November 14 2002
On July 1 2002 the long-awaited fundamental reform of Austrian cartel law (outlined in Unwelcome Merger Accelerates Reform of Cartel Law and Fundamental Reform of Cartel Law Goes Ahead) came into force. The major amendments comprise changes in procedure, structure of authorities and replacement of (most) criminal sanctions for business executives with a system of fines for the undertakings concerned.
Austrian cartel (antitrust) law is governed by the Cartel Act, which includes special regulations on vertical distribution agreements, merger control and abuse of a dominant market position. Except for infringements of criminal law provisions, proceedings in cartel matters take place before the Cartel Court, a special division of the Court of Appeal in Vienna. In most cases proceedings may be initiated by:
The former official parties (the Federal Chambers of Commerce and Labour and the Standing Committee of the Presidents of the Austrian Chamber of Agriculture, but not the Law Office of the Federal Republic of Austria), as well as the most important regulators (eg, telecommunications, media, electricity and railway networks), may still issue opinions in all proceedings pending before the Cartel Court.
Violations of antitrust regulations may result in fines of up to €1 million, or up to 10% of the worldwide turnover of the preceding financial year for any undertaking participating in the violation. Most criminal sanctions against individuals under cartel law are abolished (except for anti-competitive collusive tendering). The following are null and void and consequently cannot be enforced:
Violations of antitrust regulations may also give rise to interlocutory injunctions
or claims for damages.
Cartels based on (i) agreements between independent undertakings, or (ii) recommendations or decisions by associations of undertakings, are prohibited and void where their aim or effect is to prevent, restrict or distort competition (especially with respect to production, demand or prices in the mutual interest of the agreed undertakings). However, they may be permitted by the Cartel Court in certain circumstances (eg, if they are not expressly prohibited by law or immoral, or if they are justifiable in terms of the domestic economy).
Cartels that are created by concerted practices (without agreement) or by agreements without the intention to restrict competition, and which remain below certain thresholds with regard to market shares, are treated differently.
Vertical restrictions of distribution are agreements between a binding entity
and one or more bound entities whereby the latter is restricted in purchasing
or selling goods, or receiving or rendering services. The Cartel Court must be notified of such restrictions – except those covered by the block exemption identical to the EU block exemption on vertical restraints - prior to their implementation. The Cartel Court
may prohibit the implementation of the restrictions if they are expressly prohibited
by law, are immoral or are not justified in terms of the domestic economy. Vertical
restrictions of distribution falling within the scope of Article 81(1) of the EC Treaty are
not prohibited to the extent that the relevant EC block exemption applies. Preliminary
injunctions are available. If price maintenance is also involved, the agreement
is subject to the provisions concerning cartels.
Pre-merger control (ie, approval by the Cartel Court) applies if:
Although competitors do not have the right to request an investigation (this is a privilege of the specified institutions), the Cartel Act allows competitors to file comments on a merger that has been notified and published within 14 days of publication.
The abuse of a dominant position is now expressly prohibited even without a respective decision by the Cartel Court, and may trigger huge fines. Where a motion is filed the Cartel Court must order the participating undertakings to cease abusing a dominant market position. If such an order is issued to a media undertaking or service, the Cartel Court may also take measures to reduce the dominant market position if the abuse is likely to impair the diversity of the media and further abuse is expected. Consequently, such orders could entail the sale of parts of the undertaking or its reorganization.
For further information on this topic please contact Dieter Hauck or Martin Nepraunik at Preslmayr & Partners by telephone (+431 533 16 95) or by fax (+431 535 56 86) or by email (email@example.com or firstname.lastname@example.org).
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