These Acts have to be amended in the wake of Directive (EU) 2019/1 to empower the competition authorities (ECN+ Directive), which must be transposed into Austria law. The Federal Ministry for Digital and Economic Affairs (BMDW) is in charge of implementing the WettbG, and the Federal Ministry of Justice (BMJ) for implementing the KartG.
The deadline for submitting opinions on these draft amendments to the KartG and WettbG is 18 May 2021.
AFCA opinion on amendments to antitrust and competition law
The Austrian Federal Competition Authority (AFCA) has submitted a comprehensive opinion.
Overall, the amendments to the relevant laws mean more risks, specifically in relation to the weakening of the obligation to protect company and trade secrets, as well as entailing more red tape for companies, which might result in proceedings being delayed with negative effects on Austria as a business location. Furthermore, AFCA’s independence and autonomy is not bolstered but diminished in several respects.
The AFCA is offering to share its expertise in the matter at any time.
Implementation of the ECN+ Directive:
- Independence of competition authority not fully implemented
The ECN+ Directive has not been fully transposed, to AFCA’s regret. In accordance with the Directive, fundamental guarantees of independence need to be put in place in relation to financial, human, technical and technological resources. The WettbG draft bill does not include the requisite adaptations. In Germany, for example, the Bundeskartellamt is an independent federal authority by law.
Further steps need to be taken to secure independence.
- Provision of sufficient resources not fully implemented
In accordance with the Directive, national competition authorities in the EU must have a sufficient number of qualified staff and sufficient financial, technical and technological resources to ensure effective enforcement of European and national competition rules. AFCA’s regular 2020 budget was not sufficient to cover all expenses for staff, rent and maintenance of its IT infrastructure for the whole year. These expenses could only be paid in 2020 through transfers and additional funds generated by income from fines. The Authority’s regular budget therefore needs to be adjusted as a matter of urgency. Compared with other countries, the AFCA is less well resourced in terms of staffing and budget.
Sufficient human and financial resources must be secured for the AFCA.
Relevant issues in competition law:
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Restrictions regarding prevention efforts
The AFCA considers prevention an important part of its remit. It aims to support companies to comply with competition rules. The publication of position papers, the hosting of events and other consulting activities all form part of its prevention work.
The new wording in § 1 para. 1 (a) WettbG, according to which properly functioning competition is to be ensured by preventing distortions and restrictions of competition in the individual case, severely limits AFCA’s options since prevention work would then only be possible in individual cases. This would mean that the AFCA could only publish a position paper, for example, if there was a concrete case such as a specific breach of cartel law in a market. The Authority would not be allowed to stage Competition Talks on competition-related topics according to the new wording. However, prevention work aims to create awareness of potential breaches and thereby helps prevent them altogether.
AFCA proposal: Rewording the provision to allow prevention work to be carried out in future too.
- Ability to give opinions restricted
The AFCA will also no longer be able to give independent opinions on general issues of economic policy. However, AFCA’s opinions have in the past sparked competition debate and contributed to the creation of an environment that is conducive to fair competition. In 2020, the AFCA submitted a total of 15 opinions on topics related to competition policy.
According to the new draft bill, the AFCA will only be permitted to give its opinion if requested by the Federal Minister for Digital and Economic Affairs.
AFCA proposal: The Authority should continue to be able to give independent opinions in future.
- Reporting obligation not compatible with independent status of a competition authority
The planned reporting obligation means that the AFCA would have to immediately submit a written report on management matters and fulfilment of its remit to the Federal Ministry for Digital and Economic Affairs at her request.
This reporting obligation covers all investigation activities such as dawn raids and information about the whistleblowing system in relation to national cartels and abuse of a dominant position, as well as mergers. The AFCA would be obliged to submit sensitive corporate information such as company and trade secrets to the BMDW.
The ECN+ Directive only refers to proportionate accountability requirements, however. This includes the publication of periodic reports on activities, which the AFCA publishes and submits to the Austrian Parliament every year. The planned reporting obligation is not proportionate.
Proposal: Striking out the reporting obligation in full, or at least limiting it to a proportionate degree.
The AFCA also gives its opinion on the proposed WettbG amendments pertaining to the:
- Expansion of official assistance
- Representation in the Advisory Committee before the European Commission in accordance with the European Merger Regulation, and involvement of the Competition Commission, which is not compatible with the Regulation and which is not in line with the prohibition of exploitation or professional secrecy
- Submission of merger files to the BMDW for the purpose of investment control, which leads to delayed proceedings and more red tape
- Fines imposed by the AFCA
- Rules on the leniency programme
- Serving and enforcement within the European Competition Network (ECN)
- Obligation to allow the Competition Commission to give opinions, which would create more red tape.
Relevant issues in antitrust law:
In terms of the proposed KartG amendments, the AFCA gives its opinion on the:
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Restructuring of grounds justifying mergers
Previously, a merger could be cleared despite the existence of conditions that would otherwise prohibit it if it was “necessary and economically justified to maintain or improve international competitiveness of the undertakings concerned”. In future, a merger subject to prohibition will have to be cleared if it is “necessary to maintain or improve international competitiveness of the undertakings concerned”. Also, “the advantages to be expected from the merger” must now also “outweigh its disadvantages”. In papers on the subject, grounds justifying mergers from which mainly domestic companies benefit have been found to be incompatible with Union law.
According to the CJEU’s case law, national measures restricting fundamental freedoms purely for economic reasons are not compatible with the freedom of establishment (in case of an acquisition of control) and the free movement of capital (in case of minority holdings) and therefore may be appealed before national courts.
Proposal: Owing to these concerns under Union law and the possibility of already considering balancing factors such as the rescue merger and efficiency defence now, AFCA proposes striking out § 12 para. 2 subpara. 2 KartG.
- Grounds justifying media mergers
The control of media mergers should guarantee media diversity. According to § 13 KartG, media diversity means a “diversity of independent media companies” that “ensure media coverage that takes into account a variety of opinions”. The currently valid legal provision set out in § 12 para. 2 subpara. 2 also qualifies as grounds for justifying media mergers. Since the wording of § 13 para. 1 KartG was not changed in the draft bill, impairments of media diversity could be justified in future on the grounds that they contribute to the maintenance or improvement of international competitiveness. The possibility of strengthening international competitiveness by cutting down or reducing diversity of media or opinion should be ruled out.
Proposal: The reference in § 13 to the justifying grounds in § 12 para. 2 subpara. 2 and possibly 3 should be struck out.
AFCA’s opinion also covers draft KartG proposals pertaining to the:
- Consideration of a contribution to an environmentally sustainable and carbon-neutral economy
- Relative market dominance
- Introduction of testing for significant impediments to effective competition in merger control
- Establishment of a dominant position on multilateral digital markets
- Redacting parts of decisions published in Austria’s Legal Information System (RIS).
AFCA proposals not considered
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Less red tape for mergers - Creation of a second domestic turnover threshold to ease the burden on the business location and companies
The AFCA has been calling for a second domestic turnover threshold in merger notifications for some time. AFCA receives a high number of merger notifications by international standards. Many of these company takeovers have very little bearing on the Austrian market and do not come with any serious competition concerns. Companies are currently faced with a high level of bureaucracy and financial expense, which impacts negatively on Austria as a business location. Austrian rules are not in line with international standards. The Authority’s call for action has remained unheeded to date.
The Authority would welcome it if companies were relieved of red tape.
Other points not considered in the draft bill:
- A final decision on the relationship between cartel law and criminal law
- Enshrining the immunity of natural persons in accordance with Union law
- Embedding legal recourse to enforce the P2B Regulation