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What goes around comes around? The KaWeRÄG 2021 at a glance


After a long consultation process and eight weeks in the Federal Council, a comprehensive amendment to the Cartel and Competition Act was finally announced at the beginning of September. Please find a summary of the amendment below:

Amendments to the Cartel Act

“Sustainability exemption” from the ban on cartels

A newly inserted passage is intended to enable entrepreneurial cooperation for the purpose of ecological sustainability by exempting agreements whose ecological benefits outweigh any disadvantages for competition from the ban on cartels.

Criteria for market dominance

In order to better reflect the special features of digital markets, the (already) demonstrative list of criteria for determining a dominant market position has been extended by some examples (as was already done in Germany with the 9th GWB amendment). Explicitly mentioned should be the importance

  • of intermediary services for the access of other entrepreneurs to procurement and sales markets (gatekeepers with considerable intermediary power, e.g. Booking.com, Amazon, etc.);
  • access to data; and
  • network effects.

Additionally, the amendment contains a separate section on relative market power. Moreover, it is explicitly stated that relative market power can occur not only in business relationships with goods, but also with services. The even more significant extension of the provision regulating relative market power is that it is no longer limited to existing relationships that are at risk of being broken off but can also exist in the run-up to a contractual relationship.

Determination of a market-dominant position of a platform

Since platform economy, at the center of which are “gatekeepers” – i.e. competitively significant intermediaries of at least two user groups – is characterized by strong concentration tendencies and market entry barriers, the Cartel Court is now able to determine the market power of a company upon application.

The necessity of such a procedure is justified by the fact that the abuse procedure in the sense of an ex-post review often comes too late in these markets and is therefore not sufficiently efficient.

Merger control I – the second threshold

In order to limit Austrian merger control to those cases which actually have an impact on the Austrian market, a second transaction value threshold will be introduced. From now on, mergers will only be notifiable if at least two companies involved have achieved a transaction value of at least € 1 million in Austria in the last business year. The new threshold is applicable to mergers notified after December 31st, 2021.

Merger control II – a SIEC test for Austria

The “SIEC” test (“Significant Impediment to Effective Competition”) is the test used in EU merger control (and in most other Member States) to examine mergers for their compatibility with a competitive market. The test is now also to be applied in Austrian competition law.

Merger control III – international competitiveness and economic justification

The Cartel Court can approve mergers despite the existence of grounds for prohibition. Previously, the cumulative existence of the “need to maintain or improve the international competitiveness of the companies involved” and an “economic justification” were required. From now on these two grounds will be able to justify a non-prohibition. However, it should be emphasized that in the future an economic “necessity” will be required instead of a “justification”. A compatibility with economic concerns will no longer be sufficient; rather, the permission has to have its cause precisely in these economic concerns (e.g. health care or safeguarding innovative technologies).

From now on, Section 12 (2) KartG will also contain a third reason for approval, “the improvement of competitive conditions”.

New fines

On the basis of the newly inserted Section 29 (2) KartG, the competent authorities will be able to impose fines not only for violations of the ban on cartels and abuse of market power, but also for numerous other violations (e.g. breaking seals or not tolerating a house search).

The maximum amount is to be 1% of the total worldwide turnover. Section 29 (2) KartG also explicitly states that fines may also be imposed on parent companies (for relevant conduct of subsidiaries) as well as legal or economic successors. This is to prevent companies from evading a fine with the help of legal or organizational changes (keyword: “sausage gap“).

Joint and several liability of associations of undertakings

Fines against associations of undertakings are to be based on the total worldwide turnover of the members. The previously provided exception for associations of undertakings with statutory membership has been deleted. However, the standard has been supplemented by the addition that the liability of an individual member may not exceed 10% of its total worldwide turnover. Paragraphs 2 to 5 also stipulate joint or several liability for members.

Interruption of the statute of limitations

In the future, Section 33 (2) KartG provides for a suspension of the 10-year limitation period for fines in the case of enforcement proceedings of other national competition authorities or the Commission, provided that the proceedings relate to the same infringement. However, in the case of investigative and prosecutorial actions by the FCA, there will continue to be only an interruption of the statute of limitations.

Cooperation between authorities

Articles 25 to 28 of the “ECN+” Directive are implemented in a new section of the KartG (Sections 35a to 35e). It regulates various aspects of administrative assistance between the national competition authorities of the EU Member States.

Better protection of trade secrets

Section 39 (2) KartG (new) restricts access to statements made by principal witnesses and settlement statements to parties, and also for them to purposes of exercising their rights of defense.

Section 49 (2a) KartG (new) is intended to give parties the opportunity, in the course of an appeal or response to an appeal, to disclose which text passages of the first court decision should not be reproduced in the decision of the Cartel Court due to the protection of business secrets.

Exchange of leniency statements

National competition authorities will only be able to exchange leniency statements if the companies or associations of undertakings concerned agree or if such declarations are already available to the competition authorities involved without the possibility of withdrawal by the declarant.

Amendments to the Competition Act

Reporting obligation of the FCA to the BMDW

The envisaged amendment, which provides for a right of the Federal Minister for Digital and Economic Affairs to provide information to the FCA, caused quite a stir. According to the explanatory notes, however, this is in no way intended to interfere with the independence of the competition authority. In any case, the provision has been implemented.

Restructuring of the FCA’s catalog of tasks

In order to improve clarity, the tasks of the FCA in Section 2 of the Competition Act are to be divided into paragraph 1 (core tasks) and paragraph 2 (other tasks). A change in content arises with regard to the FCA’s ability to issue opinions on general economic policy issues. This is to be permitted only in the event of a request by the Federal Minister for Digital and Economic Affairs.

Merger Control – Procedure

In the case of mergers with particularly outstanding economic and political significance for Austria, notifications as well as modifications thereof are to be submitted to the Competition Commission to enable it to deliver opinions. In addition, there is now an obligation to submit to the Federal Minister for Digital and Economic Affairs so that she can perform her duties under the Investment Control Act (InvKG).

Leniency – substantive requirements

In order to prevent other companies allegedly involved in the antitrust infringement from finding out about investigations that have already been initiated, the obligation of a leniency applicant to cease their own involvement in the infringement is restricted. Those cartel activities, which in the view of the FCA are necessary to maintain the integrity of its own investigations, are to be exempt from the obligation to discontinue.

In addition, an already prevailing common Austrian practice has been standardized by law: Notifications that do not meet the requirements of Section 11b (1) of the Competition Act (exemption from fines) are to be interpreted as requests for action under Section 11 (2) of the Competition Act (reduction of fines).

In order not to overburden the leniency program, an authorization to issue ordinances on behalf of the Minister for Digital and Economic Affairs is also provided.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele assumes no liability for the content and correctness of this article.

 

24. September 2021

 
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