WMWP — the Austrian office of Act Legal — has successfully advised the Hannover Finanz Group on its acquisition of a stake in Sporternahrung Mitteregger GmbH.
According to WMWP, “Sportnahrung.at has developed into the Austrian and German market leader for Sports Nutrition. The provided growth capital is used to finance the company’s internationalization and external growth.”
The WMWP team was headed by Partners Robert Winkler and Paul Koppenwallner.
In its judgment of September 7, 2017, the Court of Justice of the European Union accepted the arguments made by CHSH on behalf of STRABAG, issuing what the firm is calling “the first ever preliminary ruling on a question relating to the Merger Regulation.”
According to CHSH, “the judgment concerns a fundamental issue that goes to the very heart of European merger legislation and was highly anticipated.”
According to CHSH, “STRABAG (via its subsidiary Austria Asphalt) had notified the Austrian Federal Competition Authority of a concentration; namely, the acquisition of a 50% equity interest in the Murzzuschlag asphalt mixing plant under the sole control of PORR. The Cartel Court subsequently ruled in Phase II proceedings that it lacked jurisdiction and that the concentration would instead have to be notified to the European Commission in accordance with the Merger Regulation, despite the fact that the asphalt mixing plant could not be regarded as a ‘full-function’ undertaking (nearly its entire production was intended for the parent companies). In appeal proceedings, the Supreme Cartel Court referred the case to the CJEU, requesting a preliminary ruling on whether – in simple terms – a joint venture has to perform all the functions of an autonomous economic entity on a lasting basis in order for a concentration to be deemed to arise under the Merger Regulation upon the acquisition of joint control of an existing undertaking.”
CHSH successfully argued that the question should be answered in the affirmative. Partner Bernhard Kofler-Senoner, the head of the CHSH anti-trust practice group who led his firm’s team in the case, is delighted that the CJEU shares the legal view his team put forward, saying: “The judgment of the CJEU can be seen as a landmark ruling for concentrations within the European Union as a whole. It provides our client and other businesses with the legal certainty they need.”
Kofler-Senoner was assisted by CHSH Partners Hans Kristoferitsch and Stefan Huber, Attorney Michael Mayer, and Associates Johannes Frank and Stefan Hirner.
CHSH Cerha Hempel Spiegelfeld Hlawati has acted as legal advisor to the Austrian venture capital fund Speedinvest on matters related to its joint venture ownership of iMobility GmbH, stretching from the foundation of the joint venture with partner OBB-Holding AG up to the recent acquisition by OBB-Holding of Speedinvest’s shares, which leaves OBB-Holding as sole owner.
Founded in 2015, iMobility was the developer of the “wegfinder” mobile app, which plans routes within Austria by using a newly developed routing algorithm to combine various individual means of transport with public transport services. Among others, OBB, CAT, Westbahn, Helloo Fernbusse, Car2Go, Taxi 40100, Uber, and Citybike are all integrated into the app. The app provides the user with departure times and shows the available means of transport in the surrounding area that can be booked or rented on a map. In addition, bookings can be made and tickets purchased via the app.
Speedinvest was advised by Attorney Sarah Wared and Associate Alistair Heschl-Gillespie.
The world is currently facing the Fourth Industrial Revolution – an era of technological progress that will have significant impacts on the entire labor market system.
The Revolution
The First Industrial Revolution paved the way from hand to mechanical production, while the Second enabled mass production, and the Third was all about automatization. The now-looming Fourth Industrial Revolution will enhance digital networking by blurring the lines between the physical and digital spheres in the industrial production process.
The Possibilities
As a consequence of this progressive digitalization and the possibilities of modern online platforms, a global trend towards atypical employment relationships across all industries can be discerned. More and more tasks are being offered by entrepreneurs to the crowd of people using their PCs to look for flexible and appealing jobs that do not limit them to acting under a single employer’s regime. However, the flexibility and efficiency they seek comes hand in hand with a loss of labor law rights, and the common wish to minimize (or eliminate) tax and social security payments collides with the public interest.
The Classification
The difficulty in distinguishing between an employee and a contractor is not a new issue; it has posed problems for entrepreneurs for many years. However, the so-called “gig economy” will increase the number of persons engaged in atypical employment relationships at an exponential pace. Whether a person qualifies as an employee or an independent contractor depends on specific circumstances and factors, of which the nature of the contractual obligation, whether there is a relationship of authority and subordination, whether payment is made for a specific piece of work or on the basis of time spent, and whether the contractor is exclusively acting for a single principal or for a number of different companies are only some.
The Implications
In Austria, the classification as employee or self-employed contractor also affects the assignment to a specific social security system. A (regular) employee is guaranteed insurance under the General Social Insurance Act (ASVG), while a self-employed contractor falls under the National Industrial Insurance Act (GSVG). Both systems are run by different social insurance companies. The competent one for regular employees is in principle one of nine regional health insurance companies (GKK), whereas the counterpart for self-employed contractors in principle is the social insurance company for commerce and industry (SVA).
The biggest risk in engaging an independent contractor is that the competent authorities could determine that the relationship should have been classified as an employment relationship, requiring the employer to pay income tax and social insurance contributions as well as ancillary wage costs. In Austria, back payments for five years (for social security) and up to ten years (for tax) apply. In addition, (potentially enormous) administrative fines and criminal charges might be imposed.
The Solution?
At the moment, there is no sure way to avoid this risk in Austria, as the only way to determine the correct form of classification is a non-binding request to the social insurance company. Unsurprisingly, and in light of the potential sanctions for misclassification, the situation has led to heavy criticism. However, the option of having a specific contractual relationship categorized by authorities in advance is currently under discussion, and a draft bill for a Social Security Assignment Act was released in April 2017 and is currently undergoing the parliamentary legislative process. According to the ambitious plan of the Austrian Federal Government, the new law shall be enacted on July 1, 2017 with the aim of providing legal certainty with a binding assessment of the social insurances.
The Disappointment
In reality, the much-anticipated draft bill comes with a number of limitations and is not capable of providing the envisaged legal certainty. Problematically, a binding determination regarding classification either into the ASVG or the GSVG scheme will only be possible upon the mutual agreement of the different social insurance companies (in principle the GKK and SVA), and even then only when the provided information is correct and has not changed since the submission.
Given the fact that an assignment to a specific insurance system means revenue for the that system’s competent social insurance company (in the form of social insurance contributions), a mutual agreement will be unlikely. In its absence, mandatory insurance under the ASVG will apply, although the overruled social insurance companies (the SVA in principle) will have a right to appeal. Although the final wording of the Act still remains to be seen, there is a risk that the new regulations will not lead to legal certainty for entrepreneurs and their contractors and will even spark a war of the different social insurance companies on “paying members.”
By Wolfgang Kapek, Partner, and Manuel Mullner, Associate, Taylor Wessing Austria
This Article was originally published in Issue 4.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
Schoenherr has advised real estate investment company Deka Immobilien GmbH on the acquisition of the Hoch Zwei and Plus Zwei office buildings in Vienna, from S IMMO AG, which was advised by Dorda. The purchase price was EUR 235 million and closing took place on August 31, 2017.
DEKA Immobilien GmbH is a subsidiary of DekaBank Group, one of the largest providers of open-ended real estate funds in Germany. According to Dorda, “the purchase price … exceeded the original price paid by S IMMO in 2010 by EUR 75 million.”
The two office buildings are the headquarters of Austrian energy company OMV AG. Both buildings are located in Vienna’s second district and are connected to each other by a bridge structure. The Hoch Zwei tower is 80 meters tall and has a total leasable area of around 27,000 square meters. The adjacent Plus Zwei building is 35 meters tall, with an office space of 20,000 square meters. Both buildings have been BREEAM In-Use certified with an “Excellent” sustainability rating.
The Schoenherr team advising Deka Immobilien was led by Partner Michael Lagler, supported by, among others, Partner Franz Urlesberger and Attorney Alexander Babinek.
The Dorda team was led by Partners Stefan Artner and Attorney Magdalena Brandstetter. Commenting on the transaction, Artner said: “We have been trusted advisors to S-Immo regarding most of their major Austrian transactions for several years. Therefore, we were also involved in the purchase of this landmark building and have since then been able to follow the successful development of the site. Now, advising again on the sale, we were able to contribute to the successful marketing of the two prestigious buildings.” Artner continued: “The real estate market in 2017 is very dynamic. My team and myself, we are delighted to work on many of the leading deals also during this year.”
Ernst Vejdovszky, Chairman of the Executive Board of S IMMO AG, commented: “With the successful sale of ‘Viertel Zwei’ we profited from the high price level in the Vienna market, thus acting once again in line with our cycle-oriented strategy. Thanks to the support of Stefan Artner and his team, who accompanied us right from the acquisition of this project, we wrapped up the sale most professionally and efficiently.”
Deka Immobilien has been active in Vienna this summer, as Dorda recently advised a subsidiary of Reitenburg GmbH on its acquisition of the A1 Telekom Austria site from Deka (as reported by CEE Legal Matters on August 3, 2017), and in July Schoenherr advised Deka on its acquisition of DC Tower 1, Vienna’s tallest hotel and office building (as reported on July 17, 2017).
CHSH has advised the Viennese business myAbility Social Enterprise GmbH on its successful conclusion of Austria’s largest ever round of investment in the social business start-up sector, as, according to the firm, a consortium of investors from Switzerland and Germany has provided growth capital to myAbility with a view to financing its expansion in German-speaking markets.
According to CHSH, “the social enterprise myAbility, which is run by three partners — Gregor Demblin, Michael Aumann, and Wolfgang Kowatsch — was founded back in 2014. myAbility specializes in helping large companies tap into the target group ‘people with disabilities,’ both in order to recruit new employees and to gain new customers.”
“In recent years, we have systematically expanded our position as the know-how leader in the Austrian market,” commented Gregor Demblin, one of myAbility’s founders. “The provision of growth capital means we’re well-positioned to become the market leader in the entire DACH region (Germany, Switzerland and Austria) in the next three years.”
According to CHSH, “the DACH region is home to 15 million people with disabilities. myAbility aims to improve their living conditions massively in cooperation with big business: through employment and greater freedom from barriers in everyday life.”
CHSH previously advised myAbility in connection with the company’s foundation and later on in connection with raising profit-sharing capital. CHSH Partner Heinrich Foglar-Deinhardstein, who led the firm’s team on the deal, said, “CHSH regularly offers pro bono services for important social projects and good causes such as this. We are proud to have helped courageous and idealistic entrepreneurs implement a visionary idea.”
In addition to Foglar-Deinhardstein, the CHSH team consisted of Partner Benedikt Spiegelfeld, as well as Attorney Jakob Hartig and Associate Florian Wuunscher.
Cerha Hempel Spiegelfeld Hlawati has assisted the Excellence Research Centre of the Institute of Science and Technology Austria on its establishment of an incubator for spin-offs with an unnamed international investor.
According to CHSH, the firm’s advice “was provided in connection with complex issues and included – in addition to corporate law – questions concerning state aid law, the institutional law applicable to research institutes and capital markets law.” The firm’s team was led by Partners Stefan Huber and Heinrich Foglar-Deinhardstein and included Partner Peter Knobl and Senior Attorneys Andrea Harrich and Jakob Hartig.
Fellner Wratzfeld & Partner has advised Stadler on the establishment of a joint venture with OBB-Technische Services-GmbH. The new joint venture – OBB Stadler Service GmbH – will be responsible for the maintenance of the KISS train fleet operated by WESTbahn Management GmbH. The signing of the agreement took place on March 2, 2017, and the deal closed on July 20, 2017.
The shareholdings of OBB-TS and Stadler in the joint venture – which according to fwp “was formed for the purpose of providing maintenance services for trains, including the KISS fleet of WESTbahn” – are 60 percent and 40 percent, respectively. Recently, WESTbahn increased its railcar fleet from 7 to 17 Stadler KISS trains.
According to fwp, “it is planned to relocate the maintenance business to Vienna. In the course of such expansion, the number of joint venture employees is scheduled to grow 40 by the end of 2018.”
“Thanks to the excellent cooperation among all the parties involved, and especially with the Swiss advisors, the transaction went smoothly,” said fwp Partner Markus Kajaba, who co-led the firm’s team along with Partner Lukas Flener. “The special challenge was to establish appropriate legal safeguards for the long-term cooperation.”
In addition to Kajaba and Flener, the fwp team consisted of Associates Michael Froner and Johannes Kim.
Editor’s Note: After this article was published, Binder Groesswang informed CEE Legal Matters that it had advised OBB-Technische Services-GmbH on the establishment of the joint venture. The firm’s team was led by Partner Andreas Hable and included Partner Johannes Barbist, Senior Associate Christian Zwick, and Associates Regina Kroll and Alexander Sporer.
Vavrovsky Heine Marth has advised Wienwert AG, an Austrian real estate company, on its entrance into a syndicate contract with an EU-based state pension fund and subsequent acquisitions of two large urban development plots worth, together, about EUR 22 million. The fund was reportedly represented by CHSH and Binder Groesswang, while the seller of the of the plots were represented by Amhof & Damian and Bock Fuchs Nonhoff.
“In the future,” according to a VHM press release, “Wienwert will finance all its projects solely together with the state pension fund; both syndicate partners will each hold 50% of the respective real estate project companies. Following a unified living concept named ‘Wienwert Plus,’ Wienwert will erect several thousand modern rental units of high quality and efficient unit sizes of 30, 45 and 60 square meters.”
The identity of the sellers of the two plots, according to Vavrovsky Heine Marth, is confidential.
The Vavrovsky Heine Marth team was led by Partner Nikolaus Vavrovsky, supported by Partner Christian Marth and Senior Associate Daniel Azem.
The CHSH team was led by Partners Thomas Trettnak and Mark Krenn, while the Binder Groesswang team was led by Thomas Schirmer.
The Amhof & Damian team was led by Partner Peter Amhof, and the Bock Fuchs Nonhoff team was led by Partner Gerhard Bock.
The new EU Trade Secrets Directive will have a significant impact on Austrian law. But does it establish a new Intellectual Property right?
The Importance of Trade Secrets
Intellectual property rights (IPR) such as trademarks, designs, patents, or copyrights are among an enterprise’s most important assets. However, the European Commission has correctly pointed out that every IPR starts with a secret: “Writers do not disclose the plot they are working on (a future copyright), carmakers do not circulate the first sketches of a new model (a future design), companies do not reveal the preliminary results of their technological experiments (a future patent), companies hold on to the information relating to the launch of a new branded product (a future trademark), etc.” Proposal for a Directive of the European Parliament and of the Council on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, COM (2013) 0813 final – 2013/0402 (COD), Explanatory Memorandum, para 1.
While certain ideas or concepts may later be protected by registered or unregistered IPRs, other information is kept secret because:
Current Protection in Austria
Confidential know-how and business information (referred to as “trade secrets” in the relevant directive) is currently protected mainly by criminal law provisions in the Unfair Competition Act, accompanied by a provision stipulating additional civil law claims in case of such criminal offences. However, as these provisions are fragmentary and merely cover specific (intentional) behavior, most civil law cases are decided on the basis of the general clause of Sec. 1 of the Unfair Competition Act.
Moreover, the current provisions do not create a right of the owner of a trade secret but address unfair behavior of third parties, without even defining what a trade secret is.
There is yet another major hurdle when enforcing trade secrets, as the Austrian procedural rules do not ensure that confidential know-how and business information is kept secret throughout and after court proceedings. In fact, they hardly address the protection of trade secrets at all.
New Directive Strengthens Position of Trade Secret Owners
Being aware of the importance of trade secrets, the EU has recognized that the protection in the Member States is inconsistent and often insufficient. Thus, with Directive (EU) 2016/943 (the “Directive”), a modern (and first-ever) EU-wide harmonized regime for the protection of trade secrets was established. Member States are required to transpose the Directive into their national laws by June 8, 2018.
In addition to defining trade secrets, the Directive also determines the scope of protection of the owner, who may prevent any unlawful acquisition, use, or disclosure of a trade secret. Under certain conditions, the production, offering, or placing on the market of infringing goods, including their import, export, or storage, will be considered unlawful and may be prevented as well. The Directive requires Member States to ensure protection throughout and after court proceedings and to provide a wide range of claims in case of infringements, including a claim for injunctive relief that may be secured by an interim injunction. Such claims are already known from the EU Enforcement Directive.
It must be noted, however, that the Directive grants no exclusive rights in trade secrets. Competitors are therefore free to independently acquire the knowledge protected by the trade secret, and reverse engineering is also permitted. Thus, the Directive does not create a further IPR with absolute effect but mere “access protection” (as it is referred to in current provisions). Exclusive rights may only be obtained via IPRs.
Obligatory Protection Measures
The harmonized legal definition of protectable “trade secrets” is one of the core elements of the Directive and has a massive impact on Austrian law. According to this definition, the information must not only be secret (meaning that it is not generally known or readily accessible) and of commercial value but must also have been subject to reasonable protection measures.
While the first two requirements are rather obvious and unsurprising, the last requirement is new in Austria, as the owner of a trade secret will actively have to prove that reasonable protection measures have been implemented. Companies are thus well advised to identify their valuable know-how and business information and to implement protection measures now rather than in June 2018, when it may already be too late.
Conclusion
While it does not establish a new IPR, the new Directive will undoubtedly strengthen the position of companies owning trade secrets. On the other hand, the Directive requires companies to guard their trade secrets and to implement sufficient protection measures.
Although a separate and consolidated Trade Secret Act would be preferable, the Directive will probably be transposed by the insertion of new provisions into the Unfair Competition Act.
By Guido Kucsko, Partner, and Dominik Hofmarcher, Attorney at Law, Schoenherr Austria
This Article was originally published in Issue 4.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.