In 2018, 481 transactions were notified in Austria, which is - again - a slight increase compared to the previous year, which saw 439 merger filings. As in previous years, the statutory parties have been busy with merger review and significant enforcement action.
In 2018, one case went into Phase II (compared to two cases in 2017). It concerned the acquisition of joint control of D.Med Consulting by Fresenius Medical Care and KR2. D.Med Consulting is active in the field of development and marketing as well as consulting for medical products with a focus on dialysis technologies and related medical fields. The merger was cleared in early 2019 subject to conditions intended both to protect current projects conducted by the target for a competitor of the acquirer and to prevent the acquirer gaining a competitive advantage by obtaining sensitive information. One of the Phase II cases of 2017, which concerned the leasing of railcars, was cleared in 2018 with conditions after an in-depth review by the Cartel Court (VTG Rail Assets/CIT Rail Holdings (Europe); Nacco-Group), with concerns relating to the possible creation of a dominant position in particular in the area of the rental of dry goods wagons and regarding the accuracy of the proposed market definition. The notifying parties undertook to sell approximately 30 per cent of the Nacco business to an upfront buyer (the same conditions were also agreed on with the German Federal Cartel Office).
In 2017, the FCA started its sector investigation into the Austrian healthcare sector, which had previously seen two noteworthy mergers (both cleared subject to remedies). The investigation targets numerous segments of the healthcare industry, including pharmaceutical production and distribution, pharmacies, medical devices, e-health and also health institutions and health insurance. First results relating to the pharmacy area were published in May 2018. In this report, the FCA addresses possible competition restraints regarding market entry, ownership as well as operating rules applicable to pharmacies. According to the FCA, anticompetitive regulations exist in various areas such as needs assessment, prohibition of chains and third-party ownership, restriction of opening hours, restrictions on online sales of OTC medicines and of pharmacy delivery services and exclusive rights of pharmacies to sell OTC medicines. Far-reaching liberalisation measures are therefore recommended, with the aim of achieving better prices and more transparency for consumers as well as enhanced quality through more competition. On this basis, it can be expected that transactions in the healthcare sector will generally be of interest to the FCA. Furthermore, in October 2018 the FCA published a ‘Fairness catalogue for companies’ which is intended as (non-binding) guidance to market participants and to prevent breaches of good conduct, with a particular view to the retail sector.
Furthermore, there was an interesting merger in the media and entertainment sector, relating to the takeover of Sky, Europe’s largest media company and pay-TV broadcaster, by the US telecommunications conglomerate Comcast. In parallel to the EU filing, this case was reviewed as a media merger in Austria (and certain other countries). The case was cleared unconditionally in Phase I, following an extension of the review period by two weeks, which allowed the statutory parties to rule out any concerns as to media plurality in Austria.
One case concerning the operation of ski-resorts (Bergbahnen Aktiengesellschaft Wagrain; Fremdenverkehrs GmbH/Bergbahnen Flachau Gesellschaft mbH) was cleared without remedies in the formal sense, but the companies had agreed to certain commitments that were already included in the initial merger application for the Phase I review. The commitments included discounted new ski passes and new bus tariffs. One case (Apple Inc/Shazam Entertainment Ltd) was referred to the European Commission by a number of national authorities, including the Austrian FCA. Another case, relating to Knauf’s acquisition of AWI’s modular suspended ceilings business, was referred to the Commission in early 2018.
As explained in question 7, a large number of transactions with only very limited effects on the Austrian market come within the ambit of Austrian merger control, because of the low turnover thresholds. In light of the FCA’s criticism of the Supreme Court’s case law on the domestic effects requirement, it will presumably continue to closely monitor compliance with the notification obligation. In this context, the head of the FCA has repeatedly emphasised his ambition not only to take up cases of early implementation but also to focus on the completeness of notifications submitted to the FCA.
Moreover, in recent years, the FCA has been active in the gas and electricity markets. Mergers in this sector could therefore attract particularly close competition scrutiny. The same applies to media mergers, which tend to be closely scrutinised by both the FCA and the FCP (including in particular aspects of media plurality). Other sectors of a broader public interest, for example, telecoms and financial services, have also been subject to an in-depth review recently. The telecom sector was also subject to a sector investigation by the FCA, which was concluded in March 2016. With regard to the food retail sector, which has been under close scrutiny for anticompetitive conduct, takeovers of the majority of stores from an insolvent retailer by several of the major retail chains in Austria were cleared in Phase I in early 2016 (out of 98 stores, 28 could only be taken over subject to conditions, while takeovers of eight stores were abandoned because of competitive concerns; considerations relating to the securing of jobs played a certain role in the authorities’ assessment).
Apart from that, there have been developments in the kinds of evidence that the FCA reviews in assessing mergers. For complex cases, it is advisable to provide economic evidence, at least in Phase II and potentially earlier to avoid a Phase II referral. Also, the FCA and FCP appear to be increasingly interested in parties’ internal documents in complex cases. For instance, we have seen in the telecoms sector that it is advisable to engage in pre-notification discussions and provide the statutory parties with regulatory data early Phase I. The acquisition of Tele2 Austria, a provider of fixed-line telecoms services, by Hutchison Drei Austria, one of the major Austrian mobile telecoms operators, is a prime example of good procedural cooperation with the authorities. This case has shown that a detailed economic analysis of a transaction within the four-week Phase I window is possible if the parties reach out to the authorities at an early stage of the transaction process, engage with pre-notification contacts to discuss the scope of information and data required, and keep up the dialogue with the authorities throughout Phase I to swiftly provide any additional evidence required for the analysis. The same applied for the Comcast/Sky case, which, because of the close cooperation regarding the authorities’ media merger review, could be cleared unconditionally in Phase 1, using the two-week procedural extension tool. This matter required a solid understanding of the media market not only in Austria but more widely, combined with an ongoing dialogue with the authorities. In Phase II proceedings, the Cartel Court usually appoints an independent economic expert to review this evidence or conduct their own market investigations on which they will then report to the Cartel Court. It is also quite common that the FCA sends out questionnaires to market participants (eg, in the case BGO Holding/hali/svoboda büromöbel, the FCA conducted a market test with 300 customer surveys and 172 requests for information from competitors in Austria and abroad). Besides that, however, third parties still have a rather limited role in Austrian merger control, especially compared to the EUMR process. They have no procedural rights and cannot challenge a clearance decision. Another interesting development is that the FCA has made use of the instrument of referral of a transaction to the European Commission in recent years (along with other national authorities). This was done in Apple Inc/Shazam Entertainment Ltd and Knauf’s acquisition of AWI’s modular suspended ceilings business.
Back to top