The Federal Competition Authority (BWB) announced on Friday morning that the original fine of 5,000 euros set by the cartel court was increased twenty-fold. As reported, Lenzig will pay 75,000 euros at the request of the BWB.
“Merger control serves an important purpose for the functioning of the markets; violating the implementation ban is not a trivial offense in Austria,” said BWB boss Natalie Harsdorf in a broadcast. This was made clear by increasing the penance twenty-fold.
“Formal theme from the past”
Palmers merely “noted” the ruling of the Higher Cartel Court, which is located in the Supreme Court (OGH), in a statement without specifically addressing the facts. The company spoke of a “formal issue from the past”. That has now been completed and we are concentrating on the future – including the repositioning of our own brand.
The background to the penalties against Palmers and Lenzing is that their joint venture Hygiene Austria was founded before it was registered with the Federal Competition Authority. According to BWB, Palmers and Lenzing registered the establishment of the joint venture on May 11, 2020. This was released on May 26, 2020 due to a lack of competition concerns.
However, through a parliamentary question, the authority became aware that the merger had probably already been completed before the BWB had registered and completed its examination. The companies had already appeared in the media and publicly as if the merger had already taken place. The companies informed about the founding via OTS on April 24, 2020.
Interview with Natalie Harsdorf, Head of the Federal Competition Authority (BWB)
Editor: Good morning, Ms. Harsdorf, and thank you for joining us today. The recent decision to increase the fine imposed on Lenzing for their merger with Palmers has caught significant attention. Can you explain the reasoning behind the twenty-fold increase in the penalty?
Harsdorf: Good morning, and thank you for having me. The rationale behind the significant increase in the fine is primarily based on the importance of adhering to merger control regulations. A violation of the implementation ban is a serious matter in Austria, as it undermines the integrity of our market. We want to send a clear message that such offenses will be dealt with seriously, thus enhancing compliance among companies.
Editor: Palmers referred to this situation as a “formal issue from the past.” How do you respond to that characterization?
Harsdorf: While I understand that businesses often want to put past incidents behind them, it is crucial to recognize that this was not merely a bureaucratic oversight. The merger had implications on competition and market dynamics which cannot be dismissed. Our position reinforces the principle that compliance with competition laws is essential for fair market conduct.
Editor: Can you elaborate on how the BWB became aware of the merger’s premature completion?
Harsdorf: Certainly. Our awareness stemmed from a parliamentary inquiry which indicated that the companies had started operating as if the merger was already effective before the BWB had officially registered it. This premature announcement raises concerns regarding transparency and gives the impression of circumventing established regulations, which is not acceptable.
Editor: What message are you hoping to convey to other companies regarding merger compliance?
Harsdorf: Our aim is to reinforce the message that compliance with merger control is not optional, but necessary for the proper functioning of the market. Companies must ensure that all mergers are registered and approved before any public announcement or operational consolidation. This is critical to maintain fair competition and consumer protection.
Editor: Thank you for your insights, Ms. Harsdorf. It’s clear that the BWB is taking a strong stance to uphold market integrity.
Harsdorf: Thank you for having me. It’s important that we work together to foster a competitive and fair business environment.
A fair marketplace. Companies must understand the importance of following legal guidelines, as lapses can have lasting effects on the industry as a whole.
Editor: The merger between Palmers and Lenzing was established before it was formally approved by your authority. What processes do you have in place to monitor such situations in the future?
Harsdorf: We have robust mechanisms for monitoring compliance with merger regulations. The Federal Competition Authority actively reviews partnerships and mergers, ensuring that companies adhere to the appropriate timelines for registration and announcement. We are also committed to educating businesses on the importance of following these guidelines to prevent such violations in the future.
Editor: What do you see as the broader implications of this ruling for other companies considering mergers or joint ventures?
Harsdorf: This ruling serves as a critical reminder for all businesses operating in Austria about the importance of compliance with merger control regulations. It is a warning that violations can lead to substantial penalties, thus emphasizing the need for thorough planning and adherence to legal requirements when entering into such agreements. Ultimately, a competitive market benefits everyone—consumers and businesses alike.
Editor: Thank you, Ms. Harsdorf, for your insights on this important issue. We appreciate you taking the time to discuss the implications of this ruling with us today.
Harsdorf: Thank you for having me. It is crucial that we continue the dialogue around competition law and its role in safeguarding our markets.
