Merger notification and clearance in Austria

Notification and clearance timetable

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

There are no legal deadlines for prior notification of mergers but, as mergers subject to merger control must not be completed before clear­ance, notifications must be submitted well before the envisaged date for the closing of the transaction. It is possible to file a pre-merger notification even prior to the signing of the relevant agreement, provided the parties have, in principle, agreed on the structure and timing of the transaction and intend in good faith to enter into this agreement in the foreseeable future. Following a legal dispute about option rights between two potential buyers, the statutory parties have recently initiated Phase II proceedings in relation to a notified takeover in the gambling sector, to obtain a court ruling on the question of notifiability of the proposed transaction. There are no specific sanctions for not filing a notifiable merger (within a certain deadline). For sanctions for imple­menting a transaction prior to clearance, see question 13.

In complex cases (especially where the need for remedies may already be anticipated by the notifying parties) it can also be helpful for the parties to engage in pre-notification discussions with the statutory parties prior to formal filing. While there is no formal pre-notification procedure, the FCA’s head has recently voiced concerns with regard to a case – which had gone to Phase II – where the notifying party had failed to engage in a pre-notification contact prior to notification. For instance, in the telecoms sector it is advisable to engage in pre-noti­fication discussions and provide the FCA/FCP with regulatory data at an early stage in Phase I. In the proceeding regarding the acquisition of Tele2 Austria, a provider of fixed line telecommunications services, by Hutchison Drei Austria, one of the major Austrian mobile telecoms operators, the parties reached out to the authorities at an early stage of the transaction process, engaging in pre-notification contacts to discuss the scope of information and data required. The case has shown that clearance within the four-week Phase I window can be obtained even in complex cases if the parties actively engage with the FCA/FCP.

Which parties are responsible for filing and are filing fees required?

Each of the undertakings concerned is entitled to file a pre-merger notification. However, usually the acquirer files the notification. Joint notifications are permissible but rare in practice. In Phase I proceed­ings, there is a fixed filing fee of €3,500. In Phase II proceedings, the Cartel Court sets a lump-sum fee of up to €34,000. However, in the case of a (full) in-depth review of a merger in Phase II there will usually be additional costs for the preparation of an expert’s opinion, which the notifying parties will have to pay (in the past, fees ranged between €150,000 and €300,000).

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

Generally, the waiting periods are four weeks in the case of a Phase I clearance and up to six months if proceedings for a Phase II review by the Cartel Court are initiated. However, since the 2013 amendment to the ACA the notifying party has had the right to apply for an exten­sion of the Phase I deadline by two weeks to avoid the initiation of an in-depth investigation without reasonable concerns on the substance. This request makes sense if the FCA and the FCP can be convinced with a little more time that the transaction does not raise competition concerns or if a remedy package in Phase I is a feasible option for both the authorities and the parties. In previous years, such an extension of Phase I was sought in only few cases (usually significantly below 5 per cent of all cases).

Further, the review period for Phase II proceedings will be extended by one month upon request by the notifying party. Implementation must be suspended until clearance.

A transaction that is subject to Austrian merger control must not be implemented until:

• both statutory parties have waived their right to request a Phase II review of a merger by the Cartel Court;
• neither statutory party has requested the initiation of Phase II proceedings within the four-week period of Phase I (or six-week period in the case of an extension request); or
• if Phase II proceedings have been initiated, the issuing of a final decision of the Cartel Court whereby these proceedings are ceased, the relevant request of a statutory party is held inadmissible, or the merger is approved.

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

The implementation of a transaction that is subject to merger control is null and void if effected prior to clearance. The same applies to the underlying agreement. However, it is unclear what this means in the case of a foreign-to-foreign merger governed by foreign contract law.

In the case of an unauthorised implementation of a merger that requires pre-merger notification, the Cartel Court can, upon the request of a statutory party, impose on each party that intentionally or negli­gently violates the standstill obligation a fine in the amount of up to 10 per cent of the worldwide turnover achieved by that party in the last business year.

To date, the highest fine imposed by the Cartel Court for violation of the standstill obligation is €1.5 million. Fines in other cases have been significantly lower, typically ranging between €15,000 and €150,000. The Cartel Court imposed a fine of €20,000 in a case relating to the notifi­able establishment of interlocking directorates at the managing board level. An unlawful completion of the concentration had been effected by formal registration of the amended representation competences at the companies’ register. When determining the fine, the court acknowl­edged the factual complexity of the case, the fact that joint (not sole) control had been established as well as the fact that the infringement had been voluntarily terminated by subsequent submission of a merger notification.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Yes; sanctions for violation of the standstill obligation by early implemen­tation of a notifiable transaction are also applied in foreign-to-foreign merger cases. In 2010, for instance, the FCA requested the Cartel Court to impose a fine against a foreign logistics company that had failed to notify its initial acquisition of a minority shareholding in a Hungarian company. After imposition of a fine of €4,500 by the Cartel Court, the FCA appealed and requested the fine to be increased to almost €5 million, largely on general turnover grounds. In its final decision issued in 2013, the Supreme Court imposed a fine of €100,000.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

In principle, any structural or behavioural undertaking is accept­able under Austrian law, including local ‘hold-separate’ agreements. However, given the lack of precedent decisions by the Supreme Court in this area, it is unclear which solutions would be considered sufficient by the Austrian authorities.

Are there any special merger control rules applicable to public takeover bids?

Public takeover bids in Austria do not receive special treatment under the merger control rules. The Takeover Act regulates Austrian public takeover bids. A takeover panel has exclusive jurisdiction over all matters coming under its scope and supervises compliance with its rules.

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The merger notification must contain precise and comprehensive infor­mation on all factual aspects that could give rise to the creation or strengthening of a dominant position, in particular:

• the corporate structure (direct and indirect shareholders and subsidiaries) of the undertakings concerned, including under­takings that are connected to them by one or more of the links that constitute a concentration within the meaning of section 7 of the ACA;
• the turnover (by volume and value) achieved by these undertak­ings in the last business year (to be provided separately for each relevant product or service market);
• the market shares of these undertakings in each relevant product or service market;
• information on general market conditions; and
• in the case of a media concentration, precise and comprehensive information on other factors that could impair media plurality.

In 2016, the Cartel Court fined an applicant €750,000 for providing inac­curate and misleading statements in the notification, which resulted in a wrong description of the proposed transaction (the transaction actu­ally constituted another type of concentration). The Cartel Court also held that a very high standard of care was required when preparing merger notifications. Recent experience suggests that a thorough analysis of the filing structure itself is advisable in cases where trans­actions consist of various acquisition steps (in some cases a joint filing may be required, whereas in others separate filings may be possible or required). In the absence of specific legislation, the Austrian authorities will take into account the European Commission’s Jurisdictional Notice when assessing such issues.

The FCA has published a form for merger notifications on its website. The use of this form is not compulsory but is strongly recom­mended by the statutory parties.

What are the typical steps and different phases of the investigation?

Upon receipt of the notification, the FCA forwards a copy of the notifica­tion to the FCP and publishes a short summary of the notification on its website (www.bwb.gv.at). This summary contains the names of the parties, a brief description of the type of the concentration (eg, merger, creation of a joint venture) and the business sectors concerned.

Within two weeks of the date of publication, third parties whose legal or economic interests are affected by the concentration (ie, compet­itors and customers, in particular) may submit written comments to the FCA and the FCP. Third parties do not have procedural rights and cannot challenge a clearance decision.

The Competition Commission, an independent advisory body, may recommend the FCA to request a Phase II review of the merger by the Cartel Court. Such a recommendation has to be issued within three weeks of the filing of the notification. In the event that the FCA or the FCP requests a Phase II review of the merger by the Cartel Court, the FCA will publish the request on its website.

Following the initiation of a Phase II review of the merger, the Cartel Court has five months to adopt a prohibition or clearance decision (upon request by the notifying party, the review period will be extended by one month). A decision by the Cartel Court by which a concentration is cleared subject to conditions or obligations, or both, will be published on the FCA’s website once it is final and binding. Non-confidential (full text) versions of decisions of the Cartel Court are also published in an electronic database (Ediktsdatei) run by the Federal Ministry of Justice.

What is the statutory timetable for clearance? Can it be speeded up?

If neither of the statutory parties requests the initiation of a Phase II review by the Cartel Court, clearance takes four weeks (or six weeks in the case of an extension request by the notifying party). The review period starts to run on the day of receipt of the notification by the FCA provided that the filing fee (€3,500) has been paid.

Early clearance is possible, if the transaction clearly does not raise competition concerns. However, this procedural option is only used rarely and the parties and their advisers should generally expect the full four-week review period. Early clearance will be granted in excep­tional circumstances and requires that both the FCA and the FCP waive their right to apply for an in-depth review of the transaction to the Cartel Court. The earliest early clearance can be obtained is after the expiry of the two weeks for third-party comments (plus an additional three busi­ness days for comments to come in via mail).

Under the regime laid down by the ACA, the Cartel Court does not issue a confirmation of Phase I clearance. Instead, the statutory parties are obliged to inform the notifying party of the fact that they did not request the initiation of Phase II proceedings within the four-week (or six-week) period.

If a statutory party requests Phase II proceedings, the Cartel Court can issue a prohibition decision within five months of such request being made (if both statutory parties issue such requests, the date of the first request is decisive). After expiry of the five-month period (without a final decision) or, before that, after withdrawal of the respec­tive requests by the statutory party (parties), the Cartel Court must close its review proceedings and the standstill obligation is lifted. The notifying party may apply for an extension of the five-month period by one month. According to the legislative materials, this period may be used, in particular, for remedy negotiations.

During Phase II proceedings before the Cartel Court, the statutory parties withdraw their requests only in exceptional cases, mainly if the parties offer commitments that are sufficient to remedy the competition concerns that had been identified and if the statutory parties do not insist on having such commitments fixed as conditions or obligations in a formal decision of the Cartel Court. Once Phase II proceedings before the Cartel Court have been initiated, such withdrawal is almost the only practical way to obtain a merger clearance before the end of the full review period.