Anger not extinguished

After record fine: Billa now a “model student”

The Rewe Group was fined 70 million euros for the takeover of the retail space in Welas-Park in Wels from mid-2018, which was not registered until August 2022.

(Bild: Matthias Lauber/laumat.at)

The fine rose from the original 1.5 million euros to 70 million euros and is therefore even higher than the fine imposed on Porr or Strabag in the construction cartel. The record fine against the Rewe Group for a takeover of a retail space in Wels in 2018 caused a stir this week. Billa is now acting as a "model pupil" for a project in Linz.

"The penalty for a formal error is massively disproportionate", "such a draconian level of penalty is sustainably detrimental to Austria as a business location", "the alleged offense has not led to any economic advantages for Rewe International AG" - this is how the Rewe Group (Billa, Billa Plus, Penny, Adeg, Bipa) reacted to the 70 million euro fine issued by the company this week.

Relying on the reasonable legal opinion at the time
The Supreme Court had increased the original fine of 1.5 million euros following appeals by the Federal Competition Authority and the Federal Cartel Prosecutor. What kind of offense was it that cost 70 million euros? You have to look back to 2018, when the then subsidiary Merkur Warenhandels AG (now Billa Plus) took over the food retail business in the Welas-Park shopping center in Wels. Rewe had relied on the "reasonable legal opinion at the time", which meant that the rental of the location was not subject to registration. Subsequent notification was made in August 2022 and the takeover was approved - this could no longer avert the penalty.

Pro-Kaufland is now being renovated at a cost of 35 million euros and is due to reopen in May 2026.

(Bild: Wenzel Markus)

While the Federal Competition Authority emphasizes that there is a dedicated service point in the legal department where companies can ask questions if they are unsure about the obligation to register, Rewe has clearly learned from the damage. For example, the long-term lease of a food retail space in Pro-Kaufland in Linz was recently registered with the Federal Competition Authority. The contract will be concluded with Magdalena Projektentwicklung GmbH.

"Companies should follow the developments closely," says Irmgard Pracher, lawyer at LeitnerLaw.

(Bild: Krone KREATIV/Antje Wolm)

Until December 7, 2024, the Rewe Group was represented in the "Pro" with a Billa Plus. "When the first rental agreement was concluded in 2019, the Federal Competition Authority was consulted and confirmed that the interim solution at that time did not constitute a merger," said the retail group. Due to the conversion of the shopping center, in which the group around Stefan Rutter and Christian Harisch is investing 35 million euros, a longer-term solution is now being considered. This has therefore also been registered.

The Federal Competition Authority has its own service center in the legal department if there is uncertainty about the obligation to register. This was used 36 times by companies in 2024.

Natalie Harsdorf, Generaldirektorin der Bundeswettbewerbsbehörde

"Market behavior of dominant players is monitored more closely"
The 70 million euro fine against Rewe is certainly symbolic. "It is clearly evident that concentrated markets such as the construction industry or food retail have increasingly become the focus of the authority's attention in the last three to four years. The market behavior of dominant players is being monitored more closely," says Irmgard Pracher.

Complaints mechanisms are used more often
"Smaller players are making more frequent use of the complaints procedures against the big players," says the lawyer from LeitnerLaw. This should give food for thought: "Correct conduct and preventative, legally compliant design of projects should be taken seriously and compliance should not be stifled as a costly evil."