Major changes to Austrian Competition Law

The Austrian Cartel and Competition Law Amendment Act 2021 (“KaWeRÄG 2021”) finally entered into force on 10 September 2021.[1]

The KaWeRÄG 2021 implements the ECN+ Directive[2] and aims to adapt Austrian competition law to “modern economic life”.[3]

Key changes include the following:

Merger control:

• Second domestic turnover threshold for mergers requiring a notification in Austria: In addition to a combined Austrian turnover of all undertakings concerned exceeding EUR 30 million, the amendment introduces a new second domestic turnover threshold, requiring that at least “two of the undertakings concerned each […] have a turnover of more than EUR 1 million” in Austria (the other two turnover thresholds remain unchanged, i.e. a combined worldwide turnover of more than EUR 300 million and at least two concerned undertakings having a worldwide turnover of more than EUR 5 million). As a result, it is expected that the number of notifiable mergers in Austria is likely to decrease. In particular, the amendment will exclude most cases of acquisition of sole control where the target company only achieved insignificant domestic turnover from Austrian merger control (unless the transaction falls under the alternative transaction value threshold or if a joint-venture is created where the turnover of other shareholder(s) has to be taken into account, such as a remaining shareholder with a participation of 25 % or more). However, as the corresponding transitional provisions are inconsistent, it is not clear yet whether this second domestic threshold will enter into force on the day following the publication of the KaWeRÄG (i.e. on 10 September 2021) or only after 31 December 2021.
• Introduction of the SIEC test: As regards the substantive assessment of mergers, whereas Austrian merger control currently (only) applies a dominance test, the KaWeRÄG 2021 additionally introduces the significant impediment of effective competition (SIEC) test, as applied under the EUMR. This amendment will only apply for mergers being notified after 31 December 2021.
• Increase of the merger filing fee: from EUR 3,500 to EUR 6,000[4], effective for all mergers being notified after 31 December 2021.[5]
• Strengthening of FDI enforcement: The Federal Competition Authority (“FCA”) is now also required to forward all merger filings to the Federal Minister for Digital and Economic Affairs to administer her tasks under the Investment Control Act (ICA).[6] As a consequence, we expect that transactions involving direct or indirect third-country acquirers/UBOs (non-EEA or Swiss) where an Austrian merger filing but no Austrian FDI filing is made will face heightened scrutiny from the Austrian FDI authority.

Digital markets/abuse of dominance:

• Decision ascertaining a dominant market position of an undertaking operating in a multi-sided digital market: A new procedure is introduced allowing the Official Parties (i.e., the FCA and Federal Cartel Prosecutor) and the regulators to lodge an application with the Cartel Court requesting it to declare that an undertaking operating in a multi-sided digital market holds a dominant position.[7] Such a proceeding does not require an allegation of an abuse of a dominant market position. Therefore, once such a decision has been rendered, the existence of a dominant position will no longer have to be established in a subsequent proceeding alleging an abuse of dominance. While it remains to be seen whether this new proceeding will be used frequently, we expect that multi-sided digital markets will receive even more scrutiny by the Austrian competition watchdogs in the future.
• New (exemplary) market dominance criteria typical for the platform economy: The KaWeRÄG 2021 introduces additional factors that can be taken into account when deciding whether an undertaking has a dominant position specifically addressing digital markets such as (i) the importance of intermediary services for the market access of other undertakings, (ii) access to competitively relevant data and (iii) the benefits derived from network effects.

Competition Law and sustainability:

• Exemption for agreements restricting competition – fair share for consumers: The condition that consumers must receive a fair share of the efficiencies as a requirement for an exemption from the prohibition of restrictive practices is extended: Such a fair share for the consumer is assumed if the efficiencies from the restrictive practice substantially contribute to an ecologically sustainable or climate-neutral economy.

Implementation of the ECN+ Directive:

• The majority of the amendments to the KaWeRÄG 2021 serve to implement the ECN+ Directive, including the following provisions concerning fines:
  • Breach of seal: The amendment introduces new fines of up to 1 % of the annual turnover of an undertaking for failing to comply with an inspection or damaging or removing a seal affixed by the FCA during an inspection in connection with an infringement of Articles 101 and 102 TFEU (previously, only the individuals breaking a seal were subject to a criminal offence).
  • Imposition of fines (legal successors, parental liability): The KaWeRÄG 2021 now explicitly introduces the single economic entity doctrine to Austrian competition law and provides that a fine may be imposed on the undertaking operating the undertaking participating in the infringement at the time of the infringement and legal successors operating such an undertaking or economic successors continuing the business of such an undertaking. Additionally, the amendment clarifies that fines can also be imposed on parent companies belonging to the same economic entity as the undertaking participating in the infringement.

Informal guidance by FCA on restrictive practices and merger control:

• The KaWeRÄG 2021 now explicitly introduces a provision allowing undertakings to request the FCA to provide informal guidance on matters that may be subject to the rules governing restrictive practices (Section 1 Cartel Act and Art 101 TFEU) or Austrian merger control.[8]

[1] Federal Law amending the Cartel Act 2005 and the Competition Act, BGBl. I No. 176/2021.
[2] Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, L 11/3.
[3] Explanatory notes on the ministerial draft, 114/ME XXVII. GP, page 1, available at https://www.parlament.gv.at/PAKT/VHG/BR/I-BR/I-BR_10702/index.shtml (German language only).

[4] Section 10a Austrian Competition Act (WettbG).

[5] Section 10a para 1 Competition Act (WettbG).

[6] Section 10 para 6 Competition Act (WettbG).

[7] Section 28a and 36 para 2a Cartel Act.

[8] Section 2 para 5 Competition Act (WettbG).