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Various mergers, particularly in the media and food retailing markets, have caught the public eye over the past few years and drawn attention to various weak points in Austria's cartel and competition laws. The Austrian Parliament has responded by passing amendments to both the Cartel Act and the Competition Act and these will take effect on July 1 2002. According to the legislator, the new regulations are expected to enhance the attractiveness of Austria to both national and international investors.

The changes to the Cartel Act include institutional issues. Instead of the Cartel Court having the right to take the initiative in investigating potentially relevant transactions, a federal cartel prosecutor (Bundeskartellanwalt) has been introduced. The federal cartel prosecutor reports to the federal minister of justice. Although this structure leaves some doubts as to its independence from pressure groups, political or otherwise, it is nevertheless regarded as a big step forward from the old set-up where investigator and tribunal were united in one body. The Cartel Court has been restricted to the role of a ruling tribunal.

The panels of the Cartel Court now consist of two judges and two expert lay judges, with the presiding judge having the casting vote. The Supreme Court's panels are composed of three judges and two expert lay judges. This effectively reduces the influence of the lay judges (nominated by the Federal Chamber of Commerce and the Federal Chamber of Labour), who formerly held the majority.

The second new institution is the Federal Competition Authority. Although it was previously part of the Federal Ministry of Commerce and Labour, it is now constituted as an independent authority. Led by the director-general of competition (Generaldirektor fuer Wettbewerb), the authority investigates alleged breaches of competition rules, files applications with the Cartel Court and will assist the European Commission in investigations. The Federal Competition Authority will cooperate closely with the Federal Cartel Prosecutor and various other public regulators and authorities. Following the one-stop-shop principle, it is the only public point of contact (in the field of cartel and other competition questions) for parties seeking guidance on or clearance of proposed mergers or other concentrations, replacing the four Official Parties (Amtsparteien).

The system of sanctions has been tightened in the new Cartel Act. Though most criminal sanctions have been eliminated, they have been replaced by significant penalties of (€10,000 ($9,650) to €1 million, or up to 10% of the company's annual turnover). The sanctions which may be imposed by the Cartel Court now include the break-up of merged entities provided that the merger has been cleared on the basis of inaccurate or incomplete information given by the parties. The abuse of a dominant market position may trigger an immediate break-up order, if deemed appropriate by the court.

Peter Huber and Andreas Baumgartner

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