As of 1 November 2017, Austrian merger control will require the passing of a new test, based on the transaction value, in addition to complying with the – unchanged – turnover thresholds already existing under merger control law. This transaction-value-based test is intended to subject those transactions to regulation that would not be captured by using the current sales-revenues-based thresholds under merger control law. The most prominent example is the acquisition of WhatsApp by Facebook. The purchase price then paid amounted to some USD 19 billion. Nevertheless, the merger slipped through the ‘net’ of requirements provided for under nearly all merger control regimes. A trick was needed to establish the jurisdiction of the European Commission: individual member states referred the transaction to the European Commission.

This situation prompted both Austria and Germany to respond by creating the new transaction-value-based test proceeding from the assumption that a valuable transaction may also give rise to concerns from the competition perspective.

The new paragraph 4 of section 9 of the Cartel Act of 2005 (Kartellgesetz, KartG) stipulates the following – cumulative – requirements:

1. Combined sales revenues of the companies in question for the last fiscal year prior to the merger ofa. more than EUR 300 million worldwide, andb. more than EUR 15 million in Austria;
2. Value of the consideration for the merger exceeding EUR 200 million; and
3. Target company being active in Austria on a substantial basis.

Against the backdrop of the very severe sanctions imposed under antitrust law for failure to notify a merger, the ultimate omission of definitions of the terms ‘value of the consideration’ and ‘on a substantial basis’ in the new legislation entails quite substantial uncertainty. Companies not only run the risk of a high fine being imposed on them but must also be aware of the consequence under civil law: a transaction executed in spite of the standstill clause will be null and void.

At least the comments on the relevant government bill provide a reference to the new section 38 (4a) of the German Competition Act (deutsches Gesetz gegen Wettbewerbsbeschränkungen, dGWB) by including the exact wording of that provision in the definition. Accordingly, the value of the consideration shall comprise ‘all assets and other benefits with monetary value received by the seller from the purchaser in connection with the merger (purchase price), and the value of any liabilities that the purchaser may have taken over’. In this context, the term ‘asset’ must be understood to have a broad meaning. The definition thus comprises all payments of money, the transfer of voting rights, of securities, of tangible assets as well as of intangible assets. Likewise included are instances of consideration being linked to the occurrence of certain conditions, such as earn-out clauses, or agreements on additional payments to be made in the future even if such payments additionally depend on turnover or profit goals. Furthermore, payments in return for a seller’s agreement to refrain from acting as a competitor have to be added. ‘Value of the consideration’ also includes any liabilities taken over by the purchaser, which means that the liabilities of the target company (assumed to be deducted from the purchase price) have to form part of the calculation of that value. Neither does the law stipulate the calculation method to be used to determine the value of such consideration. It must be a recognised calculation methodology, though.

The meaning of ‘active in Austria on a substantial basis’ is even more complex. The law does not provide a definition for this phrase either. As a rule, the nexus to the geographical reference, ‘Austria’, will depend on the customer’s place. The location of servers or the question where the company offering the goods or services has its registered offices is irrelevant in this context. Regarding the issue of intensity, the nexus is assumed to be adequate in any case where the target is located in Austria. If neither of the two companies is represented in Austria, the difficult issue of establishing the nexus arises. It is interesting to note that the comments to the government bill state that companies which are ‘marginally’ active in Austria shall not be subject to the notification requirement. No further clue as to the marked difference between the terms ‘marginally active’ and ‘active on a substantial basis’ is identifiable. Judging by the previous case law of the Austrian Supreme Court one may expect, however, that a very low level of activity in Austria will be regarded as sufficient for the cases at hand, too.