulatory authority?

Regulatory framework

To maintain and secure effective competition the Austrian legal system established a system of notification for transactions meeting certain thresholds. The relevant provisions are laid down in the:

  • Cartel Act (Kartellgesetz).

  • Competition Act (Wettbewerbsgesetz).

As well as regulating merger control these laws prohibit restrictive agreements and abuses of a dominant position (see Question 11).

Regulatory authorities

Transactions that meet the definition of concentrations under the Cartel Act must be notified to the Federal Competition Authority (Bundeswettbewerbsbehörde) (FCA), if the transaction exceeds certain turnover thresholds (see Question 2).

The following are collectively known as the Official Parties, and have responsibility for applying the merger control provisions:

  • The FCA.

  • The Federal Cartel Prosecutor (Bundeskartellanwalt) (FCP).

The Cartel Court (Kartellgericht) has decision-making authority over in-depth merger control investigations. The Supreme Cartel Court (Kartellobergericht) hears appeals from decisions of the Cartel Court.

Finally, the Competition Commission (Wettbewerbskommission) is an advisory body to the FCA.

See box, The regulatory authorities.

 

Triggering events/thresholds

2. What are the relevant jurisdictional triggering events/thresholds?

Triggering events

Concentrations that are within the meaning of the Cartel Act and subject to merger control are (section 7, Cartel Act):

  • The acquisition of an entire undertaking or a substantial part of it, particularly through merger or conversion into another corporate form.

  • The acquisition of rights giving control of an undertaking.

  • The direct or indirect acquisition of shares in a company, if this leads to the acquirer increasing its shareholding in the target to 25% or 50%.

  • Any agreement leading to the identity of at least one-half of the members of the management board or the supervisory board of two or more undertakings becoming identical.

  • Any other transaction resulting in one undertaking gaining a controlling influence over another.

  • The formation of a joint venture, performing on a lasting basis all the functions of an autonomous economic entity (that is, a full-function joint venture (section 7(2), Cartel Act)).

The Cartel Act does not provide for a limitation period for the FCA to take action in relation to mergers.

Thresholds

Mergers must be notified if all of the following turnover thresholds are met (based on the turnover in the last financial year before the transaction) (section 9(1), Cartel Act):

  • The worldwide turnover of all undertakings concerned exceeds EUR300 million.

  • The combined domestic turnover of all undertakings concerned exceeds EUR30 million.

  • The individual worldwide turnover of at least two of the undertakings concerned exceeds EUR5 million.

However, where the thresholds are met, the merger does not need to be notified if both of the following apply (section 9(2), Cartel Act):

  • Only one of the undertakings concerned reached a domestic annual turnover of more than EUR5 million.

  • The other undertakings concerned reached a worldwide annual turnover of no more than EUR30 million.

Special threshold rules apply in the media sector (see Question 14, Media and telecommunications).

Mergers taking place outside of Austria are only exempt from the notification requirement if those concentrations do not have any impact on the Austrian market (section 24(2), Cartel Act). However, except in special cases, concentrations meeting the above thresholds will usually have such an impact. Concentrations with a community dimension must be notified to the European Commission.

 

Notification

3. What are the notification requirements for mergers?

Mandatory or voluntary

All concentrations under the Cartel Act that meet the turnover thresholds must be notified to the FCA (see Question 2).

Timing

The undertakings concerned can decide when to notify, as there is no specific time limit for notification. However, the undertakings must receive clearance before implementing the transaction (see below, Obligation to suspend). Breaches of this rule are sanctioned by fines (see Question 11). Therefore, when deciding on the timing of the notification, to avoid delays the undertakings should bear in mind the time frame for the procedure (usually four weeks in Phase I) (see Question 4, Phase I proceedings). The best timing for a notification depends on the specific circumstances of the merger and should be chosen strategically. A formal signing is not required for the notification. However, the parties must be able to provide the necessary information and the closing of the transaction must be foreseeable.

Formal/informal guidance

To facilitate the notification process and avoid costly and time-consuming examinations, it is possible to enter into pre-notification talks with the FCA. However, after notification, it is also possible to discuss competition problems, amendments to the notification, or possible remedies during Phase I and II proceedings (see Question 10).

Responsibility for notification

The Cartel Act only requires an accurate and complete notification from one of the undertakings. Therefore, the notification can be filed either jointly or by one of the undertakings concerned.

Relevant authority

Notifications must be submitted to the FCA in four hard copies, either personally or by mail.

Form of notification

The law does not provide a specific form. However, it is advisable to use the notification form provided by the FCA. The information provided must be accurate and comprehensive. If the FCA lacks information required to assess the transaction, the risk of an in-depth Phase II investigation increases (see Question 4).

Filing fee

Regardless of the transaction volume, the notifying parties must pay a flat fee of EUR1,500 during the Phase I procedure. This filing fee must be paid along with the notification, as the payment of the filing fee triggers the four-week deadline for the Phase I procedure (see Question 4).

If a Phase II investigation is reached, the Cartel Court sets the costs, which vary according to the specific circumstances of the transaction (for example, its size, impact and complexity), up to a maximum fee of EUR34,000.

Obligation to suspend

The undertakings must not take any action to implement the transaction before receiving clearance from the FCA or the Cartel Court (section 17, Cartel Act). If they do, any agreements and actions taken to implement the concentration are void and unenforceable. In addition, they may be liable for fines of up to 10% of the last financial year's turnover (see Question 11).

 

Procedure and timetable

4. What are the applicable procedures and timetable?

One or more of the parties must complete the notification (it is often sensible for the parties to jointly complete the notification) and forward the final documents to the FCA, together with the filing fee. It is crucial that the submitted documents comply with the formal and legal requirements and the fee is fully paid. When notification is made, Phase I proceedings begin.

Phase I proceedings

The Official Parties are responsible for assessing notifications during Phase I (see Question 1, Regulatory authorities). The FCA assesses the provided information and publishes a summary on its website. Any undertaking whose legal or economic interests are affected by the concentration can submit a written statement to the Official Parties. However, even where the undertaking's objections are well-founded it cannot apply for an in-depth examination (see below, Phase II examination). If the FCA has possible competition concerns, it may accept remedies from the undertakings concerned to remedy those concerns. The transaction can be cleared subject to conditions at the end of Phase I.

The deadline for the proceedings is four weeks after the notification has been submitted. The deadline may be extended to six weeks, if requested by the notifying undertakings within the four-week period. The Official Parties can apply for a Phase II examination. If both Official Parties waive their right to apply or the deadline expires without an application, the transaction is cleared automatically.

Phase II examination

The Official Parties have the sole right to apply for a Phase II examination. This usually occurs in one of the following situations:

  • The FCA applies to the Cartel Court to prohibit the concentration on the grounds that the merger causes competition concerns and no appropriate measures have been found or agreed to resolve those concerns.

  • The FCA cannot perform a comprehensive examination during the four-week (six-week, if extended) deadline due to lack of information, or because the concentration raises complex competition issues.

The Official Parties can submit the case before the Cartel Court and are automatically parties to the proceedings, independently from the fact that they initially applied.

The proceedings in Phase II must be completed within five months. The deadline may be extended to six months, if requested by the notifying parties within the five-month period. A Phase II examination ends with either the Cartel Court clearing the concentration (possibly with conditions and obligations) or prohibiting the concentration.

For an overview of the notification process, see flowchart, Austria: merger notifications.

 

Publicity and confidentiality

5. How much information is made publicly available concerning merger inquiries? Is any information made automatically confidential and is confidentiality available on request?

Publicity

The following is made publicly available:

  • A summary of the proposed concentration, published by the FCA on its website (see Question 4, Phase I proceedings). The parties must provide that summary in their notification form. The publication of this summary enables third parties to judge the consequences of the transaction for themselves. The summary contains:

    • the names and activities of the undertakings concerned;

    • basic information concerning the intended concentration.

  • Written objections to the concentration.

  • The decision to perform a Phase II examination.

  • The application for a Phase II examination.

  • The decision to clear a transaction after Phase I or Phase II.

Procedural stage

If the undertakings concerned contact the FCA for pre-notification talks, neither the existence of those talks nor their subject matter is published.

The FCA will publish the summary immediately after it receives the notification (see above, Publicity). The timing of further publicity depends on when the information is submitted or the decision made. If the undertakings announce changes to the concentration that alter the summary, those facts will be published at the time the FCA receives this information. This also applies when clearance is granted on the basis of conditions or restrictions.

Automatic confidentiality

Apart from the summary, the FCA will, in principle, keep all information that the undertakings have provided confidential and third parties will not have access to any notification materials. However, the FCA can (subject to certain restrictions) provide information regarding the notification to other regulatory authorities, including the European Commission and the competition authorities of other EU member states.

Confidentiality on request

Information provided to the FCA remains confidential except for the summary published on the FCA's website (see above, Automatic confidentiality). It is not possible to request any further confidential treatment for materials submitted.

 

Rights of third parties

6. What rights (if any) do third parties have to make representations, access documents or be heard during the course of an investigation?

Representations

Undertakings that believe they will suffer adverse effects from the concentration can submit written objections to the Official Parties or the Cartel Court. These objections, even if supported by evidence, will not give those third parties the right to be heard, access the notification materials or be further involved in the procedure. It is possible to submit written statements during both Phase I and Phase II proceedings (see Question 4). The Official Parties and the Cartel Court can seek the views of third parties (for example, customers or competitors) on a voluntary basis during the proceedings, depending on the intended transaction.

Document access

Third parties aiming to access documents or files of the concentration must obtain permission from the undertakings concerned. The Official Parties or the Cartel Court cannot grant permission.

Be heard

Third parties do not have the right to be heard in the proceedings (see above, Representations).

 

Substantive test

7. What is the substantive test?

A merger must be prohibited if it would create or strengthen a dominant position. An undertaking is presumed to have a dominant position in certain circumstances.

However, concentrations can be cleared if they:

  • Are economically justified and essential for the competitiveness of the undertakings concerned.

  • Will increase competition, and therefore the advantages gained by implementing the transaction will outweigh the disadvantages.

 
8. What, if any, arguments can be used to counter competition issues (efficiencies, customer benefits)?

The Cartel Court may approve the merger if either:

  • The concentration leads to such an improvement of the competitive conditions on the market that these improvements outweigh the disadvantages of dominance.

  • For the undertakings concerned the merger is necessary to sustain or improve international competitiveness and the merger is economically justified (Section 12(2), Cartel Act).

 
9. Is it possible for the merging parties to raise a failing firm defence?

A failing firm defence is not mentioned in the Cartel Act. However, the principle applies in the material assessment of a merger.

 

Remedies, penalties and appeal

10. What remedies (commitments or undertakings) can be imposed as conditions of clearance to address competition concerns? At what stage of the procedure can they be offered and accepted?

The undertakings concerned can offer and discuss possible remedies during both Phase I and Phase II (see Question 4). Typically, undertakings will suggest appropriate remedies to the FCA during Phase I to avoid the Phase II in-depth investigation. At the end of Phase II, the Cartel Court can clear the concentration on the basis of the undertakings accepting conditions and obligations.

There are no strict rules for possible remedies, and they can be both structural and behavioural. There are no general rules for monitoring the compliance with remedial undertakings given. Possible compliance obligations (such as reporting or filing obligations) of the undertakings concerned must be assessed on a case-by-case basis.

 
11. What are the penalties for failing to comply with the merger control rules?

Failure to notify correctly

The Cartel Court can impose fines on the undertakings that submitted the notification. Individuals acting for the undertakings are not held liable for infringements under the Cartel Act.

Fines under the Cartel Act are neither administrative nor criminal, but do have a punitive character. The federal government forcefully collects the fines not paid on time (section 32, Cartel Act).

Where the notification is incomplete, or contains incorrect or misleading information, the Cartel Court can impose on the undertaking(s) that submitted the notification fines of up to 1% of their annual turnover in the preceding financial year.

If the undertakings are unable to implement conditions or remedies imposed, the undertakings can apply to the Cartel Court to amend or repeal those conditions (section 12, Cartel Act). If conditions or remedies are not complied with, the Cartel Court can impose fines on the undertakings.

Implementation before approval or after prohibition

The Cartel Court can impose fines of up to 10% of the preceding financial year's worldwide annual turnover of the undertakings concerned (section 29, Cartel Act). The amount of the fine will depend on the duration and importance of the breach and, in particular, whether the transaction would have been cleared if it had been properly notified.

When setting the fine, the Cartel Court will consider the:

  • Duration of the breach.

  • Degree of fault.

  • Amount of enrichment.

  • Whether the transaction would have been cleared if it had been properly notified.

  • Adverse economic effects of the concentration.

  • Economic ability of the company in breach to pay.

Failure to observe

Undertakings must co-operate with the competition authorities. Undertakings that refuse to co-operate, including failing to provide information or documents requested by the Cartel Court, or failing to comply with orders of the Cartel Court, are in breach of the law and subject to fines of up to 1% of their annual turnover (see above, Failure to notify correctly). For further breaches, fines of up to 10% of the annual turnover of the undertaking can be imposed (see above, Implementation before approval or after prohibition).

 
12. Is there a right of appeal against the regulator's decision and what is the applicable procedure? Are rights of appeal available to third parties or only the parties to the decision?

Rights of appeal

The parties to the proceedings can appeal against Cartel Court rulings to the Supreme Cartel Court. However, they cannot appeal the decision to start a Phase II investigation.

Procedure

The appeal must be filed within one month after the decision. The Supreme Cartel Court must decide on the appeal within two months after the appeal has been filed.

Third party rights of appeal

The rights of third parties are limited to written statements and objections and they have no rights of appeal.

 

Automatic clearance of restrictive provisions

13. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automatically cleared, how are they regulated?

The clearance decision automatically clears competitive restrictions that are necessary for the concentration (ancillary restraints). Such restrictions can include:

  • Non-compete obligations of a certain duration.

  • Licence agreements.

  • Supply agreements.

These restrictions must, however, be proportionate and limited to what is necessary to implement the concentration.

 

Regulation of specific industries

14. What industries (if any) are specifically regulated?

Media and telecommunications

The thresholds for merger control are lower for undertakings active in the media sector. When calculating the turnover thresholds:

  • The turnover of media undertakings must be multiplied by 200.

  • The turnover of media support undertakings must be multiplied by 20. Media support undertakings can include:

    • publishing houses as long as they do not qualify as media companies themselves;

    • printing houses;

    • companies acting as wholesalers of media products; and

    • companies acting as agents for advertising orders.

See Question 2, Thresholds.

In addition, telecommunications and media companies may require special approval from their sector-specific regulators.

When assessing concentrations in the media sector, media diversity must be taken into account, on the basis that the restriction of media diversity may have negative effects on the foundations of a democratic and cultural society (section 13, Cartel Act).

Credit institutions and insurance companies

Special turnover calculations apply to credit institutions (section 22, Cartel Act). In addition, transactions concerning banks and insurance companies may require additional clearance from the Financial Market Authority (Finanzmarktaufsicht).

However, banks acquiring shares are exempt from the requirement to notify (even if the turnover thresholds are met) if the purpose of the transaction is to use those shares for any of the following purposes (section 19, Cartel Act):

  • Restructuring an insolvent company.

  • Managing those shares as an investment.

  • Reselling those shares.

However, the bank must not use the voting rights of those shares, and can only hold them for a limited duration.

 

Joint ventures

15. How are joint ventures analysed under competition law?

The formation of a joint venture is considered to be a concentration that is subject to merger control if the joint venture performs on a lasting basis all the functions of an autonomous undertaking (full-function joint venture) (section 7(2), Cartel Act). For a full-function joint venture to exist, the joint venture must be:

  • Established on a lasting basis.

  • An independent business entity (rather than a subsidiary that only performs auxiliary functions for the parent companies).

 

Proposals for reform

16. Are there any proposals for reform concerning merger control?

Reform of the Austrian competition legislation was completed in March 2013. The changes focused on de minimis rules, collective dominance and procedural issues. No further reform is expected at the moment.

 

Online resources

Federal Chancellery of the Republic of Austria

W www.ris.bka.gv.at

Description. Official website maintained by the Federal Chancellery of the Republic of Austria, containing up-to-date legislation and case law of the Cartel Court and the Supreme Cartel Court in German.

Federal Competition Agency (Bundeswettbewerbsbehörde) (FCA)

W www.bwb.gv.at

Description. Official website of the Federal Competition Agency (Bundeswettbewerbsbehörde) (FCA), containing up-to-date general information on Austrian competition law, the activities of the FCA, summary information on merger notifications and so on in German.

Federal Competition Agency (Bundeswettbewerbsbehörde) (FCA)

W www.en.bwb.gv.at

Description. English version of the official website of the FCA, which may not be up-to-date. It has limited content on Austrian competition law, the activities of the FCA, and summary information on merger notifications, among other things.



The regulatory authorities

The Cartel Court (Kartellgericht)

Contact details. Oberlandesgericht Wien als Kartellgericht
Justizpalast
Schmerlingplatz 11
1010 Vienna
Austria
T +43 1 521 523 346
F +43 1 521 523 690

Outline structure. The Cartel Court comprises:

  • Seven professional judges.
  • 15 lay judges.

The tribunal for a particular case consists of up to two professional judges and two lay judges. If votes are equal, the presiding professional judge's vote is decisive. Decisions of the Cartel Court can be appealed within four weeks to the Supreme Cartel Court (Kartellobergericht).

Responsibilities. The Cartel Court is the competent court for national and European competition rules. The Cartel Court:

  • Decides on whether to clear concentrations in Phase II proceedings initiated by the Federal Competition Agency (Bundeswettbewerbsbehörde) (FCA) or Federal Cartel Prosecutor (Bundeskartellanwalt) (FCP).
  • Decides on applications from the FCA and FCP and undertakings affected by anti-competitive behaviour.
  • Issues cease and desist orders.
  • Imposes fines for infringements of competition rules.

Procedure for obtaining documents. Parties to an anti-trust case can access the Cartel Court's case file. Third parties have no rights to access documents.

Federal Competition Agency (Bundeswettbewerbsbehörde) (FCA)

Head. Dr Theodor Thanner

Contact details. Bundeswettbewerbsbehörde
Praterstrasse 31
1020 Vienna
Austria
T +43 1 245 080
F +43 1 587 4200
E wettbewerb@bwb.gv.at
W www.bwb.gv.at

Outline structure. The FCA is managed by the Director General (DG) for Competition, who is appointed by the federal government. The staff of the FCA is bound by the DG's directives.

Responsibilities. The FCA's responsibilities are to:

  • Promote the enforcement of the competition rules.
  • Perform investigations.
  • Examine mergers in Phase I proceedings.
  • Make applications to the Cartel Court.
  • Perform as an official party in cartel proceedings.

Procedure for obtaining documents. The FCA publishes summary information concerning concentrations on its website.

Federal Cartel Prosecutor (Bundeskartellanwalt) (FCP)

Head. Dr Alfred Mair

Contact details. Bundeskartellanwalt
Schmerlingplatz 11
1016 Vienna
Austria
T +43 1 521 523 057
F +43 1 521 523 690

Outline structure. The FCP is appointed to represent the public interest in competition matters before the Cartel Court. The FCP is subordinate to the Federal Ministry of Justice and is assisted by one deputy.

Responsibilities. The FCP's duty is to represent the public interest in competition matters. This obligation consists of:

  • Promoting the enforcement of the competition rules.
  • Examining mergers.
  • Engaging in competition advocacy by addressing the Cartel Court.

Procedure for obtaining documents. Documents cannot be obtained from the FCP.



Contributor profiles

Claudine Vartian

DLA Piper Weiss-Tessbach Rechtsanwälte GmbH

T +43 1 531 78 1038
F +43 1 533 52 52
E claudine.vartian@dlapiper.com
W www.dlapiper.com

Professional qualifications. Austria, Lawyer, 1997

Areas of practice. Competition and anti-trust; regulatory; litigation; telecoms law.

Recent transactions

  • Successfully defended an Austrian-based industrial group and one of the largest mineral oil groups in Central and Eastern Europe, in a case of alleged abuse of a dominant market position before the Cartel Court in Vienna.
  • Advising eTel Group Limited on the sale of all its operating subsidiaries to Telekom Austria AG, including a Phase II merger control examination in Austria.
  • Advising a global steel corporation on the acquisition of certain assets in Europe and on filing the required merger notification in Austria and Germany and obtaining clearance.

Florian Schuhmacher

Of counsel DLA Piper Weiss-Tessbach Rechtsanwälte GmbH

T +43 1 531 78 1014
F +43 1 533 52 52
E florian.schuhmacher@dlapiper.com
W www.dlapiper.com

Areas of practice. Anti-trust and competition law; civil and business law.

Non-professional qualifications. Full professor for civil and business law at the Vienna University of Economics (WU Wien)

Recent transactions

  • Advising in an abuse of dominance proceeding against a multinational company.
  • Advising German publishing group BURDA DRUCK on several recent merger notifications in Austria.
  • Providing expert opinions in various areas of expertise.

Publications. Numerous publications on Austrian and European competition law and other areas of business law.

Nicole Daniel, Associate

DLA Piper Weiss-Tessbach Rechtsanwälte GmbH

T +43 1 531 78 1922
F +43 1 533 52 52
E nicole.daniel@dlapiper.com
W www.dlapiper.com

Areas of practice. Competition and anti-trust; litigation; regulatory.


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