Dieter Hauck Martin Preslmayr November 8 2001 Supreme Court Rules on 'Most Favoured Treatment' Clauses Preslmayr Attorneys at Law | Competition & Antitrust - Austria Dieter Hauck, Martin Preslmayr Competition & Antitrust FactsJudgmentCommentFactsIn a recent case(1) the plaintiff organized the collection and recycling of packaging waste within a scheme pursuant to the Austrian Packaging Order, which obliges companies to recycle their waste. The plaintiff used subcontractors that worked in cooperation with regional partners. The plaintiff sought a preliminary injunction to prevent the subcontractors from using the following 'most favoured treatment' clause in their contracts with regional partners: "Irrespective of the agreed fees the [regional] partner of ... [the defendant] ... grants a most favoured treatment. Thus, the partner will not offer or render recycling services, comparable to those agreed in this contract, on more advantageous conditions to other parties. However, if the partner breaches this obligation the fees to be paid by ... [the defendant] ... are reduced to the same extent."The plaintiff argued that:the clause adversely and illegally affected competition in the recycling market;regional recycling companies refused to cooperate with the plaintiff because of the clause; the defendants had intentionally hindered the plaintiff's access to the market; and use of the clause constituted an abuse of a dominant market position according to Paragraph 35 of the Cartel Act.The defendants argued that they did not have a dominant position in the market and that the clause did not prevent regional partners from rendering services to the plaintiff. Rather, the purpose of the clause was to protect the plaintiff's economic interests.JudgmentThe Supreme Court held that Paragraph 2(1) of the Neighbourhood Supply Act, according to which an injunction can be sought against suppliers who offer different conditions to retailers without objective justification, is applicable even if a supplier does not hold a dominant market position. Thus, the quoted most favoured treatment clause of the defendants, which grants equal treatment within the meaning of this legal provision, cannot be considered an abuse of a dominant market position.CommentThis ruling complies with the opinion of the European Commission, according to which the granting of a most favoured treatment does not usually result in a limitation of competition. This opinion also underlies Article 2(1)10 of Regulation 240/96 on technology transfers, which permits a 'most favoured licensee' clause.For further information on this topic please contact Dieter Hauck, Bernhard Köck or Martin Nepraunik at Preslmayr & Partners by telephone (+431 533 16 95) or by fax (+431 535 56 86) or by email ([email protected], kö[email protected] or [email protected]).Endnotes(1) 16 Ok 8/00.