In a landmark decision for the future practice of fines in Austria, the Supreme Court as the higher cartel court has increased a fine set by the cartel court from EUR 1.5 million to EUR 70 million. The background to this is the prohibited implementation of a merger (OGH 28.01.2025, 16 Ok 5/24g).
What happened?
The decision is based on the execution of a lease agreement for retail space in a shopping center in 2018. Before the new store opened in spring 2019, the shopping center was closed and renovated by the new owner for 11 months. The project was not reported to the Federal Competition Authority (“FCA“).
In October 2021, the FCA filed an application for a discontinuance and an application to impose an appropriate fine for violating the standstill obligation with the Cartel Court (“KG“). In its decision of 15 May 2023, the KG confirmed there was a notifiable merger, but did not impose a fine because it was not punishable. The FCA and the Federal Cartel Prosecutor each lodged an appeal against this decision with the Higher Cartel Court (“KOG“).
At the end of 2023, the KOG confirmed there was a notifiable merger and ordered the KG to impose a fine of a “noticeable” amount. The KOG was not convinced by the arguments put forward in the proceedings, including that no “customer base” was acquired because the shopping center was closed for 11 months. The KOG held that the acquisition of a mere right to continue to exist does not preclude the fulfillment of the merger requirement of § 7(1)(1) KartG. The takeover of a location known in several respects was to be seen as the acquisition of an asset that lasted for the duration of the closure and enabled the entry into the market position of the previously operated food retail business (OGH, 30.11.2023, 16Ok4/23h).
In the second instance, the KG imposed a fine of EUR 1.5 million in spring 2024. The FCA and the Federal Cartel Prosecutor again appealed this decision.
The decision
In its decision, the KOG imposed a fine of EUR 70 million following appeals by the FCA and the Federal Cartel Prosecutor.
In its assessment of fines, the KOG refers to the fact that fines under the KartG pursue preventive and repressive purposes, which requires an appropriate amount because otherwise no deterrent effect would be achieved.
In assessing the fine, the KOG took into account, in particular, as aggravating factors (i) the duration of the infringement, (ii) the respondent’s high economic capacity, (iii) the high market shares of the undertakings involved and, as mitigating factors, (i) the absence of enrichment, (ii) the small size of the geographic market concerned, (iii) the (mere) infringement of the standstill obligation without fulfilling a prohibition criterion and (iv) the respondent’s contribution to clarifying the facts of the case.
Significance for practice
The decision is one of several decisions by the KOG in recent years in which the deterrent effect of significant fines is emphasized (including 16 Ok 2/22p, 16 Ok 6/23b, 16 Ok 4/24k). Only last fall, for example, a “symbolic” fine of EUR 5,000 for violating the standstill obligation was increased to EUR 100,000 despite its (very) minor severity (16 Ok 4/24k). However, in light of the Austrian authorities’ previous fining practice, the fine of EUR 70 million in question appears disproportionately high, taking into account the circumstances of the underlying facts. The amount of the fine, which was not to be expected to this extent, becomes particularly clear if one compares this fine with the fines recently imposed in the context of the construction cartel. From a consultant’s point of view, in this context it is particularly objectionable that there are still no legal regulations or guidelines for calculating fines in Austria. There is an urgent need for action here. Irrespective of this, the KOG’s decision shows that violations of the standstill obligation will be prosecuted and severely punished. Companies that do not comply with the antitrust regulations must expect high penalties. Companies are therefore called upon even more than before to examine merger control notification obligations in detail.
