An overview of the Austrian competition law, the national competition authority of Austria and the benefits of their work for consumers
Introduction
Competition among companies is the driver of economic development. It is a prerequisite for growth, employment, prosperity and innovation. In order to achieve the above, all companies must adhere to the same rules, therefore independent institutions are needed to enforce them. However, what sounds good in theory often causes difficulties in practice. The Law on Protection of Competition provides a framework that enables competition to benefit all actors. The independent Austrian Federal Competition Authority (Bundeswettbewerbsbehörde - BWB) was founded twenty years ago with this very aim in mind. In the following, a brief overview of competition and competition law from an Austrian perspective will be provided.
What is competition?
Several generations of economists, and more recently, more and more female economists, have studied the theory of competition, its factors and objectives. Friedrich A. von Hayek, the Austrian economist and Nobel Prize winner, deserves special mention because he described competition as a “discovery process”. This highlights a key aspect of competition: the incentive to try something new and solve problems, which includes technological advances or improved/new products. This includes efficient use of existing factors of production, stimulation and improvement of performance, and preservation of economic freedom. Competition is necessary to promote prosperity in economies.
Why is the law on competition protection important?
Competition law enforcement in Austria does not have a long history. Modern Austrian competition laws were established in 2002, after Austria joined the EU seven years earlier. These laws serve as a legal basis in Austria today, with three basic pillars: prohibition of cartel association, prevention of abuse of a dominant market position and control of concentrations on the market.
Since then, more than a hundred unannounced direct inspections have been carried out in companies due to violations of the law on competition protection. The total fines imposed exceed a quarter of a billion euros. The overwhelming majority of fines paid by companies are sent to the government and then returned to the general public (ie: taxpayers).
Ensuring fair and free competition in Austria has proven to be particularly valuable in times of crisis. Markets with limited competition are more vulnerable to various disturbances, including market concentrations. In these cases, there is concern that consumers in particular will be exposed to unjustified and disproportionate price increases. In order to prevent companies from consolidating their market power in the medium or long term and abusing it under the pretext of a crisis, it is necessary to enforce competition laws.
Fair and free competition is not always unanimously supported, despite its logical and understandable nature. In this regard, it is important to emphasize that independent competition bodies and effective competition legislation are crucial for creating a successful business environment and market that suits both companies and consumers.
The author is the executive coordinator for international cooperation at the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde).
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