Category: Austria

EU Regulation 2017/460 (16 March 2017) has established a network code on harmonised transmission tariff structures (TAR NC). It defines, among other provisions, rules on reference price methodologies, publication and consultation requirements and the calculation of reserve prices for standardised-capacity products. Articles 26 and 28 require the national regulatory authority (NRA) or transmission system operators to carry out one or more consultations on the proposed reference price methodology and the resulting indicative reference prices as well as on the proposed discounts, multipliers and seasonal factors.

NRAs must be open for consultation at least once (the final consultation) but have the option to consult multiple times. Consultations must be open for comments for at least two months after the consultation document is published. The whole consultation process must be concluded no later than 31 May 2019. Within two months after the end of the final consultation, the Agency for the Cooperation of Energy Regulators (ACER) must publish a conclusion of its analysis of the consultation document. According to Article 27(4), the NRA must make a motivated decision on reference price methodology within five months after the end of the final consultation.

Consultation of E-Control Austria

On 31 January 2019 the NRA E-Control published its consultation document on the implementation of the TAR NC. Anyone interested had the right to comment on the document until 31 March 2019.

The document is structured in line with the ACER consultation template. First, the proposed reference price methodology is described. Second, the transmission tariff levels and estimated tariffs for the new regulatory period are stated; and third, the transmission service revenue is stipulated and the reference price methodology is assessed in more detail. The final chapter entails the proposed discounts, multipliers and seasonal factors.

Proposed reference price methodology

The proposed reference price methodology for the entry-exit system is a virtual point-based approach. This methodology has already been applied to the tariff period that started in 2016. E-Control claims that this methodology is “widely accepted and transparent”. The principle behind a virtual point-based approach is to determine entry and exit reference prices for each point to which the tariff applies by weighting capacity at these points according to their distance to a virtual point. The virtual point is defined geographically and, according to the document, it is the Baumgarten interconnector point. E-Control states that a virtual point-based approach is appropriate for the Austrian market area, as Austria has a non-meshed network with a dominant node in Baumgarten where the main transmission systems connect. Further, most gas flows are dispatched and routed from there.

In order to maintain tariff stability and avoid market distortion, the proposed reference price methodology uses clustering and equalisation of homogenous points. It also stipulates a maximum tariff increase of 10%. This 10% cap is applied to all entry and exit points. Moreover, at the Murfeld exit, a benchmark tariff (down 33% compared to the current tariff) has been created so that the resulting values meet the competitive level of reference prices on a competing route (eg, to the Croatian entry-exit system via Mosonmagyarovar). Capacity-based transmission tariffs for exits into storage facilities are discounted by 50% and entries from storage facilities are discounted by 100%. The breakdown between the revenue from capacity-based transmission tariffs at all entry points and the revenue from capacity-based transmission tariffs at all exit points results in an entry-exit split of 20 to 80.

Discounts, multipliers and seasonal factors

According to Article 28, NRAs must conduct – at the same time as the final consultation – a consultation on the level of multipliers, seasonal factors and discounts. E-Control has proposed to set the level of multipliers at 1.00 for one year, 1.15 for one quarter, 1.30 for one month, 1.50 for one day and 2.00 for within one day. While the multipliers are within the range of the TAR NC, they are significantly higher than the multipliers currently defined under the Austrian Gas System Charges Ordinance and higher than multipliers proposed or applied in other member states. The document does not provide any explanation or justification for the increase of the multipliers.

E-Control has proposed to introduce a seasonal factor at the Arnoldstein exit point, arguing that the usage and booking profile at this point shows a varying level of demand depending on consumption levels for each month.

According to Article 16 of the TAR NC, the NRA may apply ex post or ex ante discounts for interruptions, depending on whether capacity has to be interrupted due to physical congestion in the preceding gas year. E-Control proposes an ex ante discount of 12% at the entry points Oberkappel and Überackern, as they did not fulfil the requirements for an ex post discount in the gas year 2017-2018. An ex postdiscount will apply to all other points. The discount will be compensation paid for each day on which interruption occurs and it is supposed to be equal to three times the reserve price for daily standard capacity products for firm capacity.

Critical observations on the consultation

E-Control decided to carry out one final consultation only, given that the whole consultation procedure must be completed by 31 May 2019. This is including the publication of ACER’s analysis and the issuing of the motivated decision by the NRA. When taking into consideration the limited time between the end of the consultation (31 March 2019) and the completion date of the final consultation, it is obvious that ACER’s two-month review period has been significantly shortened. This eliminates ACER’s opportunity to assess the consultation responses submitted during the final consultation. Further, E-Control will not have the full five months that the NC TAR has granted the NRA to issue the motivated decision. This leaves E-Control with less time and less input compared to NRAs in other member states, in which consultations took place in 2017 or 2018 and were not limited to one final consultation.

It appears that E-Control has not paid much attention to maximum transparency and traceability when setting transmission tariffs. This could be problematic insofar as the document refers to calculations, methods and guidelines that were laid down in the existing method approval in Section 82 of the Natural Gas Act. This method has not been subject to any public consultations. Moreover, the current method does not contain any information on or explanation of the virtual point-based approach. There is no mention of virtual point distances, capacity weightings, distance rations or clustering. Thus, it is not verifiable whether the current tariff uses a virtual point-based approach. E-Control’s claim that the virtual point-based approach is “widely accepted and transparent” seems to be unfounded.

According to the document, the tariffs are distinguished between effective tariffs (those applied from the beginning of the next tariff period) and theoretical tariffs (those which would result without the application of a 10% cap). Only the effective tariffs are set out in the document; the theoretical tariffs – which would supposedly be even higher than the effective tariffs – have not been disclosed. This is out of line with the transparency requirements of the TAR NC and is questionable with regard to the reflective costs of the proposed reference price methodology.

Comment

According to Article 26(3) of the TAR NC, E-Control must publish the consultation responses received and their summary within one month after the end of the consultation. Eight stakeholders, the Austrian Chamber of Labour and the Austrian Ministry of Finance have made use of their right to comment on the document. All of the stakeholders and the Ministry of Finance criticised the general lack of transparency and many pointed out that the proposed multipliers are unreasonably high. Only after E-Control issues its motivated decision will it be fully assessable whether it has taken stakeholders’ and ACER’s comments into account and addressed the lack of transparency in the document. In any event, the request for more transparency and traceability in E-Control’s work remains as pressing as always.

By Bernd Rajal, Partner and Stefanie Orator-Saghy Associate Schoenherr

Scandals from Danske Bank to LuxLeaks and the Panama Papers would never have come to light were it not for insiders who dared to expose major wrongdoings within companies and organisations. Until recently, protection of whistleblowers in the EU has been fragmented across Member States and even across policy areas. The meagre protections granted to whistleblowers have been subject to constant criticism.

In the wake of important revelations by whistleblowers, the EU Commission proposed a new directive in 2018 to protect and encourage whistleblowing. After lengthy negotiations, the EU Parliament adopted a draft of this new directive (“Directive”) on 16 April 2019 with the following cornerstones:

1. What type of reporting will be protected?

The proposed Directive grants protections for persons reporting on breaches of various EU rules in areas like public procurement, financial services, AML or data protection. It also applies inter alia to breaches relating to EU competition rules and breaches harming the EU’s financial interests.

2. Who will be protected?

The proposed new rules provide protection not only for whistleblowers, but also for facilitators, third persons connected with the whistleblower (e.g. relatives) and legal entities that the whistleblower owns, works for or is otherwise connected within a work-related context.

3. What are the prerequisites for protection?

Protection will be granted if the whistleblower (i) adheres to a certain “reporting scheme” and (ii) acts in good faith:

The whistleblower should generally report via internal reporting channels, but may also report externally to the authorities. Under certain conditions it is also permitted to publicly disclose the information, for example via web platforms or social media.

The whistleblower must also have had reasonable grounds to believe that the information reported was true at the time of reporting and that the information fell within the scope of the Directive.

4. What type of protection will be offered?

The Member States will take the necessary measures to prohibit any form of retaliation, including threats and attempts at retaliation, whether direct or indirect. This includes suspension, dismissal or equivalent measures, discrimination or unfair treatment.

Furthermore, the proposed Directive provides for measures to support whistleblowers, such as public access to independent information and advice on whistleblowing and protection measures free of charge and access to legal aid in criminal and cross-border civil proceedings. In addition, whistleblowers may receive full compensation for damages suffered under certain conditions.

5. Limitation of scope

The proposed Directive will not affect the protection of classified information, legal privilege or rules on criminal procedure under EU or national law. It should also serve only as a minimum standard and would be subordinate to mandatory sector-specific rules.

6. Timeframe and implementation

Member States will have to implement the Directive into local law within two years after its adoption. Thus, its actual implementation into local law remains to be seen. In addition, the proposed Directive contains a reporting, evaluation and review process on EU level.

7. Obligations for companies

The proposed Directive formally addresses the Member States which need to adopt local laws to implement the requirements of the Directive. However, it contains various obligations which will in fact be highly relevant for companies.

Most important of all is establishing internal reporting channels according to the standards of the Directive. Basically, legal entities in the (i) public sector and (ii) private sector with 50 or more employees would generally need to establish such reporting channels, although under certain conditions Member States may also impose this obligation on private legal entities with less than 50 employees. In addition, the affected companies must implement internal structures to handle reports accordingly and give the whistleblower feedback within three months at the latest.

While the Directive is likely to massively strengthen the position of whistleblowers, it will also increase compliance needs for companies.

By Christoph Haid, Partner and Michael Lindtner, Associate Schoenherr

Social Media is omnipresent these days and individuals as well as companies increasingly use these instruments as communication and marketing tools. Moreover, the development of Social Media platforms, like interactive online rating and comparison platforms, is also of interest for the start-up sector. However, this increasing importance of Social Media also raises questions about the liability for the published content and legal remedies to protect and enforce affected legal positions.

1. Social Media and its effects

Austrian law does not define “Social Media”. However, the common understanding is that Social Media are media characterised in particular by the possibility for users to network with each other and exchange data (i.e. to engage in multilateral communication) and a high degree of user-generated content. In addition, Social Media has a very low level of content control and a high level of anonymity, facilitating phenomena like fake news, fake accounts and social bots.

In a nutshell, Social Media has positive and negative effects. On the one hand it has never been easier to spread and receive information and opinions and to stay in touch with family, friends, colleagues and others; on the other, there is an ever-greater danger that these communication tools will be misused, including for insults or defamation, “shitstorms” or the mere dissemination of fake news and lies to influence the public perception and discussion.

2. Legal framework

Activities in and in connection with Social Media must comply with applicable laws, just like activities in the real world. However, Austrian law provides for certain provisions which have a strong focus on online activities affecting users of Social Media as well as the providers of such platforms.

2.1 Austrian Criminal Code

The provisions of the Austrian Criminal Code (“ACC”) are generally not limited to activities in the real world, but also cover virtual acts, like posting or sharing illegal content on Social Media. Nevertheless, the ACC contains provisions which are especially relevant for illegal behaviour in Social Media such as Cyberbullying (Art 107c ACC), Defamation (Art 111 ACC) or Incitement (Art 283 ACC). In addition, companies operating Social Media platforms may under certain special conditions face criminal liability under the Austrian Act on Corporate Criminal Liability (see our Legal Insights of 20 June 2017).

Although the ACC provides ways to counter illegal behaviour in Social Media, practical enforcement still faces some hurdles. First, it needs to be assessed whether Austrian jurisdiction even applies. Especially when it comes to virtual acts in the (globally available) internet, it is sometimes difficult to assess whether the “virtual offence” has been committed in Austria. Moreover, some offences are subject to private charges, which limit the possibilities of investigation, and some legal questions in the context of virtual acts, e.g. the criminal relevance of a “Like” of an illegal posting, are still unclear.

In this context, victims of illegal behaviour in Social Media as well as companies dealing with such criminal activities among their staff are well advised to seek professional legal assistance to protect their rights.

2.2 Austrian Media Act

The Austrian Media Act (“AMA”) aims to protect from infringements of personal rights in media with broad publicity, which may also include Social Media. In particular, the AMA provides for the possibility to receive compensation for defamation or the disclosure of certain aspects of private life in a rather quick proceeding with certain facilitations, i.e. it is not necessary to provide evidence of actual damage, though the amount of compensation is capped. Moreover, under the AMA a counterstatement can be requested if incorrect statements are published.

Claims under the AMA are directed against the media owner, i.e. basically the person taking care of the content and dissemination of the media. According to the Austrian Supreme Court, even operators of a Facebook page may qualify as media owners if they are ultimately responsible for the content1, which is why professional users of Social Media platforms may also qualify as media owners.

Nevertheless, media owners may be discharged from liability under the AMA if they operated with due diligence, which includes in particular reacting quickly when gaining knowledge about illegal content. This obligation is generally stricter if the media owner operates professionally (e.g. a professional Facebook page for marketing purposes).

2.3 E-Commerce Act

A person who offers virtual space for users and stores their content qualifies as a host-provider pursuant to the E-Commerce Act, which includes operators of online platforms that enable other users to comment on contributions on the page.2 Therefore, providers of Social Media platforms, like an interactive online rating portal, may also qualify as host-providers.

Host-providers are generally not liable for the content published by the users on the provided platform. However, if host-providers gain knowledge of illegal content, they need to act without undue delay and delete the content or block the access. Case law shows that host-providers often have a very short period of time from gaining knowledge of potential illegal content to assessing the respective content and taking further action.

3. What to take care of

This brief look at parts of the legal framework of Social Media shows that private and professional users as well as providers of Social Media platforms need to comply with various legal requirements, which is why risk-mitigating strategies are recommendable.

• Privateusers must ensure that their virtual actions are in line with applicable laws, which is generally the case if these would also be permitted in real life. However, the ACC provides for certain offences that demand particular attention in the context of Social Media.
• Professional users of Social Media platforms, like start-up companies using Social Media channels for marketing, must ensure that they do not publish illegal content and generally act with due diligence. Therefore, in addition to setting internal guidelines and policies, Social Media administrators are advised to establish clear internal structures to deal with possible illegal content in due time.
• Providers of Social Media platforms, like a start-up providing an online rating platform for certain services where users can comment and interact, should also implement clear internal structures and policies to react to possible illegal content on time.

Moreover, persons whose rights are affected by virtual acts on Social Media have various legal remedies to protect their position. As enforcement usually requires a legal assessment of the actual case, professional legal assistance is recommendable.

If you are seeking legal advice regarding compliance with applicable laws or enforcement of rights in the context of Social Media, do not hesitate to contact us.

By Michael Lindtner, Associate, Schoenherr