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09 September 2021
press release

Austria: Major success before ECJ: Schoenherr as legal advisor to Adler Real Estate AG reveals need for reform of Austrian Takeover Commission

  • The Austrian Takeover Commission currently acts as "investigator", "prosecutor" and "judge" in personal union and does not qualify as an independent court under the European Charter of Fundamental Rights;
  • The structure and lack of appeal possibilities before the Austrian Takeover Commission violate European law;
  • Decisions issued by the Takeover Commission against Adler Real Estate AG therefore have no binding effect and are irrelevant;
  • The Republic of Austria is called upon to create the missing legal protection for market participants and to quickly amend the Austrian Takeover Act.

As legal advisor to Adler Real Estate AG ("ADLER") in the proceedings before the European Court of Justice ("ECJ"), Schoenherr welcomes today's ruling by the ECJ that the Austrian Takeover Commission ("ATC") in its current structure is not independent and does not act in accordance with European law due to the lack of legal protection and appeal possibilities for market participants. As a result, the decisions of the ATC issued against ADLER and contested by Schoenherr as ADLER's legal advisor have no binding effect in civil and administrative proceedings and are therefore irrelevant. The Republic of Austria is now expected to amend the Austrian Takeover Act.

"The decision offers the Republic of Austria the opportunity to establish a fair and legally reliable regime  for the review of decisions of the Takeover Commission by amending the Austrian Takeover Act in conformity with European law, for example, according to the German model by means of an appeal to a takeover panel at the Vienna Higher Regional Court," Schoenherr partner Sascha Hödl, who represented ADLER in the proceedings before the ECJ together with counsel Sascha Schulz, said. "The Takeover Commission, which is equipped with the highest level of expertise, would thus also be strengthened on the Austrian capital market as a supervisory authority under takeover law," Sascha Schulz added.

In March 2016, the ATC accused ADLER, together with other parties to the proceedings, of acting as joint legal entities in the course of a planned takeover of conwert Immobilien Invest SE ("conwert") and of "acting in concert". According to the ATC, ADLER, together with other shareholders, acquired a controlling interest in conwert on 29 September 2015 and subsequently wrongfully failed to submit a mandatory tender offer. Although the ATC acted as "investigator", "prosecutor" and "judge" vis-à-vis ADLER, ADLER has been excluded from challenging this ruling of the ATC in front of an independent court under the current appeal regime of the Takeover Act. In subsequent proceedings, the Federal Administrative Court ("BVwG") followed the suggestion of Schoenherr as ADLER's legal representative and requested clarification from the ECJ as to whether this limited appeal regime infringes European law.

The ECJ confirmed that the current structure of the ATC is not in line with European law, in particular Article 47 of the European Charter of Fundamental Rights. Since the ATC is structured as a court of inquisition and is therefore not independent in the sense of European law, market participants should be able to have decisions of the ATC fully reviewed by an independent court. This is currently not the case. As a consequence, the rulings issued by the ATC against ADLER cannot ultimately have any binding effect and are therefore irrelevant. 

Sascha Hödl (partner, co-head corporate/m&a) and Sascha Schulz (counsel, corporate/m&a) provided legal advice to ADLER in the proceedings before the ATC, the Austrian Financial Market Authority ("FMA"), the BVwG and the ECJ. The civil proceedings based on the ATC's decision, some of them still pending, are being led by Andreas Natterer (partner, dispute resolution) and Sara Khalil (attorney at law, dispute resolution). In the administrative penalty proceedings and the ECJ proceedings, Christian Schmelz (partner, public law) and Christian Holzer (associate, public law) were also part of the Schoenherr advisory team.