Category: Austria

Dorda has advised Ascott on an agreement for serviced residences in the Forum Donaustadt/Vienna Twentytwo development in Vienna’s 22nd district with Signa Real Estate and Austria Real Estate. The aparthotel will be marketed under the Citadines Apart’hotel brand and is scheduled to open at the end of 2022. Arnold reportedly advised Signa and ARE on the deal.

Ascott Limited is an international lodging owner-operator, and the agreement is set to cover 223 units, which will be operated under the brand Citadines. 

Dorda describes Vienna Twentytwo as “one of Vienna’s biggest urban development projects.” It will cover nearly 15,000 square meters with six buildings. 

Dorda’s team included Attorney Magdalena Brandstetter and Associate Markus Buchleitner.

On May 12, 2020 after a long-lasting proceeding between the general importer Peugeot Austria and Austrian Peugeot dealer Buechl, the Austrian Cartel Court decided in first instance that Peugeot Austria had abused its market power vis-à-vis Buechl. The dispute revolved around the imposition of contractual conditions by Peugeot which, in the opinion of the court, put dealers at a substantial economic disadvantage. Peugeot Austria has expressed its surprise at the court’s decision and has announced that it will file an appeal.

Inadmissible Terms Applied by Peugeot

The parties used a common business and contract model which confers upon the dealer the non-exclusive right to distribute and provide after-sales service for new and light commercial Peugeot vehicles. Buechl claimed that the conditions imposed on it by Peugeot Austria were abusive and excessive. The Austrian Cartel Court ruled partly on behalf of the plaintiff, holding that certain clauses were inappropriate and in violation of EU and Austrian law.

The court found that the mandatory participation of the dealer in Peugeot Austria’s pricing campaigns and promotions disproportionately restricted the dealer’s economic activities. In addition to such predetermined pricing campaigns the payments of dealer bonuses were linked to customer satisfaction surveys. The court reasoned that such surveys did not reflect the quality of the dealer’s services or the customer’s experience, thus again unduly limiting the dealer in its daily business. These and other practices of Peugeot were found by the cartel court to be abuses of Peugeot’s market power. Other practices included the setting of clearly exaggerated sales targets and the passing on the costs of “mystery shoppers” and audits to the dealer by disguising them as training costs.

Even though the Court prevented Peugeot Austria from applying numerous trading conditions, it did not fully decide in favor of the plaintiff. For example, claims regarding provisions imposed by Peugeot Austria stipulating flat-charges for mandatory trainings of the plaintiff’s employees and investments to ensure corporate identity were rejected by the court.

The Austrian Principle of Relative Dominance

In its ruling, the Court applied European competition law in parallel to Austrian competition law. The distinction is particularly important for the decision’s trans-border significance. While European competition law only prohibits the abuse of absolute market dominance, Austrian competition law also recognizes the principle of relative market dominance and prohibits its abuse. This means that a market players’ dominance is not only determined by comparing market positions between competitors but also by considering a company’s (strong) vertical relationships to its trading partners – both dealers and suppliers.

In the Peugeot case the Court concluded that the plaintiff, Buechl, is in a dependent relationship with the defendant since the absence of the business relations would lead to a severe loss of revenue. This reliance on Peugeot Austria provides it with relative dominance. By making certain business terms compulsory (such as described above), while being in a position of relative dominance, Peugeot Austria violated competition laws by abusing its market power.

Future Relevance of the Decision for Dealers Outside Austria

It can be assumed that the Court’s decision is relevant not only for Austrian dealers, but rather for dealer networks throughout Europe. Nevertheless, it must be noted that Austrian competition law differs from European competition law, so that the decision’s ultimate significance outside Austria is unclear. Nonetheless, the decision marks a milestone in identifying and clarifying abusive trading provisions, and its significance is not to be underestimated as it will ultimately affect other brand dealers as they deal with similar issues.

Although the decision’s ultimate legal impact is uncertain, its key elements have been welcomed by industry representatives. Automotive dealers have been complaining about unfair business practices and predominance of manufacturers. The findings and reasonings of the Austrian Cartel Court therefore contribute substantially to restoring the original negotiation stances between dealers and suppliers by evening out the power imbalance between them.

Regardless of the appeal’s outcome, it is imperative to monitor the situation closely, since it will affect the industry significantly with regards to operating in compliance with competition laws.

By Martin Eckel, Partner, and Julia Lorincz, Associate, Taylor Wessing Vienna

This Article was originally published in Issue 7.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Brandl & Talos has advised Ring International Holding on its takeover of the Burger King franchise in Norway, Sweden, and Denmark from Umoe Restaurants. Norwegian law firm Bahr advised the seller on the deal. Wikborg | Rein in Norway, Cirio in Sweden, and Bruun & Hjejle in Denmark acted as local advisors to the buyer.

Financial details of the transaction were not disclosed, and the deal is expected to be completed in the fourth quarter of 2020.

Umoe Restaurants is a Norway-based operator of more than 360 restaurants and cafes across Scandinavia. The company is a franchise partner with brands such as Peppe’s Pizza, TGI Fridays, Burger King, Starbucks, and Blender.

Brandl & Talos’s team consisted of Partner Roman Rericha, Lawyer Markus Arzt, and Associates Christina Bernhart and Adrian Anbmann.

Wikborg | Rein’s team included Partner Ketil Boe, Specialist Counsel Christian Emil Petersen, and Senior Associate Henrik Biornstad.

Bruun & Hjejle’s team was led by Partner Andreas Nielsen.

Eisenberger & Herzog has advised Markus Kummel, Oliver Jusinger, and Andreas Kossmeier, the founders of the Bergfex tourism platform, on the sale of a 60% stake to Russmedia Equity Partners. 42law reportedly advised Russmedia Equity Partners on the deal.

Financial details were not diclosed.

E&H describes Bergfex as “Europe’s largest platform for mountain sports tourism in the Alpine region.” According to the firm, “the platform, accessible over the Internet and via app, is a reliable companion for mountain enthusiasts to plan tours, check the weather, and book accommodations. All three founders, Markus Kummel, Oliver Jusinger, and Andreas Kossmeier, who have worked to build the company since 1999, will remain onboard both operationally and as shareholders. Within the network of Russmedia, a family business over 100 years old, Bergfex will continue to grow as an independent and founder-managed company, and continuously develop technically innovative services for mountain sports enthusiasts.”

Eisenberger & Herzog’s team included Partners Peter Winkler, Josef Schmidt, Philipp Nidal Karaman, Dieter Thalhammer, Jana Eichmeyer, Andreas Zellhofer, and Helmut Liebel, Attorney Karolin Andreewitch, and Associates Martin Zankl and Daniel Metz.

42law’s team was led by Partner Christof Strasser.

Schoenherr has advised Austrian start-up Carbomed Medical Solutions on a EUR 3 million financing round led by Aws Gruenderfonds. Act Legal Austria WMWP advised Aws Gruenderfonds on the deal.

According to Schoenherr, “Carbomed Medical Solutions, a start-up founded in Graz, develops and sells Breathe Ilo, a breath analysis device that tracks a woman’s cycle predicting ovulation. Before this financing, EUR 5 million in investments and grants were already collected to fund the intense product development over several years. With the EUR 3 million that has now been secured the company plans to continue its expansion internationally and to develop new product features.”

Schoenherr’s team included Partners Thomas Kulnigg and Andreas Natterer, Attorneys Clemens Gaugusch and Iliyana Sirakova, and Associate Dominik Tyrybon.

Act Legal Austria WMWP’s team was led by Attorney Paul Koppenwallner.

“Things are, right now, Covid-driven again, really,” begins Partner Marc Lager, the head of the EU Competition Law and Global Trade practice in the Vienna office of Deloitte Legal. “The numbers have been going up a bit lately, as in other parts of Europe, and there have been talks of reintroducing some of the measures that were in place earlier in the year.”

Lager says that a new foreign investment review framework has been introduced, reflecting last year’s introduction of EU FDI-Screening Regulation 2019/452, which established a European framework for the screening of foreign direct investments into the EU. The new law, he says, allows the authorities “to review a large number of transactions in a wide range of industries that could potentially leave key infrastructure points exposed to foreign investors, especially during these troubled times.” He adds that “Austria’s Minister of Economic Affairs stated recently that some 100 transactions would fall under the scope of the new framework each year. Since a vast number of industries fall within the scope of the new framework and since the authorities can prohibit transactions to safeguard (national) ‘security or public order,’ the law is a public policy tool, so it’s best to keep an eye on near-future developments.”

Locally, Lager reports that Vienna has held its municipal elections. “These have gone by peacefully and in order,” he reports, but says that “what I’ve found to be rather interesting is that one of Vienna’s nine municipalities plans to introduce an investment incentivization scheme by supporting companies in exchange for temporary equity.“ Other than that, Lager says, nothing much has been going on – either in Vienna or in Austria in general – in terms of legislation that isn’t directly Covid-related.

And on that subject, Austria’s economy, like most in Europe, has not been spared by the fallout of the pandemic. “Personally, I hope that the overall economy will bounce back next year, but I must admit that it is quite difficult to predict anything at this point,” Lager says. On the one hand, he says, “there has been speculation by local experts that governmental support to distressed sectors will be severely strained by the end of the year and that mass lay-offs could follow.” On the other hand, he says, information coming from EU experts has been “more positive, with more optimistic predictions.”

The effects of the pandemic have been felt in the legal sector as well, Lager says. “We have been lucky since we [at Deloitte Legal] are a growing practice. But some firms have taken advantage of the shortened work time scheme that the government introduced earlier this year to stimulate businesses not to fire people by subsidizing a portion of their salaries.” 

Lager says that, in general, various types of state aid have been “more present in client requests,” and he believes that, going forward, this may be a more active practice. “Businesses will want to know what happens when they acquire a company that has previously received some form of state aid, what their potential obligations and exposures might be,” he says. “With the pandemic still going on – this seems likely to be a hot topic in the future.” 

Binder Groesswang, Schiff Hardin, and Hengeler Mueller have advised California-based medical devices and life science instruments manufacturer Paramit Corporation on the acquisition of 100% of shares in Austria’s System Industrie Electronic GmbH and its German subsidiary, System Industrie Electronic Deutschland GmbH, from former majority shareholder System Industrie Holding AG (and its ultimate owner, the Filzmaier Private Foundation) and Aws Mittelstandsfonds, a former minority shareholder. Brandl & Talos advised the sellers on the transaction, which remains subject to regulatory clearance in both Austria and Germany.

According to Binder Groesswang, “as part of the S.I.E SOLUTIONS Group, the acquired company is a leading provider of embedded technology solutions and, as a high-tech company and innovation driver, offers a combined portfolio of design, hardware, software, and services to customers across the medical device, IVD, and life science industries.”

Binder Groesswang’s team was led by Partner Thomas Schirmer, Senior Associate Wolfgang Guggenberger, and Associate Pia-Alena Havel, and it included Partners Johannes Barbist, Christian Wimpissinger, Stefan Tiefenthaler, Markus Uitz, Horst Lukanec, and Christine Dietz, Counsel Hellmut Buchroithner, Senior Associates Regina Kroell, Clemens Willvonseder, Manuel Muellner, Philipp Spring, and Thomas Hartl, and Associates Markus Stelzl, Sara Anahita Bayat, Franz Hufnagl, Artan Duraku, Adam Wu, Nina Niederstrasser, Florian Gruber, and Miriam Imarhiagbe.

Brandl & Talos’s team included Partner Roman Rericha and Associate Stephan Strass.

Schiff Hardin’s team was led by Chicago-based Partner Steve Isaacs and included New York-based Partners Sara Rosenberg and Olga Bogush.

Hengeler Mueller’s team included Partners Daniel Wiegand, Dirk Uwer, Alf-Hendrik Bischke, and Hendrik Bockenheimer and Senior Associates Tobias Bieber, Carsten Bormann, and Selina Rohr.

Sixtus-Ferdinand Kraus, a member of CMS Vienna’s Corporate Transactions and Corporate Litigation teams, has been appointed Professor of Civil Law at the Johannes Kepler University Linz.

According to CMS, “Kraus has always been equally committed to both scholarship and practice. He has qualified as a professor in the fields of business law, corporate law, and civil law and is known to the practice as an expert in corporate law, business law, and business-related civil law. Sixtus-Ferdinand Kraus has been working as a lawyer at CMS in Vienna since January 2019 and has also taught at the Institute for Business and Commercial Law at the University of Vienna.”

Kraus will continue his work as Counsel with CMS, focusing on corporate litigation.

“We see ourselves as a law firm with an academic foundation,” said CMS Vienna Managing Partner Johannes Juranek, adding that “we are very proud when colleagues like Sixtus-Ferdinand Kraus are involved in research and teaching in parallel with their work as lawyers.” 

Eisenberger & Herzog, Allen & Overy, and Shearman & Sterling have advised SAP SE on the acquisition of Emarsys, a Viennese cloud-based provider of omnichannel customer loyalty platforms. Freshfields Bruckhaus Deringer advised Emarsys.

Financial details were not disclosed, and the transaction remains contingent on regulatory approval.

According to E&H, SAP is seeking to expand its customer experience portfolio, and “Emarsys offers communication with clients through various channels, such as email, SMS, social networks, mobile devices, and the Internet.”

Eisenberger & Herzog’s team included Partners Michael Strenitz, Philipp Nidal Karaman, Peter Winkler, Andreas Zellhofer, Helmut Liebel, Jana Eichmeyer, Dieter Thalhammer, and Marcus Benes, Lawyers Philipp Schrader, Karolin Andreewitch, Stefan Wartinger, and Johannes Feilmair, and Trainee Lawyers Claudia Kendlbacher, Martina Proschofsky-Spindler, Julia Mittendorfer, Franziska Egger, Nina Muskovich, Matthias Eberle, Fabian Larcher, and William Redl.

Allen & Overy’s Germany-based team included Partners Alexander Veith, Ulrich Baumgartner, Jens Matthes, Markulf Behrendt, and Michael Ehret, and Counsel Peter Wehner.

Shearman & Sterling’s team advising SAP on US law was led by California-based Partner Daniel Mitz.

Freshfields Bruckhaus Deringer’s Vienna-based team included Partners Konrad Groeller and Florian Klimscha, Counsels Stephan Denk, Lutz Riede, Felix Neuwirther, and Maria Dreher, Attorney Anouschka Zagorski, Principal Consultant Claus Staringer, and Associates Daniel Lungenschmid, Gernot Fritz, Johannes Kater, Maria Tumpel, Thomas Mollnhuber, Carmen Hoyos, Lukas Treichl, Boris Klimpfinger, Matthias Hofer, Iris Amschl, Simon Fitzpatrick, Lilly Leitner, Lukas Pomaroli, Luca Mischensky, Iris Hammerschmid, Johannes Samaan, Can-Michael Nural, Leonhard Prasser, Benedikt Sprinzl, Susanne Paul, Florian Reiter-Werzin, Katharina Kubik, Oliver-Christoph Guenther, and Lukas Allram.

Fellner Wratzfeld & Partner has advised Immobilien Holding on the sale of its shares in Arwag Holding to the Fund for Temporary Housing in Vienna.

Financial details of the deal, which closed on October 6, were not disclosed.

According to Fellner Wratzfeld & Partner, “the Immobilien Holding and Erste Bank decided to jointly sell their shares in Arwag Holding.” The Fund for Temporary Housing in Vienna was established in 1971 for the purpose of offering advice and support to immigrants. The firm reports that, “as a result of the sale, the fund now holds slightly less than 50% of the shares in Arwag Holding.”

Immobilien Holding is an Austrian real estate developer and a subsidiary of UniCredit.

Fellner Wratzfeld & Partner’s team consisted of Partner Markus Fellner, Attorneys-at-Law Peter Stiegler, Elisa Maria Kaplenig, and Associate Daniel Wadl.

Fellner Wratzfeld & Partner declined to provide information about counsel for the buyers.