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Illegal merger: Cartel Court imposes a fine of EUR 75,000 on Lenzing at AFCA’s request

After the companies Lenzing AG (hereinafter referred to as “Lenzing”) and Palmers Textil Aktiengesellschaft (“Palmers”) had notified the Austrian Federal Competition Authority (AFCA) of their intention to establish a joint venture, Hygiene Austria LP GmbH (“Hygiene Austria”), a parliamentary enquiry drew the AFCA’s attention to a breach of the standstill obligation. The Cartel Court has now imposed a fine of EUR 75,000 on Lenzing as requested by the AFCA.

The decision is final.

On 19 March 2024, the AFCA filed separate applications with the Cartel Court to impose fines on Lenzing and Palmers (press release of 19 March 2024). Due to Lenzing’s acknowledgement of the infringement, the AFCA applied for a reduced fine of EUR 75,000. For Palmers, the application was for an appropriate fine. Proceedings against Palmers have not yet been completed.

Background

The AFCA was notified of the merger, i.e. establishment of Hygiene Austria, on 11 May 2020. The merger was cleared on 26 May 2020. The final Cartel Court decision confirms the AFCA’s view that the parties had breached the standstill obligation prior to clearance given that they informed the public of the establishment of the company through an APA-OTS press release on 24 April 2020 and also took operational action.

Illegal merger

Illegal mergers are mergers subject to notification obligations that are implemented prior to approval by the AFCA or the Federal Cartel Prosecutor and/or the Cartel Court. The Cartel Court may impose fines for illegal mergers at the request of the AFCA.

The standstill obligation protects competition on the market from the potential and actual restrictive effects of non-approved mergers.

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