Background
On 30 June 2018, with the lease contract entering into force, REWE’s subsidiary Merkur Warenhandels AG (now “Billa Plus”, which is part of Billa Aktiengesellschaft) took over a food retail outlet in the WELAS Park shopping centre in Wels in which Weiß Handels GmbH had previously operated a supermarket. REWE did not notify the AFCA of the transaction.
On 21 October 2021, the AFCA filed an application with the KG for termination of the infringement of the standstill obligation relating to mergers without notification and to impose an appropriate fine on account of said illegal conduct by REWE. Following a retroactive merger notification (BWB/Z6052), the AFCA subsequently changed its application for termination of the infringement during the ongoing proceedings to an application for findings, with the application for the imposition of an appropriate fine being upheld. With its decision of 15 May 2023, the KG affirmed the existence of a merger subject to notification obligations but, due to a lack of criminal liability on the part of REWE, dismissed AFCA’s applications for a fine and for findings. On 19 June 2023, the AFCA and the second official party, the Federal Cartel Prosecutor, each lodged an appeal with the KOG against this decision.
For more details about the facts of the case and the KG’s legal opinion, please refer to our press release of 28 June 2023.
KOG decision
The KOG ruled in favour of the AFCA and confirmed the existence of a merger subject to notification obligations following the takeover of food retail space in the WELAS Park shopping centre through a lease contract entered into by REWE. The KOG also confirmed the antitrust liability of the REWE parent company for merger control, citing the “functional definition of an undertaking” under cartel law and taking account of the economic approach to the infringement by an affiliated subsidiary as laid down in the Federal Cartel Act (KartG) if, “although having a separate legal personality, the subsidiary does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company [...].”
In relation to the question of fault, the KOG declared that no fine should be imposed if the concerned party’s fault is negligible, the consequences of the breach are insignificant, and a sanction is not required for reasons of either specific or general deterrence. The Supreme Court affirmed the official parties’ legal opinion in this case, stating that REWE’s fault could not be deemed negligible and thus the prerequisites for refraining from imposing a fine did not apply (analogous to § 191 of the Code of Criminal Procedure – StPO). The KOG underlined the importance of the notification obligations in merger control under cartel law and stated that difficulties in calculating the relevant sales proceeds did not constitute “a licence to avoid notification.”
In relation to the materiality of Austrian merger control and the obligation to notify the AFCA, the KOG emphasised that “imposing a quasi-symbolic fine was not sufficient.” Moreover, any fine imposed by the KG needed to be considerable.
In conclusion, the KOG pointed out that the reversal of the KG decision only related to the amount of the fine and that the legality of the application for a fine was in essence already finally resolved with the present decision.
“The Cartel Court has reached a ground-breaking decision, which will have a preventive impact on compliance with the existing legal provisions. It is very important, particularly in highly concentrated markets such as food retail, that any further concentration is subject to a competition assessment, and this must not be circumvented. Merger control is in the public interest of consumers to ensure proper competition, and breaching related obligations is not a trivial offence, as the Supreme Court has now confirmed,” explained AFCA’s Director General Harsdorf-Borsch.