Legal Market Overview
2021 saw Austria, just like the rest of the world, continue to be shaped strongly by Covid-19. While the beginning of the pandemic caused a halt in market activity, firms reported a continuous increase in M&A ventures and other transactional work, speaking of a return to ‘business as usual’. 2021 and 2022 are expected to show a positive rate of growth for the country’s GDP, leading to hopeful projections after an economically challenging previous year.
Sustainability and ESG remain leading drivers in market activity, leaving no practice area untouched. The Austrian government plans to achieve carbon neutrality by 2040, which in turn is pressuring already busy energy and projects departments. An increase in hydrogen-related matters as well as a boom in wind and solar energy paired with growing demand for environmental law expertise is symptomatic of the country’s attempt to become greener.
Firms also report a boom in foreign direct investment work after the new Investment Control Act entered into force in 2021 and tightened the regulatory framework for FDI investments. This area is expected to grow further in line with a heightened sensibility to foreign investments in a global setting.
Digitalisation projects are similarly a crucial part of firms’ advisory work and continue to steer Austria towards a more connected future, having been especially sped up due to the pandemic. This, however, does not come without its challenges regarding several areas of law, in which firms are working hard to keep up with implementing new laws and directives at both a national and EU level. The new EU Copyright Directive and in particular Article 17, which obliges content-sharing service providers to obtain authorisation from rights holders for content uploaded to their websites, has created some uncertainty among content holders and host providers in Austria.
Meanwhile the Unified Patent Court of EU member states is still on the starting blocks and how this will impact the practice area in Austria remains to be seen. Generally, digitalisation continues to be hugely relevant for intellectual property, with topics like blockchain or product piracy over e-channels gaining traction. Cybersecurity work and data breaches continue to be a significant aspect of data protection in the country and home office work during the pandemic has certainly contributed to this. Data protection and data privacy challenges have also arisen from the storage of vaccination information, Covid testing and contact tracing.
2021 also marked lively activity in EU and competition law: the construction cartel case that emerged in the summer and the truck cartel of 2016 remain the nation’s biggest cartel cases with a large number of law firms being involved in these matters. Major changes in Austrian competition law came into play in September 2021 aimed at reducing the number of notifiable mergers in this sector by introducing a new domestic turnover threshold of more than one million euros.
In the employment area, activity was dominated by new work models and dramatic restructurings as well as terminations in light of the pandemic. It is expected that large restructurings will continue to take place once Covid-19 state aid and insolvency barriers come to an end. Additionally, the echoes of Brexit are still registered by firms advising clients on immigration and cross-border assignments. Mask requirements and Austria’s mandatory vaccine policy, the first of its kind within the EU, will further occupy the country’s employment practices in the time to come.
Austria has experienced an eventful 2021 marked not only by the global challenges of the pandemic, but also a governmental collapse and a high turnover of chancellors at the end of the year. For law firms, uncertain times mean an increase in advisory needs, and the country’s practitioners remain positive about the consequences of a turbulent year.