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07 August 2008
The Higher Cartel Court recently redoubled a fine imposed by the Cartel Court for infringement of the obligation to provide information upon a formal information request by the Federal Cartel Authority. The decision emphasizes the importance of fulfilment of this obligation.(1)
The proceedings were preceded by a 2004 food trade sector investigation by the Federal Competition Authority, which had issued a formal request for information to numerous companies involved in supplying. As many companies refused to provide the information, the Competition Authority applied to the Cartel Court for a judicial order to disclose the relevant information in accordance with Section 11(5) of the Competition Act. The Cartel Court immediately ordered the reluctant companies to disclose the requested information. After many companies persistently appealed - and were initially successfully on purely procedural grounds - all but one reached an agreement with the Competition Authority on the amount and structure of the information to be disclosed.
One company refused to settle and the Higher Cartel Court finally confirmed the first instance decision. The order to disclose the required information within 14 days therefore entered into force.
As the company still refused to comply with the obligation, the Competition Authority applied for an adequate periodic penalty payment to be imposed on the company by the Cartel Court for each day of delay to enforce the judicial order and for a fine to be imposed for infringement of the obligation to disclose information, in accordance with Sections 35(1)(c) and 29(2)(c) of the Cartel Act respectively.
The Cartel Court - in the first application of the procedure pursuant to Article 35 of the Cartel Act - imposed a provisional periodic penalty payment of €15,000 for every day of delay. The day after the decision on the penalty was delivered, the company finally disclosed a large proportion of the required information. The rest was handed in a few days later. The Higher Cartel Court dismissed an appeal by the company, declaring it inadmissible.
The Cartel Court thereafter imposed a fine of €60,000 on the company for the delay and determined the final amount of the periodic penalty payment to be €5,000. Both the company and the Competition Authority - which demanded that the penalty be redoubled - contested the decision.
The Higher Cartel Court reasoned, among other things, that the penalty system of the Cartel Act and the amount of possible fines and periodic penalty payments reflect the legislature’s intention to attach great importance to the fulfilment of the obligation to provide information. Due and comprehensive disclosure of information was essential in order for the Competition Authority to carry out its investigation of the food trade sector too. This is the only way to enforce the Cartel Act properly.
Regarding the amount of the fine, the Higher Cartel Court said that in fixing the amount in the present case there was no reason that the fine may not exceed five per thousand of the company’s turnover. From the court's point of view, such a small fine would unfairly trivialize infringements of the obligations in question. As the profits of a company may easily be manipulated, they do not constitute a significant criterion for reflecting its economic capacity. Thus, turnover is an essential criterion for assessing the penalty.
The Higher Cartel Court therefore ruled that the increase in the fine requested by the Competition Authority from €60,000 to €120,000 was adequate, as it did not exceed the maximum limit specified by law.
For further information on this topic please contact Dieter Hauck or Peter Resch at Preslmayr Attorneys at Law by telephone (+43 1 533 16 95) or by fax (+43 1 535 56 86) or by email (firstname.lastname@example.org or email@example.com).
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