Earlier this month, an extensive amendment of the Austrian Cartel Act came into force. The changes relate to merger control (thresholds and substantive review), digital platforms and the role of sustainability in competition law.
In this blog post, we focus on the changes to the merger control regime and new rules relating to digital platforms. We discuss the role of sustainability in competition law assessments in a separate blog post.
Merger control thresholds
The changes to the Act have introduced a second domestic turnover threshold. Previously, transactions could trigger a filing requirement in Austria even if a target only had minimal or zero turnover in Austria. Based on the amended thresholds, transactions will only have to be notified if two undertakings concerned (eg the acquirer and target) each have a turnover of more than €1m in Austria. This applies to transactions that close on or after 1 January 2022.
According to the Federal Ministry of Digital and Economic Affairs, this second threshold will decrease the number of notifiable transactions in Austria by 44 per cent. However, the authorities have already indicated that – in light of this amendment – the turnover of affiliated companies (ie companies affiliated via shareholdings of at least 25 per cent) and geographic turnover allocation will be more closely monitored (which may likely include proactive inquiries by the regulator), particularly for complex or high-profile transactions.
In addition, the fee for merger control notifications will increase from €3,500 to €6,000 for transactions filed on or after 1 January 2022.
Introduction of the SIEC test – and an additional justification for anti-competitive concentrations
For many years, Austria had been planning to align the substantive test under Austrian merger control law with the EU test. This would mean replacing the market dominance test with the significant impediment of effective competition (SIEC) test. However, following the amendment to the Act, the SIEC test has not replaced the traditional market dominance test but is instead offered as an alternative.
Further, the amended Act has introduced an additional justification for concentrations that raise competitive concerns and, in the absence of a justification, would have to be prohibited. Going forward, concentrations that lead to a SIEC (or the creation or strengthening of a dominant position) can still be approved if the ‘macroeconomic advantages of the concentration significantly outweigh its disadvantages’.
It remains to be seen how the regulators make use of these new powers of review.
Digital markets – a new approach to tackling platform market power
Like the EU and Germany, Austria is addressing concerns around the potentially dominant position of certain players in digital markets. However, unlike the EU and Germany, Austria decided not to introduce ex ante tools to tackle (actual or perceived) market power, but rather build on existing mechanisms.
First, the notion of dominance has been expanded – a company can now also be regarded as being in a position of (single) dominance due to ‘its significantly important intermediation services for other companies to get access to purchasing and sales markets, the access to competitively sensitive data or due to the benefits it takes from network effects’. Further, the notion of relative dominance is now explicitly mentioned in the amended Act.
Second, the Austrian regulators will be able to open declaratory court proceedings against companies active in multisided digital markets, with the sole purpose of finding that a company is dominant in a given market. However, the question of whether a company has engaged in abusive conduct will not be part of such proceedings.
According to the legislative materials, this new procedure is designed to enable market participants (or the regulator) to take action against abusive market conduct more quickly in abuse-of-dominance proceedings (ie it would not be necessary to establish dominance later on but only that the relevant company – whose dominant position was previously established by the court – engages in abusive conduct).
As anticipated above, the amendment also brings a paradigm shift regarding the role of sustainability in competition law, which we lay out in a separate blog post.
Based on the amended thresholds, transactions will only have to be notified if two undertakings concerned (eg the acquirer and target) each have a turnover of more than €1m in Austria. However, the authorities have already indicated that the turnover of affiliated companies (ie companies affiliated via shareholdings of at least 25 per cent) and geographic turnover allocation will be more closely monitored, particularly for complex or high-profile transactions.