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24 May 2018
In 2017 Austria and Germany implemented an additional merger threshold to catch cases that fall below existing turnover thresholds but where the consideration for the transaction exceeds €200 million (Austria) or €400 million (Germany), respectively, and the target is active in the respective country to a significant extent.(1) The first cases and legal discussions have shown that there is considerable uncertainty regarding the application of these rules. The legislators do not appear to have fully considered all of the issues and consequences. However, the Austrian Federal Competition Authority(2) and the German Federal Cartel Office(3) have now published joint draft guidelines on the application of the new, short but nonetheless quite difficult piece of legislation. The draft guidelines are available on the competition authorities' websites and are open for consultation until June 8 2018. English versions are also available. The draft guidelines reflect the opinions of the authorities and cannot bind national courts that may have to rule on individual transactions.
The draft guidelines deal with three major issues:
Calculation and documentation of consideration
Substantial domestic operations
Concept of concentration
By eliminating the requirement that the target have at least some turnover, the new law may have a significant impact on the concept of concentration. While this makes no difference if company shares are bought, it might make a significant difference when acquiring individual assets as part of an asset deal. Under present case law, the acquisition of assets is relevant only if the assets are purchased in full or to a substantial extent, meaning that the asset had to offer the possibility for the buyer to assume the seller's existing market position. Potentially this criterion can no longer be maintained unreservedly. However, as this is a highly complex question, final confirmation by the courts may be necessary.
The unique and highly commendable draft guidelines published by the Austrian Federal Competition Authority and the German Federal Cartel Office significantly reduce the uncertainty inherent in the new laws. However, such uncertainty is not completely eliminated. While things will be easier for many parties to a transaction and their lawyers, some difficult questions still need final clarification by the courts. This is likely to happen when the parties decide that a merger need not be notified to the competition authorities, which then may take a different view.
For further information on this topic please contact Dieter Hauck at Preslmayr Attorneys at Law by telephone (+431 533 16 95) or email (firstname.lastname@example.org). The Preslmayr Attorneys at Law website can be accessed at www.preslmayr.at.
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