Upon an application filed by fwp, the Austrian Supreme Court, in its capacity as higher anti-trust court, acknowledged that the target company shall have party status in merger control proceedings brought before the anti-trust court and thus paved the way for target companies to get more information and a greater say in such proceedings.

Background: This Supreme Court decision was incidental to (quite complex and tricky) merger control proceedings before the anti-trust court. In the first phase of such proceedings, a company intending to implement a transaction that will qualify as a merger as defined in section 7 of the Austrian Anti-Trust Act (Kartellgesetz) (e.g. acquisition of shares in or of control of a target company) files pre-merger notification of that transaction with the Austrian Federal Competition Authority (BWB), as required by law for transactions exceeding a defined volume. Then, if either of the official parties examining such pre-merger notification (BWB and the Federal Cartel Prosecutor) fears that implementing the transaction would create or strengthen a dominant position on the market, that official party must submit an application to the Vienna Court of Appeal, in its capacity as anti-trust court, requesting it to subject the notified merger to an in-depth examination in respect of such effects on the market and, depending on the outcome, to allow the transaction, allow it subject to obligations imposed, or prohibit it. For such in-depth examination proceedings, the anti-trust court will usually retain an expert to assess the said issue of effects on the market.

To provide further background information, one must also state that, in merger control proceedings, it is usually the acquirer alone that files the pre-merger notification with BWB. Thus, both in the preliminary proceedings before the competition authority and in the examination proceedings before the anti-trust court, only the acquirer is a formal party to the merger control proceedings whereas the target company is not. All the rights and obligations of a party involved in the proceedings are therefore due to the acquirer.

In principle, a target company not filing applications of its own, and thus lacking party status, would merely be a ‘passenger’ in the proceedings. It would not even have the right to inspect the files. As legal counsel representing the target company in the said merger control proceedings, fwp now opposed this by filing an application for inspection of the files; fwp argued that the target company must be regarded as having so-called ‘substantive’ party status (section 2(1)(3) of the Austrian Non-Contentious Proceedings Act (Außerstreitgesetz)): Persons enjoy substantive party status to the extent their legally protected position would be directly impacted by the decision requested from or envisaged by the court. The issue of who is a shareholder of the target company would directly impact the future chances of the target company against the backdrop of the (new) position on the market with or without the implementation of the merger.

Both the anti-trust court and the higher anti-trust court followed the reasoning of fwp although both the acquirer and BWB strongly opposed an inspection of the files and even appealed the positive decision handed down by the anti-trust court. Opposition by BWB was remarkable indeed, given the fact that a target company without substantive party status would be under no obligation to co-operate in the merger control proceedings; for instance, it would not be obligated to provide any information. This would make merger control proceedings much more difficult – especially for BWB.

As the approval by the supreme court means substantive party status for the target company, the target company also has the right to inspect the files kept by the anti-trust court. No consent by the other parties is required for this. In future, any target company can thus gain valuable knowledge from the files and consequently play a more active part in merger control proceedings.

Acquirers must learn to deal with this new challenge: One the hand, their transactional lawyers need to provide appropriate contractual regulations to block access to the files and to information and prevent participation in the proceedings if this is required in an individual case. On the other hand, the anti-trust experts must now protect the acquirer’s trade and business secrets also from the target