Pre-Merger Notification Survey. AUSTRIA Cerha Hempel Spiegelfeld Hlawati, Partnerschaft von Rechtsanwalten

Transcription

1 Pre-Merger Notification Survey AUSTRIA Cerha Hempel Spiegelfeld Hlawati, Partnerschaft von Rechtsanwalten CONTACT INFORMATION Dr. Bernhard Kofler-Senoner Cerha Hempel Spiegelfeld Hlawati, Partnerschaft von Rechtsanwalten Austria Telephone: Is there a regulatory regime applicable to mergers and similar transactions? Mergers and similar transactions are subject to Austrian merger control, which is part of the Austrian Competition Law regulated by the Austrian Competition Act (Wettbewerbsgesetz) and the Cartel Act (Kartellgesetz). As of 1 January 2006, amendments of the Competition Act and the Cartel Act will enter into force bringing about a clarification and simplification of Austrian cartel law. Concerning the Austrian merger regime, the legislator has not deemed it necessary to change the main principles but instead has only passed some minor modifications (which the following text has already incorporated). 2. Identify Applicable National Regulatory Agency/Agencies. Cartel Court and Supreme Cartel Court: The Cartel Court (Kartellgericht), as court of first instance, and the Supreme Cartel Court (Kartellobergericht), as appelate court, are the decision-making bodies of Austrian merger control law. The Cartel Court has not the power to examine merger cases ex-officio, but instead, is only competent to carry out Phase II examinations (in-depth examinations) if such Phase II examinations are initiated by one of the official parties during Phase I. Official Parties (FCA, FCP): The Federal Competition Authority (FCA, Bundeswettbewerbsbehörde) is located at the Federal Ministry of Economics and Labour as an independent body whose head

2 is not bund by instructions. In general, its main function is the investigation and detection of potential restrictions on competition, as well as filing petitions with the Cartel Court. It shall guard upon the functioning of the competition on the Austrian market and acts ex officio. As of 1 January 2006, merger filings have to be filed with the FCA (four copies) and not with the Cartel Court any more. The FCA will immediately forward one copy of the filing to the Federal Cartel Prosecutor. The Federal Cartel Prosecutor (FCP, Bundeskartellanwalt) represents the public interest in competition matters and acts ex officio, though he is bound by instructions of the Ministry of Justice. The FCP is located at the Cartel Court and is empowered to bring cases before the Cartel Court. His function replaces the former right of the Cartel Court to initiate proceedings ex officio. Comparable to the FCA, the FCP may initiate Phase II examinations of mergers before the Cartel Court. In such case, the FCP remains party to the proceedings before the Cartel Court (like the FCA). Commission on Competition: The Commission on Competition (Wettbewerbskommission) serves as advisory body to the FCA. The Commission, as a board of experts, supplies expert opinions on issues regarding competition law. 3. Is there a supranational regulatory agency (e. g., the European Commission) that has, or may have exclusive competence? If so, indicate. If a merger of European dimension falls under the EC merger regulation (Regulation No 139/2004), European merger control applies and prevails over the Austrian provisions, replacing any Austrian competence even in cases where all other prerequisites for the application of Austrian merger control are met. If European merger control applies, exclusive competence rests with the European Commission. The only exception to this is mergers on the media sector, which have to be notified (if all prerequisites are met) regardless of European competence. 4. Are there pre-merger filing requirements; if so, where are they published? Mergers are subject to mandatory pre-merger notification in Austria if certain requirements, which are regulated by the Cartel Act, are met (see questions below for details). 5. What kinds of transactions are "caught" by the national rules? (Identify any notable exceptions) Only transactions which qualify as a concentration within the meaning of s.7 Cartel Act are caught by Austrian merger control. The following transactions are deemed concentrations: the acquisition of the entire or a substantial part of an undertaking, especially by merger or transformation; the acquisition of control over another undertaking by contractual agreement (for instance by means of business management agreements);

3 the direct or indirect acquisition of shares in an undertaking if the shares held after the acquisition are or exceed 25% or 50%; at least half the members of the management bodies or the supervisory boards of two or several companies are caused to be identical; any other combination of undertakings which confers on one undertaking a direct or indirect controlling influence over another undertaking (blanket clause); The establishment of full-function joint ventures is also deemed a concentration, as is the conclusion of contractual obligations by banks within the meaning of s.30 (2a) Banking Act (Bankwesengesetz, BWG). If all enterprises involved belong to the same corporate group, there is no concentration. The Cartel Act contains an exemption to the notification obligation concerning the banking business. Merger control rules do not apply to situations in which a bank acquires shares for purposes of resale, restructuring an insolvent company or securing the debt of such a company. The bank concerned is however subject to certain restrictions laid down by law, especially regarding its voting rights. It is further required that the shares are resold within one year of the date of acquisition or, in respect of restructuring and securing measures, after the finalization of such measures. Further exceptions are provided for certain investment fund companies. Until 1 January 2006, only concentrative full-function joint ventures have been regarded as concentrations subject to merger control proceedings in Austria. Cooperative full-function joint ventures had been treated as cartels. As of 1 January 2006, all forms of full-function joint ventures will be considered to be concentrations subject to merger control under the Cartel Act. Comparable to the ECMR, a concentrative full-function joint venture is defined under the Cartel Act as a joint venture performing on a lasting basis all the functions of an autonomous economic entity, which does not give rise to the coordination of the competitive behaviour of the parties amongst themselves or between them and the joint venture. 6. Is there a "size of transaction" threshold? There is no "size of transaction" threshold. 7. Is there a "size or turnover of the parties" test; if so, what is it and how are size and turnover to be calculated? A turnover threshold is set out in s.9 Cartel Act. A concentration within the meaning of s.7 Cartel Act has to be notified to the FCA (see, however, exception below) if in the last financial year before the transaction:the combined aggregate worldwide turnover of the undertakings concerned exceeded 300 million, and the combined aggregate turnover on the Austrian market of the undertakings concerned exceeded 30 million, and

4 the worldwide turnover of at least two of the undertakings concerned was at least 5 million each. However, concentrations exceeding the turnover thresholds above are exempt by law from the notification obligation, in case (i) only one undertaking concerned achieved turnover in Austria of more than 5 million and (ii) the other undertaking(s) concerned achieved an aggregate turnover of not more than 30 million worldwide. Such exemption is intended to cover, in particular, mergers having no material effect on the Austrian market (e.g. one big Austrian undertaking acquires one or more small foreign entities). For the purpose of turnover calculation, the aggregate net-turnover, excluding intragroup turnovers, of all undertakings linked to each other as defined in s.7 Cartel Act must be taken into consideration. The calculation of turnover in the banking and insurance sector is subject to special rules. In the media sector, for the purpose of determining the combined aggregate worldwide turnover and the combined aggregate turnover on the Austrian market, the turnovers of media enterprises and media services have to be multiplied by 200, for media support companies by 20. It is important to note that rules on turnover calculation under the Austrian Cartel Act differ from the corresponding rules of the ECMR in some aspects (e.g. general issue, which undertakings turnover has to be taken into account or treatment of statecontrolled undertakings). 8. Is geographic scope/national market effect of transaction an issue with respect to filing or approval requirements? If so, specify. Filing in Austria is not necessary if a transaction has no or hardly any appreciable actual or potential effect on the Austrian market. This "effects-doctrine" has been applied rather strictly so far, as even a minor effect is deemed to be sufficient. In past cases, the Cartel Court has deemed an increased access to resources (e.g. know-how, patents, financial resources) as sufficient effect. A statement on the national market effect of mergers is available in German language at the FCA's website under 9. Is the filing voluntary or mandatory? What are the penalties for noncompliance? If the prerequisites for notification are met, filing is mandatory. Voluntary filing in cases where a notification is not required is not possible. Concentrations subject to notification must not be implemented until clearance has been granted. Any contracts violating this prohibition are legally void. Prior

5 implementation of a concentration constitutes a prohibited implementation and can lead to a fine ranging from to 1 million or up to 10% of the worldwide turnover achieved by each of the enterprises involved in the violation. As long as Austrian merger control regulations are applicable and the prerequisites for mandatory notification are met, a merger requires clearance in Austria before it may be implemented. Clearance in other jurisdictions does not affect this prohibition of implementation before clearance in Austria. A concentration is considered to be implemented in Austria as soon as it affects the Austrian market. 10. Time in which a filing must be made. There is no set time within which a filing must be made. A concentration can already be notified before the signing of an agreement, as soon as there is a concentration plan embracing the exact structure of the planned transaction. There is also no deadline for filing after the signing of an agreement. It has to be kept in mind though, that a merger must not be implemented before clearance is granted, thus it is usually in the interest of the parties to file a notification as soon as it is viable. 11. Form and Content of Initial Filing. Notifications of concentrations have to contain all material information required for assessing the concentration, especially accurate and exhaustive information about any circumstances that may cause or strengthen a market-dominating position. While there is no prescribed form for the filing, the FCA has published a "Form for the notification of concentrations" in May Its use is not mandatory, though it is highly recommended, as it usually ensures that the authorities concerned dispose of any information required, thus minimising the risk of the notification being rejected or time consuming investigations being necessary. The "Form for the notification of concentrations" is published on the FCA s website under Are filing fees required? There is a notification fee amounting to EUR 1,500 which has to be paid to the FCA. If an in depth- examination before the Cartel Court is conducted, a variable court fee of up to 30,000 will be charged depending, in particular, on the economic importance of the merger, the complexity of the proceedings and the workload for the Cartel Court. The FCA and the FCP may file a request for an in-depth examination with the Cartel Court (Phase II) within four weeks after the FCA has received the merger filing. In

6 this respect, it is important to note that this four weeks time period only starts to run if the filing fee has been duly paid and if the fact of such payment is proven in the merger filing (e.g. by attachment of the original of the payment form). 13. Is There An Automatic Waiting Period? If so, specify. There is no special waiting period, though a concentration subject to notification must not be implemented until clearance has been granted. This prohibition of implementation of the concentration generally ends after the day the ruling granting clearance has become unappealable. 14. Are There Time Limits Within Which The Regulatory Agency Must Act? Can they be shortened by the parties or be extended by the regulatory agency? Within four weeks from receipt of the notification by the FCA, the official parties (and only the official parties) may apply for an in-depth (Phase II) examination of the concentration. If no such application is filed within the four-week period, the concentration is automatically cleared. If a Phase II examination is applied for, the Cartel Court may prohibit the concentration (or clear it under appropriate restrictions and/or conditions) within five months after the FCA or the FCP have initiated the Phase II examination. If no decision is issued by the Cartel Court within the five-month period, the concentration is deemed to be cleared without restrictions. It is possible to speed up the process as the official parties may waive their right to apply for an in-depth examination, thus clearing the concentration, before the fourweek period has ended. In order to obtain such waiver, the official parties require a formal application in writing providing sound reasoning why the matter is of urgency. The accelerating effect is, however, rather small, as a waiver is usually only issued after the two-week period for third parties to submit statements has expired. In case of mergers spanning multiple jurisdictions, clearance obtained in other countries, while not affecting Austrian merger control proceedings per se, may increase the chances to obtain a waiver from the official parties (to apply for an indepth examination), and thus is advisable to be included in the Austrian filing. A statement on the issuing of waivers is available in German language at the FCA's website under What is the substantive test for clearance? A concentration shall be prohibited, if it is to be expected that it will cause or strengthen a market-dominating position. An undertaking is deemed to hold a market-

7 dominating position, if it is exposed to no or only insignificant competition or if it has a superior market position in relation to its competitors, customers or suppliers. Furthermore, s.4 Cartel Act provides for a disprovable presumption (burden of proof is placed upon the undertaking concerned) that an undertaking holds a market dominating position, if, on the relevant market, it either: holds a market share of at least 30%, or holds a market share of more than 5% and is exposed to the competition of no more than two other undertakings, or holds a market share of more than 5% and is one of the four largest undertakings in this market, which together hold a market share of at least 80%. A media concentration shall further be prohibited if it is to be expected that it will impair media diversity. Even if a concentration is expected to cause or strengthen a market-dominating position it may still be cleared (possibly with restrictions and conditions) if it is to be expected that it will lead to improvements in the conditions of competition that outweigh the disadvantages, or if it is necessary for the maintenance or improvement of the international competitiveness of the enterprises involved and is economically justified 16. What are the common Post-Filing Procedures: Requests for further information, etc? While requests for further information are the most common post-filing procedure, other possible post-filing procedures include the questioning of witnesses and parties, the examination of business documents and in rare cases even searches of premise (which have to be ordered by the Cartel Court). All investigations are carried out by the FCA who may also call upon the assistance of the law enforcement agencies in securing its investigations and searches. Using the "Form for the notification of concentrations" published by the FCA and providing accurate and exhaustive information in the initial filing reduces the risk of time-consuming investigations being necessary 17. Describe the sanctions for not filing or filing and incorrect/incomplete notification. As already mentioned, concentrations subject to notification must not be implemented before clearance has been granted. This also includes not filing at all where it is mandatory. Contracts violating this prohibition are legally void and the prohibited implementation can lead to fines of up to 10% of the worldwide turnover achieved in the preceding financial year by each of the enterprises involved in the violation.

8 Further, the submission of incorrect, incomplete or misleading information in the notification or in response to a request for information can lead to fines of up to 1% of the worldwide turnover achieved in the preceding financial year by the undertaking concerned. Finally, the Cartel Court may order ex post measures diminishing anti-competitive effects. 18. Describe the procedures if the agency wants to challenge the transaction? The official parties (and only the official parties) may apply for an in-depth examination of a notified transaction within four weeks from receipt of the notification by the FCA. The Cartel Court will then examine the transaction and may prohibit it within Phase II. It may also clear the concentrations under appropriate restrictions and/or conditions. 19. Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger? The implementation of a merger before clearance or of a prohibited merger can lead to fines of up to 10% of the worldwide turnover achieved in the preceding financial year by each of the enterprises involved in the violation. 20. Describe, briefly, your assessment of the regulatory agency's current attitudes/activities. The official parties' attitude towards informal pre-notification talks has noticeably changed during the last years, from general refusal in the beginning to being common practice now. This especially benefits the more difficult and important merger projects as it helps to clarify certain aspects beforehand and speed up the notification process. In cases of special importance, the official parties actually expect the parties involved to consult them for pre-notification talks. The issuing of waivers (to apply for an in-depth examination) has seen a similar development. While the official parties generally refused to issue waivers in the beginning, they are now willing to do so in unobjectionable cases, though they still require the notifying parties to formerly apply for a waiver in written form providing sound reasoning why the matter is of urgency. 21. Other Important Information: