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22 January 2004
The Austrian Supreme Court recently prohibited a reimbursement system and emphasized that the defendant need not hold a dominant position in order for it to do so (4 Ob 210/02i of January 21 2003 in connection with 4 Ob 34/01f of April 3 2003).
The primary statutory source of Austrian antitrust law is the Cartel Act, which prohibits the abuse of a dominant position. The law gives certain examples of what it considers to constitute an abuse (eg, directly or indirectly imposing unfair purchase or sale prices, or other unfair trading conditions). The Act on the Improvement of Local Supply and Market Conditions was enacted in 1977, when large retail chains began to exert increasing pressure on manufacturers to concede advantages of all kinds to customers which often accounted for the manufacturer's major turnover. The act aims to prevent suppliers/manufacturers from acting in an anti-competitive manner and attempts to improve local supply. It prohibits suppliers from granting unjustified advantages to certain resale customers on the one hand, and resale customers from requesting or accepting such unfair advantages on the other. Unjustified advantages occur in particular in the form of discounts without any corresponding consideration. The plaintiff, Austrian resale customer C, brought an action against its former wholesale dealer D. C alleged that D's reimbursement system was not objectively justified. D allowed reimbursements only to resale customers that met a defined minimum turnover threshold. The reimbursements varied from between 1% and 5% of the turnover exceeding the threshold. A customer meeting the threshold at at least one site was reimbursed at all sites, including smaller sites. At first and second instance the action was dismissed. The courts held that D was not in a dominant position and therefore abuse according to the Cartel Act was not possible. They held that the Act on the Improvement of Local Supply and Market Conditions no longer has a scope of application distinct from the Cartel Act. The Supreme Court agreed that the two acts contain a number of provisions that are very similar in terms of content. However, the relevant provisions of the Cartel Act apply only if an undertaking holds a dominant position, whereas the Act on the Improvement of Local Supply and Market Conditions reinforces the anti-competitive conduct of undertakings that do not hold a dominant position. The system of reimbursement would be objectively justified if the reimbursements did not exceed the reduction of costs due to the larger amount sold. Otherwise, the courts would have to balance the conflicting interests of the parties, taking into account the market power of the wholesale dealer. However, market dominance was unnecessary for applying the law. The court emphasized that the Act on the Improvement of Local Supply and Market Conditions aims to protect the interests of small and medium-sized enterprises. The Supreme Court reversed the lower courts' judgments, and ordered D to cease and desist from the aforementioned reimbursements. The case was partly referred back to the court of first instance with regard to claims for damages.
For further information on this topic please contact Dieter Hauck or Ruth Rosenberger at Preslmayr Attorneys at Law by telephone (+431 533 16 95) or by fax (+431 535 56 86) or by email (firstname.lastname@example.org or email@example.com).
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