On 6 April 2017 the Austrian Parliament has adopted an amendment to the Austrian Cartel Act, introducing a new merger notification threshold based on the transaction value.
Currently, Austrian merger control applies if the parties’ combined worldwide and Austrian turnover exceeds EUR 300 million and EUR 30 million respectively, and if at least two of the parties generate a worldwide turnover of more than EUR 5 million each (unless only one of the parties achieves turnover in Austria of more than EUR 5 million and the other parties do not have a combined worldwide turnover of more than EUR 30 million).
According to the new – additional – thresholds, a transaction that does not meet the turnover test will still have to be notified to the Federal Competition Authority if:
• the parties’ combined worldwide turnover exceeds EUR 300 million,
• the parties’ combined Austrian turnover exceeds EUR 15 million,
• the value of the consideration for the transaction is more than EUR 200 million, and
• the target is active in Austria to a significant extent.
The amendment aims to take account of the fact that the parties’ turnover does not necessarily reflect the potential impact of a transaction on the competitive landscape, in particular in cases involving companies active in the digital economy. Similar legislative initiatives are under way in other countries (e.g., in Germany).
The new notification thresholds will become effective on 1 November 2017.
The introduction of the new notification thresholds will significantly broaden the reach of Austrian merger control and will increase the number of transactions that will have to be notified to the Federal Competition Authority.
From the point of view of transaction parties, applying the new rules may give rise to various questions and uncertainties. In particular:
Determining the “consideration”
The new thresholds require transaction parties to determine the value of the “consideration” (“Gegenleistung”) for the transaction. This term is not defined in the law. The explanatory notes clarify that the consideration includes all assets and any other payments in kind which the seller receives from the acquirer in the context of the transaction (i.e., the purchase price), as well as any liabilities assumed by the acquirer.
The local nexus requirement
The new merger notification rules do not contain any specification as to when the target is active in Austria “to a significant extent”. While the explanatory notes do give some guidance in this regard (in particular, the local nexus test is fulfilled where the target has a place of business in Austria or where the relevant measure values used in the industry concerned, such as the number of monthly active users or website visits, indicate a significant activity in Austria), it may be difficult for the parties to determine with certainty whether their transaction is subject to Austrian merger control – at least until it becomes clearer how the Austrian competition authorities will apply the new rules.
In cases of doubt transaction parties are therefore advised to seek the Federal Competition Authority’s informal advice and/or to notify their transaction on a precautionary basis to avoid a fine for an infringement of the standstill obligation.
Entry into force and applicability
Parties to a transaction potentially triggering the new notification thresholds have to bear in mind that the applicability of the new rules depends on when the transaction is implemented (before or after 1 November 2017).
This may in practice give rise to questions and uncertainties, e.g., where the implementation of a transaction (that does not meet the existing turnover thresholds but would fulfil the new transaction value-based threshold) is originally planned to take place prior to 1 November 2017 but later slips to a date after 1 November 2017. In this scenario, the transaction would become notifiable merely as a result of the (changing) time schedule regarding implementation.
Therefore, it seems advisable to take the new filing threshold into consideration in any analysis of potential merger notification requirements already prior to 1 November 2017. This allows the parties to be able to exclude a filing requirement also on the basis of the new thresholds, or at least to take the necessary steps to ensure that clearance is granted in time (e.g., by adapting closing deadlines etc.)