Cartels & Leniency Laws And Regulations

• Published date: 25 May 2022
• Subject Matter: Anti-trust/Competition Law, Antitrust, EU Competition , Cartels, Monopolies
• Law Firm: Preslmayr Rechtsanw'lte OG
• Author: Mr Dieter Hauck

Chapter Content

1. The Legislative Framework of the Cartel Prohibition
2. Investigative Powers
3. Sanctions on Companies and Individuals
4. Leniency for Companies
5. Whistle-blowing Procedures for Individuals
6. Plea Bargaining Arrangements
7. Appeal Process
8. Damages Actions
9. Miscellaneous

1.The Legislative Framework of the Cartel Prohibition

1.1 What is the legal basis and general nature of the cartel prohibition, e.g. is it civil and/or criminal?

The legal basis for Cartel Prohibition in Austria is the Cartel Act (Kartellgesetz 2005), as amended - most recently in 2019. Sec. 1 paras 1 to 3 of the Cartel Act correspond to Art. 101 paras 1 and 2 of the Treaty on the Functioning of the European Union (TFEU). Sec. 2 para. 1 of the Cartel Act corresponds to Art. 101 para. 3 TFEU. Furthermore, the Austria-specific de minimis exception widely corresponds to the 'De minimis Notice' of the European Commission. Accordingly, cartel agreements of competing undertakings with an aggregate market share not exceeding 10 per cent of the market share or of non-competing undertakings not exceeding 15 per cent of the market share on any of the relevant markets affected by the agreement are exempted from the cartel ban, unless the agreement in question aims to fix prices, limit production or sales, or share markets. The notion of the cumulative foreclosure effect has not been included in the Cartel Act.

The Minister of Justice is empowered to issue ordinances to exempt certain groups of cartels from the Cartel Prohibition. Those ordinances can refer to the ordinances issued according to Art. 101 para. 3 TFEU. As Austria is an EU Member State, Council Regulation 1/2003 permits the authorities to enforce the Cartel Prohibition under Art. 101 TFEU.

The Cartel Prohibition under the Cartel Act is addressed to entrepreneurs (companies and individuals). Regarding the specific area of tendering procedures, Sec. 168b of the Austrian Criminal Code (Strafgesetzbuch) still provides for up to three years' imprisonment ('bid rigging'). Further, cartel collusion, in particular bid rigging, could also be prosecuted as serious fraud, carrying a maximum sentence of 10 years' imprisonment. Very few convictions on that basis have occurred so far.

1.2 What are the specific substantive provisions for the cartel prohibition?

Sec. 1 of the Cartel Act prohibits - with wording very close to Art. 101 TFEU - agreements between entrepreneurs, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition (i.e. cartels). Sec. 1 para. 2 of the Cartel Act states typical cases which restrict competition, such as: (i) price-fixing; (ii) limitation or control of production, markets, technical development, or investment; (iii) share markets or sources of supply; (iv) application of dissimilar conditions to equivalent transactions with other trading parties; and (v) conclusion of contracts subject to acceptance of supplementary obligations by other parties which have no connection with the subject of such contracts. Sec. 1 para. 3 of the Cartel Act declares agreements or decisions violating the Cartel Prohibition to be void.

The Cartel Act prohibits so-called 'recommendation cartels' (Empfehlungskartelle), which are unilateral practices providing recommendations such as the usage of fixed prices. However, there is an explicit exemption for such recommendations if they are explicitly marked as non-binding, and for the implementation of which neither economic nor social pressure is applied.

1.3 Who enforces the cartel prohibition?

The Higher Court of Vienna as the Cartel Court (Kartellgericht), and in second instance the Supreme Court as the Higher Cartel Court (Kartellobergericht), are the Courts with jurisdiction to decide on violations of the Cartel Act or other antitrust regulations.

The Cartel Court does not decide ex officio. The Federal Competition Authority (FCA), Federal Cartel Prosecutor (FCP), regulators of certain economic branches, Chamber of Commerce, Chamber of Labour, Presidential Conference of the Austrian Chamber of Agriculture and any other undertaking or association of undertakings with legal or economic interest in a decision can file petitions to the Cartel Court.

The FCA is Austria's independent investigating authority and, therefore, files most of the petitions. The FCP represents the public interest in competition matters and is accountable to the Minister of Justice. The FCA and the FCP together are referred to as 'Official Parties' in the law and in the Cartel Court's proceedings. Only these Official Parties may move for fines to be imposed or a merger to be prohibited; these and the other bodies may move to petition to stop infringements or to establish the existence of (past) infringements under certain circumstances.

1.4 What are the basic procedural steps between the opening of an investigation and the imposition of sanctions?

The opening of an investigation is usually conducted by the FCA, Austria's investigating authority. The FCA has been quite active and has opened investigations in various industries, including retailers and suppliers for food, electronic appliances, transport and construction. In many cases, the FCA started the investigations with unannounced on-site inspections ('dawn raids'). The FCA - or any of the other authorised parties - can file a petition to the Cartel Court. This petition can aim towards a decision for fines (if filed by the FCA or the FCP) or towards the determination of an infringement or a judicial order to cease an infringement. The Cartel Court then conducts the proceedings and files a judicial order or dismisses the petition. Against this decision, parties may appeal to the Supreme Court acting as the Higher Cartel Court.

1.5 Are there any sector-specific offences or exemptions?

Sec. 2 para. 2 of the Cartel Act lists sector-specific exemptions from the cartel ban. The following are exempted from the cartel ban: (1) agreements with retailers of books, art prints, music, journals and newspapers, fixing the retail price and further agreements necessary for a widespread and non-discriminatory distribution of newspapers and journals; (2) certain restrictions of competition among members of cooperative societies as well as between cooperative societies and their members; and (3) certain agreements, decisions and attitudes between producers of agricultural products or their interest groups.

1.6 Is cartel conduct outside your jurisdiction covered by the prohibition?

The Austrian Courts decide on violations of the Cartel Act with an impact on the Austrian market irrespective of whether the infringement against the cartel ban was conducted in Austria or abroad.

The definition of the relevant market is not limited to Austrian territory. The relevant market may also be defined as European or even worldwide, thus including the Austrian market. This is of great importance regarding the abuse of a market-dominant position as well as in merger control.

2.Investigative Powers

2.1 Please provide a summary of the general investigatory powers in your jurisdiction.

The FCA has the powers to:

• Order the production of specific documents or information.
• Carry out compulsory interviews with individuals.
• Carry out an unannounced search of business premises.*
• Carry out an unannounced search of residential premises.*
• 'Image' computer hard drives using forensic IT tools.*
• Retain original documents.*
• Require an explanation of documents or information supplied.*
• Secure premises overnight (e.g. by seal).*

Please note: * indicates that the investigatory measure requires authorisation by a Court or another body independent of the FCA. In criminal cases, these powers are vested in the criminal prosecutors and are only partly applicable (please see question 1.1).

2.2 Please list any specific or unusual features of the investigatory powers in your jurisdiction.

The right of the parties to object to the access or seizure of documents is limited. Such is possible only if recognised confidentiality obligations and rights to refuse to...