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What are the legal sources that set out the antitrust law applicable to vertical restraints?
The substantive rules of Austrian antitrust law, as well as the rules on the procedure before the Cartel Court, can be found in the Cartel Act of 2005. The Competition Act of 2002 contains certain procedural provisions. Both acts were most recently amended in May 2017. In addition, the Austrian Local Supplies Act provides legislation on price discrimination and certain contracting obligations with respect to the supply of vital goods for daily use. Moreover, Austrian antitrust law must be considered within the legal framework of articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
In 2014, the Federal Competition Authority (FCA) published guidelines entitled ‘Standpoint on Resale Price Maintenance’ (the FCA guidelines). The guidelines are non-binding but they provide a useful overview of the FCA’s likely enforcement practice.
Types of vertical restraint
List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?
Austrian antitrust law in principle covers the same types of vertical restraints as EU antitrust law (in particular, resale price maintenance (RPM), territorial or customer restraints and selective or exclusive dealing). The concept of vertical restraint is no longer defined in the antitrust law (a separate definition with special rules was in force until 2005, when the Austrian provisions were adjusted to EU antitrust law).
Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?
Austrian antitrust law on vertical restraints does not seek to promote interests other than the protection of competition.
Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?
As Austria has a ‘two-tier system’ for the enforcement of competition law, there are several authorities that are, or can be, involved in proceedings. These are:
- the FCA;
- the Competition Commission (CC);
- the Federal Cartel Prosecutor (FCP);
- the Cartel Court (part of the Vienna civil appeals court); and
- the Supreme Court as Appellate Cartel Court.
Governments or ministers have no role in the enforcement process.
The FCA is the independent Austrian authority entrusted with the safeguarding of effective competition. In this capacity, the FCA is entitled to investigate alleged anticompetitive practices (and review mergers in phase 1) but it has no decision-making power on the substance; it can only initiate proceedings before the Cartel Court.
The CC is an advisory body established alongside the FCA.
The FCP is an official assigned to safeguard the public interest in competition matters. Like the FCA, the FCP has the right to initiate proceedings before the Cartel Court. The FCP reports to the Federal Minister of Justice.
The Cartel Court is a specialised court (consisting of five senates of four judges each). It is the decision-making body in antitrust matters. It is the only Austrian entity authorised to prohibit activities infringing competition law (or adopt declaratory decisions) and to impose remedies or fines (fines can, however, only be imposed upon request of the FCA or the FCP). Cartel Court decisions can be appealed to the Austrian Supreme Court as Appellate Cartel Court.
What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so, what factors were deemed relevant when considering jurisdiction?
Pursuant to its section 24, the Austrian Cartel Act shall apply only in the event that specific facts affect the domestic market, irrespective of whether these circumstances arose domestically or abroad. The notion of ‘domestic effect’ is generally interpreted relatively broadly in Austrian case law.
Agreements concluded by public entities
To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?
In principle, antitrust law applies to vertical restraints in agreements concluded by public entities unless public entities are exercising governmental functions in a narrow sense (ie, in the state’s sovereign role).
Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)? Please identify the rules and the sectors they cover.
In principle, general antitrust law applies universally to all industry sectors. However, there are some sector-specific rules. As per section 2, paragraph 2(2) of the Cartel Act, RPM agreements between the following are exempt from the prohibition of anticompetitive agreements to the extent that such agreements are required to guarantee a nationwide and non-discriminatory distribution of a range of newspapers and magazines by stationary retail trade:
- the final seller (retailer) trading in books, art, prints, sheet music, magazines and newspapers and the publisher setting the selling price; and
- newspaper or magazine publishers and businesses that buy newspapers or magazines on a sale or return basis and sell them on the same basis to the final seller (press wholesalers).
As regards motor vehicles, after the EU abolished sector-specific rules for the sale of new motor vehicles (which, since 1 June 2013, have been covered by the general EU Vertical Block Exemption Regulation (No. 330/2010) (VBER)) in 2010, the Motor Vehicle Sector Protection Act entered into force in Austria on 1 June 2013. This Act contains, inter alia, compulsory provisions on minimum notice periods for the termination of dealer agreements (certain dealer-friendly provisions from the original EU rules for the sale of new motor vehicles were thus ‘transferred’ into Austrian law).
Are there any general exceptions from antitrust law for certain types of agreement containing vertical restraints? If so, please describe.
Austrian law contains a de minimis exemption providing that anticompetitive agreements between competitors that jointly hold a total share of not more than 10 per cent of the relevant market, or anticompetitive agreements between non-competitors that hold a total share of not more than 15 per cent each of their respective relevant market, shall be exempt from the prohibition of anticompetitive agreements, provided (in both cases) that they do not aim to fix selling prices, restrict production or distribution, or share markets (ie, do not contain hardcore restrictions).
Types of agreement
Is there a definition of ‘agreement’ - or its equivalent - in the antitrust law of your jurisdiction?
There is no definition of ‘agreement’ in Austrian antitrust law, and so it is usually assumed to have the same meaning as under EU competition law. In the area of RPM, even unilateral conduct (in the form of price recommendations, unless they are genuinely non-binding) is relevant under Austrian competition law (ie, the existence of an agreement is not required in this area in order for the prohibition of RPM to apply).
In order to engage the antitrust law in relation to vertical restraints, is it necessary for there to be a formal written agreement or can the relevant rules be engaged by an informal or unwritten understanding?
In Austria it is sufficient for the antitrust rules to apply if there is an informal or unwritten understanding. The same level of neutral understanding will be sufficient as under EU antitrust law. Even unilateral conduct (in the form of price recommendations, unless they are genuinely non-binding) may be relevant under Austrian law (see question 9).
Parent and company-related agreements
In what circumstances do the vertical restraints rules apply to agreements between a parent company and a related company (or between related companies of the same parent company)?
Austrian law recognises ‘group privilege’ as developed under EU antitrust law. There has not been any case law on the specific requirements for this exemption to apply to agreements between a parent company and a related company or between related companies of the same parent company. It is, however, safe to assume that the prohibition of anticompetitive agreements will not apply to agreements between a parent company and its 100 per cent (direct or indirect) subsidiary or between two 100 per cent subsidiaries of the same parent company.
In what circumstances does antitrust law on vertical restraints apply to agent-principal agreements in which an undertaking agrees to perform certain services on a supplier’s behalf for a sales-based commission payment?
The Austrian Supreme Court has recognised that, in principle, the prohibition of anticompetitive agreements shall not apply to agent-principal agreements under certain circumstances. The requirements for this non-application are, however, quite strict under Austrian case law: in a case decided by the Supreme Court in 2009, this exemption was held to be inapplicable because the agent, under the agreement reviewed by the court, had to bear a certain risk for non-payment by end-customers as well as the transport costs for unsold products that he returned to the principal.
Where antitrust rules do not apply (or apply differently) to agent-principal relationships, is there guidance (or are there recent authority decisions) on what constitutes an agent-principal relationship for these purposes?
The Supreme Court, in two judgments on a newsprint pricing case in 2009, clarified that for an agency agreement to exist, the agent shall not, with respect to the goods that he or she sells on the principal’s behalf, be obliged to bear any risk (unless it is minor or insignificant; see question 12). The FCA guidelines clarify that the agent shall not bear any of the ‘typical contractual trade risks (eg, assuming costs of transport, market risks, product liability, contributing to marketing costs, warranty obligations, etc)’, otherwise the agreement will be treated as a normal distribution agreement between independent businesses (and the RPM prohibition will thus apply).
Intellectual property rights
Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)?
Austrian antitrust law does not provide for special rules for agreements that contain provisions granting intellectual property rights. There is also no case law that would indicate a different application of antitrust law to such agreements.
Analytical framework for assessment
Analytical framework for assessment
Explain the analytical framework that applies when assessing vertical restraints under antitrust law.
As regards the analytical framework, Austrian law has been fully synchronised with EU antitrust law. This means that RPM is considered unlawful per se. Exclusivity clauses are assessed with respect to their effect on competition, and it is usually safe to refer to the VBER (as well as to the European Commission’s Guidelines on Vertical Restraints). This means, in particular, that the market share thresholds of 30 per cent each for the supplier and the distributor (buyer) can also be applied under Austrian law. In recent Supreme Court cases, the application of the rule of reason (ancillary restraints) has been very restrictive as regards exclusive territory assignments in production joint ventures, and high fines have been imposed for hub-and-spoke infringements in the fast-moving consumer goods (FMCG) (eg, food and drinks, consumer electronics) retail sector against supermarket chains.
To what extent are supplier market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other suppliers relevant? Is it relevant whether certain types of restriction are widely used by suppliers in the market?
Market shares are relevant mainly with respect to thresholds explicitly contained in the law: there is a de minimis exemption under Austrian law (see question 8); Austrian competition authorities and courts will also be guided by the 30 per cent market share thresholds under the VBER when applying Austrian competition law to vertical agreements. Whether certain types of restrictions are widely used by suppliers in the market can also play a part under the ‘bundle theory’, which means that a multitude of similar agreements will be added up to assess whether a market share threshold is exceeded (see Supreme Court 2011 (Radius Clause IV), discussed in question 17). Austrian law contains certain rebuttable presumptions of a dominant position in section 4 of the Cartel Act (most importantly that if a business, as a supplier or purchaser on the relevant market, has a market share of at least 30 per cent, such business shall bear the burden of proof that it is not dominant within the general dominance definition of the Cartel Act).
To what extent are buyer market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other buyers relevant? Is it relevant whether certain types of restriction are widely used by buyers in the market?
Buyer market shares are relevant for all the market share thresholds mentioned above; it can be relevant, under the bundle theory, whether certain types of restriction are widely used by buyers in the market (see question 16) - this has been confirmed by the Supreme Court in 2011 (Case 16 Ok 8/10 - Radius Clause IV). In such cases, individual suppliers or distributors (buyers) with a market share not exceeding 5 per cent are, in general, not considered to contribute significantly to a cumulative foreclosure effect, and a cumulative foreclosure effect is unlikely to exist if less than 30 per cent of the relevant market is covered by parallel (networks of) agreements having similar effects (with reference to the European Commission’s De minimis Notice).
Block exemption and safe harbour
Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints under certain conditions? If so, please explain how this block exemption or safe harbour functions.
While Austrian antitrust law empowers the Minister of Justice to adopt a block exemption (‘determine by ministerial ordinance that certain categories of cartels pursuant to section 2, paragraph 1 shall be exempt from the prohibition of anticompetitive agreements’ and that ‘such ordinances may refer to a regulation as amended from time to time pursuant to article 101(3) TFEU’; section 3 of the Cartel Act), this power has not been used since the Cartel Act entered into force in 2006. The VBER is applied by Austrian authorities and courts by analogy because most of the cases before them are subject to EU antitrust law in addition to Austrian antitrust law.
Types of restraint
Assessment of restrictions
How is restricting the buyer’s ability to determine its resale price assessed under antitrust law?
The assessment under Austrian antitrust law is very similar to the EU antitrust rules.
In terms of suggested retail prices, price recommendations from suppliers to dealers must be legally and effectively non-binding, and this should be explicitly mentioned when communicating them (‘non-bindingly recommended’ (UVP)). A consideration of the non-binding nature of recommendations is made on a case-by-case basis. A supplier using the UVP designation, or referring to the prices as ‘non-bindingly recommended’, does not yet conclusively demonstrate their non-binding nature; other factors that indicate a binding nature may be present (incentives, sanctions, emphatic insistence). The mere handing over of a list of recommendations from a supplier to a dealer is permissible (see Chapter IV, paragraph 12 of the FCA guidelines).
Fixed and minimum retail prices are strictly prohibited; this also applies to limiting the buyer’s ability to grant rebates or discounts to his or her own customers.
As a general rule, it is not prohibited for a supplier to oblige a dealer not to exceed a certain maximum price. However, in this context, it is necessary to ensure that the maximum price is not so low as to effectively make it, from an economic point of view, a minimum or a fixed target price. A supplier has the right to make any financial support of promotions conditional upon a certain maximum price not being exceeded during the promotion (Chapter IV, paragraph 16 of the FCA guidelines).
As regards other types of price-relevant communication between supplier and buyer, the FCA guidelines provide some further insight into the FCA practice (see examples in Chapter IV, paragraphs 1 to 17).
Since 2012, there has been extensive Austrian Cartel Court and Supreme Court case law with respect to illegal RPM; for example:
- a fine imposed in 2015 by the Supreme Court against a supermarket group for pricing infringements (RPM, hub-and-spoke practices) (€30 million, Case 16 Ok 2/15b, Spar);
- a fine imposed in 2016 by the Cartel Court against an electronics manufacturer for pricing infringements (RPM, instructions to dealers to raise online prices) (€1.05 million, Case 24 Kt 35/15b, Samsung Electronics Austria); and
- a fine imposed in 2017 by the Cartel Court against a manufacturer of coffee machines for pricing infringements (RPM, export bans, online sales bans) (€650,000, Case 24 Kt 35/15b, DeLonghi-Kenwood).
Have the authorities considered in their decisions or guidelines resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a ‘loss leader’?
Promotional prices are dealt with in Chapter IV, paragraph 14 of the FCA guidelines. A supplier can propose the initiative for a promotion as part of a marketing strategy to dealers but the promotional retail price must be determined by retailers or dealers and shall not be coordinated or agreed upon. However, the dealer can notify the seller of his or her planned retail prices as this may be relevant for volume planning.
Have decisions or guidelines relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?
The FCA guidelines stress that an agreement in connection with RPM measures that a sales channel (eg, internet sales) may not be used constitutes a serious violation of antitrust law. The FCA’s reasoning is that with price competition at the retail level already being restricted, any further prevention of attractively-priced competition is all the more serious (Chapter IV, paragraph 5 of the FCA guidelines). In the same Chapter, the FCA, before listing certain less severe types of behaviour ‘that are typically associated with RPM’, advises that they ‘should be refrained from if they strengthen, support, or enforce prohibited actions’ or ‘if they are pooled together, which overall may constitute an agreement or concerted practice within the meaning of article 101(1) TFEU or section 1(1) of the Cartel Act’. This advice has indirectly been confirmed by a fine imposed by the Cartel Court for several types of illegal vertical restraints (see question 19).
Have decisions or guidelines relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?
There have been no such decisions or guidelines.
Explain how a buyer agreeing to set its retail price for supplier A’s products by reference to its retail price for supplier B’s equivalent products is assessed.
The general rules also apply in this scenario. The buyer must be free to determine and apply its own resale price.
Explain how a supplier warranting to the buyer that it will supply the contract products on the terms applied to the supplier’s most-favoured customer, or that it will not supply the contract products on more favourable terms to other buyers, is assessed.
Wholesale most-favoured nation (MFN) clauses are not prohibited per se under Austrian antitrust law. Legal limitations to MFN clauses, if any, would only apply to dominant purchasers, as such clauses may amount to abusive behaviour, which is prohibited by section 5 of the Cartel Act. But even for those, MFN clauses have so far been accepted by the courts, as the Local Supplies Act contains a general ban on discrimination and thus stipulates a principle of equal treatment of resellers. Most likely, the courts would be more critical of clauses obliging the customer to notify the dominant supplier of any better offer by a competitor and to buy from the dominant supplier if it at least meets this offer (an ‘English clause’).
Explain how a supplier agreeing to sell a product via internet platform A at the same price as it sells the product via internet platform B is assessed.
There is no statutory or case law on such cases. However, under general provisions, this will usually be permissible unless it amounts to an abuse of a dominant position (see question 24), or certain industry-specific restrictions apply under Austrian law (eg, the ban on ‘best price clauses’ imposed by hotel booking platform operators in their service agreements with hotel operators, as contained since 2017 in the ‘unfair practices’ annex to the Austrian Act on Unfair Trading Practices).
Explain how a supplier preventing a buyer from advertising its products for sale below a certain price (but allowing that buyer subsequently to offer discounts to its customers) is assessed.
Such a restriction by the supplier on its distributor will be treated as a hardcore infringement even if the buyer offers discounts (unless there are certain exemptions for specific industries; see question 7). There are no separate rules on minimum advertised price in Austria.
Explain how a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers, is assessed.
There are no special provisions for this scenario in Austria. Such a warranty may, however, be unlawful under Austrian competition law if the supplier has a dominant position and insists on such a warranty.
Restrictions on territory
How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?
Territorial restrictions are assessed exactly as under EU competition law. This means that restrictions of active sales may be permissible as long as both parties each have a share of less than 30 per cent of their relevant markets. The prohibition of passive sales by the distributor will always be prohibited. A supplier cannot require a buyer to ensure that its customer does not make onward sales outside of the territory allocated to the buyer.
Have decisions or guidance on vertical restraints dealt in any way with restrictions on the territory into which a buyer selling via the internet may resell contract products?
There have been some Cartel Court cases on territorial restrictions. These decisions clearly prohibit export restrictions at least as long as they concern onward sales by the distributor to other EU member states (see question 19). The EU Geo-blocking Regulation (Regulation (EU) No. 2018/302) addresses unjustified online sales discrimination based on customers’ nationality, place of residence or place of establishment within the internal market. It entered into force in Austria (as in the whole EU) on 3 December 2018.
Restrictions on customers
Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end-consumers?
The difference between the prohibition of active sales and restrictions on passive sales is identical to that in EU competition law; also as regards customer restrictions when operating selective distribution systems.
Restrictions on use
How is restricting the uses to which a buyer puts the contract products assessed?
There are no specific Austrian provisions or case law on this topic. Restrictions of fields of use are only permissible in certain cases; EU competition law will be applicable by analogy.
Restrictions on online sales
How is restricting the buyer’s ability to generate or effect sales via the internet assessed?
There is ample case law in Austria treating an internet ban imposed by the supplier on the buyer as an infringement of the prohibition of anticompetitive agreements. See, for example, the Cartel Court judgment in DeLonghi-Kenwood (see question 19).
Have decisions or guidelines on vertical restraints dealt in any way with the differential treatment of different types of internet sales channel? In particular, have there been any developments in relation to ‘platform bans’?
There have been no such decisions or guidelines. It is likely that the Austrian authorities and courts would apply the principles developed by the Court of Justice of the European Union (CJEU) in 2017 in its Coty Germany (C-230/16, 6 December 2017) judgment.
Selective distribution systems
Briefly explain how agreements establishing ‘selective’ distribution systems are assessed. Must the criteria for selection be published?
Selective distribution systems are assessed under Austrian law in the same way as under EU competition law.
Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?
See question 34 (EU law is applied by analogy). This means that only luxury products and products whose sale requires qualified personnel are likely to enjoy the benefits of falling outside the prohibition of anticompetitive agreements when it comes to certain restrictions (see the CJEU judgment in Coty Germany). As regards exemptions from the prohibition (under section 2 of the Cartel Act), the VBER will be applied by analogy.
In selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?
The authority has not yet taken any such decisions. Austrian authorities and courts will likely apply the principles developed in the CJEU Coty Germany judgment.
Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner?
No such decisions have been taken by the FCA or the Austrian courts.
Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?
Cumulative restrictive effects of multiple selective distribution systems can be considered with respect to the effect of such types of agreements on the market (bundle theory; see question 17).
Has the authority taken decisions (or is there guidance) concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products?
There have been no such decisions and there is no guidance on this.
How is restricting the buyer’s ability to obtain the supplier’s products from alternative sources assessed?
Restricting the buyer’s ability to obtain the supplier’s products from alternative sources must be assessed on a case-by-case basis. EU law will provide proper guidance; for example, as regards treating non-compete obligations as permissible in cases where supplier and buyer each have a market share of less than 30 per cent and the clause has a maximum duration of five years. Restrictions by a dominant supplier on the buyer’s ability to obtain the supplier’s products from alternative sources may amount to the abuse of a dominant position. The Austrian Supreme Court has, however, adopted a rather lenient position regarding such restrictions (judgment of 2013, Case 16 Ok 7/12, Taxi App).
How is restricting the buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’ assessed?
Such restrictions will be assessed on a case-by-case basis under Austrian law. As a restriction of the sale of certain non-competing products will usually not restrict competition, such considerations will usually be permissible unless the restriction violates the principle of good morals of general contract law.
Explain how restricting the buyer’s ability to stock products competing with those supplied by the supplier under the agreement is assessed.
There is no statutory or case law on such a restriction.
How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier’s products assessed?
This type of requirement is assessed in the same way as under EU competition law.
Explain how restricting the supplier’s ability to supply to other buyers is assessed.
If the buyer has a dominant position in the relevant procurement market, such a restriction imposed on the supplier by the buyer can amount to an abuse of a dominant position. It may even be sufficient for applying the abuse of dominance rules that the buyer has a dominant position in the downstream market on which it is active (‘market divergence’, as confirmed by the Supreme Court in 2003, Case 16 Ok 11/03, Telekom Austria).
Explain how restricting the supplier’s ability to sell directly to end-consumers is assessed.
This will be assessed as under EU competition law. As long as the VBER is applicable (ie, if the 30 per cent market share thresholds are not exceeded), this can be permissible in an exclusive distribution arrangement.
Have guidelines or agency decisions in your jurisdiction dealt with the antitrust assessment of restrictions on suppliers other than those covered above? If so, what were the restrictions in question and how were they assessed?
Outline any formal procedure for notifying agreements containing vertical restraints to the authority responsible for antitrust enforcement.
There is no such procedure available under Austrian law.
If there is no formal procedure for notification, is it possible to obtain guidance from the authority responsible for antitrust enforcement or a declaratory judgment from a court as to the assessment of a particular agreement in certain circumstances?
Yes, the FCA will usually be ready to provide guidance on these issues. A declaratory judgment from the Cartel Court would also be possible under section 28 of the Cartel Act as long as it concerns the agreement falling outside the prohibition of anticompetitive agreements altogether; however, such judgment may not amount to an ‘exemption decision’, as this is prohibited under Council Regulation (EC) No. 1/2003.
Complaints procedure for private parties
Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?
Yes, there are various procedures for such complaints. Private parties that can show a legal or commercial interest in the matter can apply directly to the Cartel Court for a cease-and-desist order (with a right to obtain a decision on the substance). Alternatively, they can complain directly to the FCA; however, the FCA in such cases has full discretion in whether or not to investigate the matter. Since 2018, an anonymous whistle-blowing hotline has been operated by the FCA.
How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?
The only decision-making authority as regards substantive decisions is the Austrian Cartel Court located in Vienna. The Cartel Court has adopted an overwhelming majority of decisions with respect to vertical restraints (approximately 10 to 20 decisions per year) since the FCA made vertical restraints one of its core enforcement fields in 2012, especially in the FMCG area.
What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?
Section 1 of the Austrian Cartel Act provides for the nullity of such clauses and agreements (similar to article 101(3) TFEU); Austrian courts have so far usually ruled in favour of severability unless this undermined the purpose of the prohibition of anticompetitive agreements. The Supreme Court had to assess such a case in its judgment of 18 February 2015 (Case 22 Ob 22/14w).
May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?
The FCA and the FCP cannot impose penalties (fines) (with the exception of penalties imposed by the FCA for non-compliance of a business with its legal obligation to reply to a request for information). With respect to penalties for antitrust law infringements, the Cartel Court is the only Austrian entity authorised to impose fines (which can only be imposed upon request of the FCA or the FCP; the Cartel Court may not impose a fine that is higher than the specific amount requested by the FCA or the FCP, which is the legal basis used by the FCA for settlements - but if there is no settlement, the FCA or the FCP can simply apply for an ‘adequate fine’ to be imposed by the Cartel Court).
The Cartel Court has imposed fines in a number of vertical restraints cases since 2012. The highest fine (albeit for a mixed vertical and hub-and-spoke case) was increased by the Supreme Court in 2015 from €3 million to €30 million. There is no specific trend with respect to the amount of fines. Most fines have been in the range of between €200,000 and €3 million. Measures such as positive duties to supply on given terms cannot be imposed by the Cartel Court (unless in commitment decisions if such measures are offered by the defendant).
Investigative powers of the authority
What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?
The FCA has all the usual types of investigative powers of competition authorities: written requests for information, interviews and on-site inspections (dawn raids); the latter, however, must be approved and ordered by the Cartel Court.
To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?
Private enforcement is highly developed in Austrian law and practice. Private parties that can show a legal or commercial interest in the matter (even if they are non-parties to the vertical restraints agreements) can apply directly to the Cartel Court for a cease-and-desist order (also in combination with an interim injunction) or a declaratory judgment (with a right to obtain a decision on the substance). They can also apply for damage claims to the civil courts (commercial courts). A party to an agreement can also bring all these claims.
The duration of proceedings obviously depends on the individual case (evidence available, the need for the court to obtain an expert opinion, etc), but, in general, private enforcement before the Cartel Court will usually last approximately two years (or six months for interim injunctions). Appeal proceedings to the Supreme Court take approximately one year.
The successful party can recover its legal costs in proceedings before the civil courts (only in the amount foreseen in the official tariff) but not in proceedings before the Cartel Court (unless the losing party has grossly abused the proceedings without any perspective to win the case - this was, however, never held to have been the case in recent years). An important cost factor for court fees may be the costs of economic expert opinions, which have to be borne by the losing party. The court may also divide the costs between the parties in the case of a partial victory.
Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above?
Update and trends
What were the most significant two or three decisions or developments in this area in the last twelve months?
In October 2018, the FCA published the ‘Guidance for fair conduct in business’. This lists all sources of law applicable to business conduct (in vertical relationships) and provides examples of unfair conduct. From a competition law perspective, some of the examples amount to abuse of a dominant position, but not every type of unfair conduct mentioned will be relevant for the antitrust assessment of vertical agreements.
It remains to be seen how potential changes in EU law on vertical restraints (following the current review of the VBER) will affect Austrian law. On the procedural level, the ‘ECN+ Directive’ (aiming to make national competition authorities more effective enforcers) must be transposed into Austrian law by early 2021.