In March 2024, the Austrian Federal Competition Authority (AFCA) filed applications with the Cartel Court for fines to be imposed on Lenzing AG (“Lenzing”) and Palmers (press release of 19 March 2024). Following Lenzing’s acknowledgement of the infringement, a settlement with a fine of EUR 75,000 was sought and finally imposed by the Cartel Court.
The AFCA applied for the imposition of an appropriate fine on Palmers, with the Cartel Court setting the fine at EUR 5,000. The AFCA and the Federal Cartel Prosecutor subsequently filed appeals against the amount of the fine, declaring the fine to be too low to have an appropriate general and specific preventive effect. The Supreme Cartel Court has now upheld the appeals by the official parties and imposed a fine of EUR 100,000. The decision is final.
“Merger control serves the important purpose of ensuring that markets function properly. Breaching the standstill obligation is not a trivial offence in Austria. The Supreme Court has made this abundantly clear by increasing the fine twentyfold,” commented AFCA’s Director General Harsdorf.
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 even 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 took operational action marking the implementation of the merger.
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 official parties.
The standstill obligation protects competition on the market from the potential and actual restrictive effects of non-approved mergers.