Amendment to the Cartel and Competition Act (‚KaWeRÄG 2021‘)

Created by Mag. Fridolin Fahringer |
Business Law

The KaWeRÄG 2021 adapts the Austrian Cartel Act as well as the Competition Act to the ECN+ Directive. Additionally, the government implemented amendments pursuant to the current government program, to adapt the Austrian competition law ‘to a modern (in particular digital) business life’.

1. Background

The Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (‘ECN+ Directive’) intends to ensure greater harmonization and more effective enforcement of European competition rules. Numerous regulations (inter alia regarding independence) were already sufficiently anchored in Austria and thus only ‘minor’ adjustments were necessary. In addition to this EU Directive, the legislator also implemented changes from the government program 2020 - 2024. The amendment came into force on 10.09.2021. New regulations regarding mergers for e.g. turnover threshold, grounds for prohibition, filing fees are however to be applied to mergers as of 1.1.2022 (Section 86 para 12 Cartel Act, 21 para 10 Competition Act)

2. Exceptions to the prohibition of agreements restricting competition

Restricting agreements are permissible if ‘the advantages outweigh the disadvantages’. Already existing exemptions are the improvement of the production of goods or the promotion of technical or economic progress and the appropriate participation of consumers in the profit.

A new exception is implemented in case the profit ‘contributes significantly to an ecologically sustainable or climate-neutral economy’

3. Abuse of a dominant position

3.1 ‘Intermediary’ or ‘Gatekeeper’ (§ 4 para. 1 no. 2 Cartel Act)

In addition to the ‘financial strength, the relations with other entrepreneurs, the access possibilities to the procurement and sales markets, and those circumstances which restrict market access for other entrepreneurs

  • the importance of its intermediary services for other entrepreneurs' access to procurement and sales markets.
  • access to relevant data and
  • the benefits deriving from network effects

must be considered.

3.2 Relative Market Power (Section 4a Cartel Act)

Relative market power is now regulated separately in Section 4a Cartel Act. Furthermore, the dependency on ‘Gatekeepers’ is relevant for both concluding as well as maintaining a business relationship. Hence, a dominant market position can also be assumed if an entrepreneur is dependent on the gatekeeper not only for maintining but also for establishing business relationships (both goods and services). This market power can also be declared by way of a declaratory relief by the authority to facilitate possible future sanctions, see below.

4. Merger control:

4.1 Second domestic turnover threshold pursuant to § 9 para 1 no. 2 Cartel Act

In future, target companies must turn over at least EUR 1 million domestically in Austria.  Thereby the Austrian cartel authority aims to reduce the amount of ‘bagatelle proceedings’ by more than 40%.

To secure the budget of the Austrian cartel authority, the application fee pursuant to will be increased from € 3,500.00 to € 6,000.00 (§ 10a para 1 Competition Act).

4.2 Significant impediment to effective competition § 12 para 1 b Cartel Act

Henceforth, the Cartel Court will have to prohibit a notifiable merger if it is to be expected that

  • a dominant position (§ 4) is created or strengthened as a result of the merger, or

  • the effective competition would otherwise be significantly impeded’. This introduces the Union law standard of review (‘SIEC’ - Significant Impediment of Effective Competition) at the national level.

5. New Grounds for Justification of Concentrations Section (12 para 2 Cartel Act)

A merger shall not be prohibited if it is expected that the merger will lead to

  • improvements in competitive conditions that outweigh the ‘disadvantages of the merger’ (previously: ‘disadvantages of market dominance’),
  • the maintenance or improvement of the international competitiveness of the companies involved is necessary and economically justified, or
  • the economic advantages significantly outweigh the disadvantages of the merger

By replacing ‘dominance’ with ‘concentration’, the justification is applicable to the new ground for prohibition (‘significant impediment to effective competition’) as well.

Economic advantages include ‘above all growth, innovation and full employment’, but also ‘increased prosperity, the sustainable improvement of the quality of life through job security, income growth and fair income distribution.’

6. Decisions

6.1 Commitments (Section 27 Cartel Act)

To avoid termination proceedings, the Cartel Court can accept commitments from the companies involved and declare them binding. Henceforth, the Cartel Court must consider the opinions / statements of market participants as already conducted at the European level.

6.2 Determination of a Dominant Market Position § 28a Cartel Act

When digital companies act as intermediaries (‘platforms’), a dominant position or a ‘significant impediment to competition’ could emerge rapidly and customers and end users are impaired and potential competitors of these platforms are prevented from entering the market.

The new Section 28a of the Austrian Cartel Act now provides for the possibility of a declaratory decision by the Cartel Court if a company is dominant on a multi-sided digital market (Section 4). On the one hand, the determination functions as ‘warning and signal function and, on the other hand, prepares for possible subsequent abuse proceedings.

7. Leniency (§ 11b Competition Act)

In future, the leniency applicant's obligation to cease its own participation in the infringement will be limited so the integrity of the investigation is not jeopardized.

8. Case access and redaction

The rights to inspect leniency statements and settlement submissions shall be limited to parties and to the purposes of exercising their rights of defense (§ 39 para 2 Cartel Act).

The parties may request to redact text passages from the decision of the court of first instance to protect business secrets (§ 49 para 2a Cartel Act).

9. Safeguarding of fundamental rights (§ 13 para. 1 Cartel Act)

The Competition Authority is obliged to comply with fundamental rights (incl. the Charter of the EU) when exercising its powers.

10. Weitere Änderungen

  • Amendment of fines (Sections 29, 31 Cartel Act; new fines, liability of legal successors / of groups, limits of liability).
  • Amendment of the limitation and suspension periods (§ 35 para 2 Cartel Act).
  • Distribution of competence and reporting obligations (between the Federal Competition Authority and the Federal Ministry).
  • Publication of decisions (Section 37 Cartel Act; declaratory decisions, fines, interim injunctions, commitments, etc.).
  • Restriction of the use of evidence under cartel law.
  • Cooperation between cartel authorities (service of process, collection of fines (Section 3a Cartel Act), exchange of leniency statements (Section 83a Cartel Act), administrative assistance (Sections 35a to 35e Cartel Act)).