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Selling U.S. Products and Services in Austria

Using an Agent or Distributor
Establishing an Office
Franchising
Direct Marketing
- Processing Customer Data
- Transferring Customer Data to Countries Outside the EU
Distance Selling Rules
Joint Ventures and Licensing
Selling to the Government
Distribution and Sales Channels
Selling Factors and Techniques
Electronic Commerce
Trade Promotion and Advertising
Pricing
Sales Service and Customer Support
Protecting Your Intellectual Property
Due Diligence
Local Professional Services
Web Resources
- Other useful websites:
- EU News Sources:

Using an Agent or Distributor

Qualified Austrian agents and distributors can be found for nearly every kind of product. Because of Austria’s geographic location and history, many Austrian agents and distributors sell regionally, covering several markets in Central and Eastern Europe, in addition to Austria.

Companies wishing to use distribution, franchising and agency arrangements need to ensure that the agreements they put into place are in accordance with EU and Member State national laws. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. In essence, the Directive establishes the rights and obligations of the principal and its agents; the agent’s remuneration; and the conclusion and termination of an agency contract, including the notice to be given and indemnity or compensation to be paid to the agent. U.S. companies particularly should be aware that the Directive states that parties may not derogate certain requirements. Accordingly, the inclusion of a clause specifying an alternate body of law to be applied in the event of a dispute will likely be ruled invalid by European courts.

Key Link:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31986L0653:EN:HTML

The European Commission’s Directorate General for Competition enforces legislation concerned with the effects on competition in the internal market of such "vertical agreements." Most U.S. exporters are small- and medium-sized companies and are therefore exempt from the Regulations, because their agreements likely would qualify as "agreements of minor importance," meaning that such agreements are useful for cooperation between SMEs but would not affect competition at the EU level. Generally speaking, companies with fewer than 250 employees and an annual turnover of less than EUR 50 million are considered small- and medium-sized enterprises. The EU has additionally indicated that agreements that affect less than 10 percent of a particular market are generally exempted as well (Commission Notice 2001/C 368/07).

Key Link:

http://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/c_368/c_36820011222en00130015.pdf

The EU also looks to combat payment delays with Directive 2000/35/EC. This covers all commercial transactions within the EU, whether in the public or private sector, and deals primarily with the consequences of late payment. Transactions with consumers, however, do not fall within the scope of this Directive. In sum, the Directive entitles a seller who does not receive payment for goods or services within 30 to 60 days of the payment deadline to collect interest (at a rate of 7 percent above the European Central Bank rate) as compensation. The seller may also retain title to the goods until payment is complete and may claim full compensation for all recovery costs.

Key Link: http://ec.europa.eu/comm/enterprise/regulation/late_payments/

Establishing an Office

Establishing a business in Austria means navigating a bureaucratic maze, despite efforts by the Austrian government to reduce the paperwork involved. Some regions have moved to set up one-stop shops for entrepreneurs, but it is unclear how much of the red tape these offices can really eliminate. Your first step should be to contact this office (CS Vienna)!

Most business activities in Austria are regulated and require that separate applications be made for a business license (Gewerbeschein) and for registration in the commercial register (Firmenbuch). Evidence of proficiency is required to operate most businesses. Usually a passing score on an examination or evidence of prior experience in the field is sufficient. For business activities that do not require proof of proficiency, the business license is granted automatically upon registration of the business.

There are several options available to the investor when deciding on the legal form of an Austrian office. These include public corporations, limited liability companies, limited or unlimited commercial partnerships, silent partnerships, branches of foreign enterprises, cooperative societies, and sole proprietorships. Most foreign-owned businesses choose to operate as a limited liability private company (Gesellschaft mit beschraenkter Haftung or Ges.m.b.H.).

The official investment office of the Austrian government is the “Austrian Business Agency”. It is an excellent source of information on all subjects related to opening an office or a production facility in Austria:

Austrian Business Agency
Contact: Hans Nagl
Opernring 3
A-1010 Vienna, Austria
Tel.: (0043 1) 588 58 12
Fax: (0043 1) 586 86 59
Email: h.nagl@N0SPAM.aba.gv.at
Web: http://www.aba.gv.at

Franchising

Franchising as a business model is still a relatively small factor in the Austrian economy, accounting for an estimated five percent of retail sales. After a period of stagnation in the late 1990’s, Austria is experiencing respectable growth; the franchise association estimates a yearly growth in the number of franchise systems at around 11 percent yearly, and the number of new franchise unit owners to be growing at 16 percent annually.

Around half of the franchise businesses operating in this country are of local origin. The top foreign participant in the Austrian franchising economy is Germany, with around 25 percent of franchises, followed by the United States, with about 10 percent of all franchises operating in Austria. Most German franchisers either set up a headquarters in Austria or franchise directly over the border, whereas most American franchisers choose to expand their operations in Austria through a master franchise partner, a solution that has had mixed results.

Some of the best prospects for franchising include business and personal services, schooling and training, and specialty retailing.

The Austrian Franchise Association collects data, maintains an informative web site, and co-organizes seminars as well as a yearly trade show:

Österreichischer Franchiseverband
Michaela Jung
Bayerhamerstraße 12/1
A-5020 Salzburg
Tel.: (0043) 662 874 236-0
Fax: (0043) 662 874 236-5
E-Mail: oefv@N0SPAM.franchise.at
Website: http://www.franchise.at

Direct Marketing

Within limits set by Austrian law, telephone and direct mail solicitation are very much in evidence in Austria. Telecommunications regulations forbid most forms of e-mail direct marketing. Some U.S. companies, including Tupperware and Amway, have established themselves in the Austrian market with multi-level marketing systems.

There is a wide range of EU legislation that impacts the direct marketing sector. Compliance requirements are stiffest for marketing and sales to private consumers. Companies need to focus, in particular, on the clarity and completeness of the information they provide to consumers prior to purchase, and on their approaches to collecting and using customer data. The following gives a brief overview of the most important provisions flowing from EU-wide rules on data protection, distance selling and on-line commerce. Companies are advised to consult the information available via the hyper-links, to check the relevant sections of national Country Commercial Guides, and to contact the Commercial Service at the U.S. Mission to the European Union for more specific guidance.

Processing Customer Data

The EU’s general data protection Directive (95/46/EC) spells out strict rules concerning the processing of personal data. Businesses must tell consumers that they are collecting data, what they intend to use it for, and to whom it will be disclosed. Data subjects must be given the opportunity to object to the processing of their personal details and to opt out of having them used for direct marketing purposes. This opt-out should be available at the time of collection and at any point thereafter. The general legislation is supplemented by specific rules set out in the "Directive on the processing of personal data and the protection of privacy in the electronic communications sector" (2002/58/EC). This requires companies to secure the prior consent of consumers before sending them marketing e-mails. The only exception to this opt-in provision is if the marketer has already obtained the intended recipient’s contact details in the context of a previous sale and wishes to send them information on similar products and services.

Key Link: http://ec.europa.eu/justice_home/fsj/privacy/law/index_en.htm

Transferring Customer Data to Countries Outside the EU

The EU's general data protection Directive provides for the free flow of personal data within the EU but also for its protection when it leaves the region’s borders. Personal data can only be transferred outside the EU if adequate protection is provided for it or if the unambiguous consent of the data subject is secured. The European Commission has decided that a handful of countries have regulatory frameworks in place that guarantee the adequate protection of data transferred to them. The United States is not one of them.

The Department of Commerce and the European Commission negotiated Safe Harbor to provide U.S. companies with a simple, streamlined means of complying with the adequacy requirement. It allows those U.S. companies that commit to a series of data protection principles (based on the Directive), and who publicly state that commitment by "self-certifying" on a dedicated website, to continue to receive personal data from the EU. Signing up is voluntary but the rules are binding on those who do. The ultimate means of enforcing Safe Harbor is that failure to fulfill the commitments will be actionable as an unfair and deceptive practice under Section 5 of the FTC Act or under a concurrent Department of Transportation statute for air carriers and ticket agents. While the United States as a whole does not enjoy an adequacy finding, companies that join the Safe Harbor scheme will.

EU-based exporters or U.S.-based importers of personal data can also satisfy the adequacy requirement by including data privacy clauses in the contracts they sign with each other. The Data Protection Authority in the EU country from which the data is being exported must approve these contracts. To fast-track this procedure, the European Commission has approved sets of model clauses for personal data transfer that can be inserted into contracts between data importers and data exporters. The most recent clauses were published at the beginning of 2005. Most transfers using contracts based on these model clauses do not require prior approval. Companies must bear in mind that the transfer of personal data to third countries is a processing operation that is subject to the general data protection Directive, regardless of any Safe Harbor or contractual or consent arrangements.

Key Links: http://www.export.gov/safeharbor/

http://ec.europa.eu/justice_home/fsj/privacy/modelcontracts/index_en.htm

Distance Selling Rules

Distance and Door-to-Door sales

The EU’s Directive on distance selling to consumers (97/7/EC) sets out a number of obligations for companies doing business at a distance with consumers. It can read like a set of onerous "do’s" and "don’ts," but in many ways it represents nothing more than a customer relations good practice guide with legal effect. Direct marketers must provide clear information on their own identity as well as the identity of their supplier, full details on prices including delivery costs, and the period for which an offer remains valid – all of this, of course, before a contract is concluded. Customers generally have the right to return goods without any required explanation within seven days, and they retain the right to compensation for faulty goods thereafter.

Similar in nature is the Doorstep Directive (85/577/EEC), which is designed to protect consumers from sales occurring outside of normal business premises (e.g. door-to-door sales) and which essentially assures the fairness of resulting contracts.

Key Link: http://ec.europa.eu/consumers/cons_int/safe_shop/index_en.htm

Distance Selling of Financial Services

Financial services are the subject of a separate Directive that came into force in June 2002 (2002/65/EC). This piece of legislation amends three prior existing Directives and is designed to ensure that consumers are appropriately protected with respect to financial transactions taking place where the consumer and the provider are not face-to-face. In addition to prohibiting certain abusive marketing practices, the Directive establishes criteria for the presentation of contract information. Given the special nature of financial markets, specifics are also laid out for contractual withdrawal.

Key Link: http://ec.europa.eu/consumers/cons_int/fina_serv/index_en.htm

Direct Marketing Over the Internet

The e-commerce Directive (2000/31/EC) imposes certain specific requirements connected to the direct marketing business. Promotional offers must not mislead customers, and the terms that must be met to qualify for making such offers have to be easily accessible and clear. The Directive stipulates that marketing e-mails must be identified as such to the recipient, and it requires that companies targeting customers on-line must regularly consult national opt-out registers where they exist. When an order is placed, the service provider must acknowledge receipt quickly and by electronic means, although the Directive does not attribute any legal effect to the placing of an order or its acknowledgment. This is a matter for national law. Vendors of electronically supplied services must also collect value added tax (VAT).

Key Link: http://ec.europa.eu/internal_market/e-commerce/index_en.htm

Joint Ventures and Licensing

Joint ventures and licensed production arrangements in Austria offer U.S. firms several advantages, including free access to the European Union market, improved access to Central and Eastern European markets, reduction of transportation costs to European destinations, and high quality production. Joint ventures may be formed as companies, partnerships, or other legal entities.

Austrian companies are receptive to licensing arrangements, especially as a source of technology. Royalty and license fee payments may be freely transferred out of Austria.

In addition to the assistance offered by the U.S. Commercial Service in Vienna, U.S. firms seeking joint venture or license partners in Austria will receive valuable information from the Austrian Government’s investment organization:

Austrian Business Agency
Contact: Hans Nagl
Opernring 3
A-1010 Vienna, Austria
Tel.: (0043 1) 588 58 12
Fax: (0043 1) 586 86 59
Email: h.nagl@N0SPAM.aba.gv.at
Web: http://www.aba.gv.at

Selling to the Government

The Austrian Government adheres to the WTO (GATT) Agreement on Government Procurement. Austria’s Federal Procurement Law was amended in January 1997 to bring its procurement legislation in line with EU guidelines, particularly on services. Austria does not have Buy National laws, but as with any political decision, the economic impact of any new contract is taken into consideration. In addition, some major contracts are negotiated by invitation, and limited tenders and offset requirements are common in defense contracts. For assistance with specific tenders, please contact this office (CS Vienna) or our CS EU office in Brussels.

The EU public procurement market, including EU institutions and Member States, totals around EUR 1,600 billion per year. This market is regulated by two EU Directives which apply to contracts above certain agreed-upon thresholds. For contracts under the agreed-upon thresholds, each EU Member State has developed its own procurement law which is not regulated by the EU public procurement Directives, although the general principles of the EU Treaty regarding non-discrimination and free movement of goods apply, even below the thresholds. The two EU public procurement Directives are: Directive 2004/18 on Coordination of procedures for the award of public works, services, and supplies contracts, and Directive 2004/17 on Coordination of procedures of entities operating in the Utilities sector, which covers water, energy, transport, and postal services. Those Directives are implemented in each EU Member State’s national procurement legislation. Two Remedies Directives outline the procedures that EU Member States ought to put in place in case of violation of the EU public procurement law: Directive 89/665 on the “Coordination of the laws, Regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts” for the classic sectors, and Directive 92/13 for remedies in the utilities sector.

Two proposals for new Directives, scheduled for 2007, are under discussion by EU institutions. First, a proposal for a new Remedies Directive, which would increase the opportunity for aggrieved companies to complain in the pre-contractual period, is being discussed by the EU institutions. Second, a proposal for a Directive covering defense procurement would detail which particular less sensitive armaments will be covered by EU Directives, and which sensitive items will be exempt from the law.

Most tenders from European public contracting authorities for public supplies whose value is above the agreed-upon thresholds are open to U.S.-based companies by virtue of the WTO Government Procurement Agreement (GPA). The GPA allows U.S. firms to bid on all supplies and services and some construction work contracts, above thresholds established for EU central public contracting authorities. However, there are restrictions for U.S. suppliers in the utilities sector, both in the EU Utilities Directive and in the EU coverage of the GPA. The Utilities Directive allows EU contracting authorities in these sectors either to reject non-EU bids, where the proportion of goods originating in non-EU countries exceeds 50% of the total value of the goods constituting the tender, or to apply a 3% price difference to non-EU bids in order to give preference to the EU bid. These restrictions are applied to U.S. bidders when no reciprocal access for EU companies in the U.S. market is offered.

The website of the U.S. Mission to the EU also has a database of all European public procurement tenders that are open to U.S.-based firms by virtue of the GPA. This database is free of charge, contains on average 6,000 to 10,000 tenders, and is updated twice per week.

For more information, please see the website of the U.S. Commercial Service at the U.S. Mission to the European Union, and refer to the pages dedicated to procurement and to market research. These contain a handful of reports on EU tendering and government procurement.

Key Links: http://www.buyusa.gov/europeanunion/euopportunities.html

http://www.buyusa.gov/europeanunion/mrr.html

Distribution and Sales Channels

Austria enjoys a multitude of distribution and sales channels, including traditional wholesale distribution and retailing, catalog and e-commerce channels, direct marketing methods, franchising, joint ventures and other licensing agreements.

It may be useful to think of Austria in terms of the following five marketing or distribution areas:

1) Vienna and vicinity: This is the business and government center and the most populous part of Austria.
2) Pre-alpine provinces: These are Styria, Lower Austria, and Upper Austria, where most industrial and agricultural production takes place.
3) Alpine provinces: These are Carinthia, Tyrol, and Salzburg, which rely heavily on tourism.
4) Vorarlberg: This province in the far western Alps on the Swiss border has a small but wealthy population.
5) Burgenland: This province in the eastern flatlands of Austria is the least developed part of the country.

Many Austrian firms distribute to the neighboring markets of Central and Eastern Europe at the wholesale level, and some Austrian retail chains are beginning to build networks in those countries as well. In the same way, German and international retail giants have been building a presence in Austria over the last several years.

Selling Factors and Techniques

Possibly because of the many years of shortage during World War II and the post-war period, and certainly because of Austria’s monarchical authoritarian history, the traditional buyer-seller relationship in Austria may seem strange to the American. The customer wants or needs something and is thus at a disadvantage, while the seller, who is holding the item that the customer wants, is in a position of power. Though it is true that this traditional interpersonal part of the commercial relationship is losing its hold here as the older generations move into retirement and more sophisticated communications and competition take hold, the sense that the customer is asking a favor of the seller still persists to some degree.

Why is this information important? Because it will help U.S. firms avoid making simple mistakes when communicating with potential partners and customers. Two rules of thumb are worth remembering: First, companies should refrain from hard sell practices, which could backfire if the Austrian customer feels that the products are less desirable when the approach is so strong. And second, companies should stick to simple American friendliness and transparency, which usually make a good impression.

In addition to cultural considerations, price has become a key factor in purchasing. More and more sectors are now price-driven, a development that has accelerated with the globalization of the local economy. Where product quality and personal relationships once played a larger role in purchasing decisions, the focus has shifted increasingly to pricing and the bottom line.

Electronic Commerce

E-commerce has grown more slowly than had been expected in Austria. According to a recent study by Statistics Austria (E-Commerce 2005/2006), the branch that reports the highest percentage of Internet sales is tourism, with 7.5 percent of sales taking place via the Internet. Seventy-eight percent of Austrian companies have a website, and 98 percent use the Internet.

In 2005, 3,126 Austrian companies booked over 20.7 billion EUR in electronic sales, either on the Internet or using an alternative electronic system. The primary brake on e-commerce via the Internet is worry about payment security, legal issues, and logistical problems of product delivery.

In 2005, around 63 percent of all Austrian households had a computer, and 46 percent had Internet access. Households with Internet access tend to be younger and better educated than those without. Of all households with Internet, the split between broadband and ISDN or analog connections is almost exactly half and half.

Trade Promotion and Advertising

The economic slowdown has affected the local advertising industry, which has been shrinking since 2002, after nearly two decades of high growth. In 2005, advertising spending totaled just over EUR 2 billion ($2.6 billion). The relative distribution of advertising Euros among the various media and marketing channels has not changed much over the past 10 years.

Print media:
Daily papers, regional publications, magazines, industry publications and other print media account for more than half of all advertising spending.

Television:
TV accounts for around 22 percent of the advertising pie. It was not until 2003 that the first private non-government Austrian television network started operations. Most viewers watch one of the two state television channels. Currently, 42 percent of Austrian households also receive satellite programming, and 37 percent are hooked up to cable. Thus advertising originating from Germany is reaching Austrian consumers, and to some extent, special advertising windows directed at Austrian TV viewers are being built into cable programming.

Radio:
Radio advertising accounts for just over seven percent of advertising spending, a significant fall from the boom years of 1997 and 1998 when Austria liberalized access to radio frequencies and the first private radio stations went on the air. All currently operating private radio stations are owned by large media concerns. Austrian National Broadcasting operates several national and regional radio stations, including the national market leader.

Other advertising venues:
Direct mail accounts for around eight percent of advertising spending, and billboard advertising remains a constant feature of Austrian marketing, with around seven percent of advertising spending.

Truth in Advertising:
A Consumer Forum has been established in the Austrian Economics Ministry. The Forum is made up of representatives of political parties, business organizations, labor unions, and business associations. A subcommittee for commercial advertising examines posters and TV, radio and newspaper ads, as well as entire sales campaigns, for their truthfulness, information value, and ethnic sensitivity. The Forum can initiate proceedings against advertisers who make false claims. Anyone transgressing established commercial usage laws may be sued. The government recently lifted the regulation that prohibited comparative advertising, thus enabling advertisers to make direct comparisons between their products and services and those of their competitors.

Trade Promotion:
Annually, between 100 and 150 national and international trade fairs representing many industry sectors are organized in Austria. Most of the Austrian fairs are open to the general public and thus fulfill an advertising function. Austrian importers also attend the major European trade fairs.

General Legislation

Laws against misleading advertisements differ widely from Member State to Member State within the EU. To respond to this imperfection in the Internal Market, the Commission adopted a Directive, in force since October 1986, to establish minimum and objective criteria regarding truth in advertising. The Directive was amended in October 1997 to include comparative advertising. Under the Directive, misleading advertising is defined as any "advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which for those reasons, injures or is likely to injure a competitor." Member States can authorize even more extensive protection under their national laws. Comparative advertising, subject to certain conditions, is defined as "advertising which explicitly or by implication identifies a competitor or goods or services by a competitor." Member States can, and in some cases have, restricted misleading or comparative advertising.

The EU’s Television without Frontiers Directive lays down legislation on broadcasting activities allowed within the EU. It is currently being reviewed to adapt to advances in Internet, mobile phones, and digital TV technologies. It partially lifts regulations on advertising and product placement and proposes to ban advertising to children of food and drink. The new rules should be adopted in 2007.

Following the adoption of the 1999 Council Directive on the Sale of Consumer Goods and Associated Guarantees, product specifications, as laid down in advertising, are now considered legally binding on the seller. (For additional information on Council Directive 1999/44/EC on the Sale of Consumer Goods and Associated Guarantees, see the legal warranties and after-sales service section of 4.4, below.)

The EU adopted Directive 2005/29/EC concerning fair business practices in a further attempt to tighten up consumer protection rules. These new rules will outlaw several aggressive or deceptive marketing practices such as pyramid schemes, "liquidation sales" when a shop is not closing down, and artificially high prices as the basis for discounts in addition to other potentially misleading advertising practices. Certain rules on advertising to children are also set out.

Key Link: http://ec.europa.eu/comm/consumers/cons_int/safe_shop/fair_bus_pract/index_en.htm

Medicine

The advertising of medicinal products for human use is regulated by Council Directive 2001/83/EC. Generally speaking, the advertising of medicinal products is forbidden if market authorization has not yet been granted or if the product in question is a prescription drug. Mentioning therapeutic indications where self-medication is not suitable is not permitted, nor is the distribution of free samples to the general public. The text of the advertisement should be compatible with the characteristics listed on the product label, and should encourage rational use of the product. The advertising of medicinal products destined for professionals should contain essential characteristics of the product as well as its classification. Inducements to prescribe or supply a particular medicinal product are prohibited and the supply of free samples is restricted.

The Commission plans to present a new framework for information to patients on medicines in 2007. The framework would allow the industry to produce non-promotional information about their medicines while complying with strictly defined rules and would be subject to an effective system of control and quality assurance.

Key Link: http://ec.europa.eu/eur-lex/pri/en/oj/dat/2001/l_311/l_31120011128en00670128.pdf

Food

On July 16, 2003, the Commission adopted a proposal for a Regulation on nutrition and health claims made on foods (COM 2003/424), supplementing 2000/13/EC on the labeling, presentation, and advertising of foodstuffs. The proposal is expected to be adopted by the end of 2006. The proposed Regulation would set rules on the use of language such as "low fat” and "light," among others. The proposal seeks to harmonize the rules for making claims throughout the EU, and to establish what nutrition and health claims are allowable.

Key link: http://ec.europa.eu/comm/food/food/labelingnutrition/claims/index_en.htm

Food Supplements

Directive 2002/46/EC establishes rules relating to the labeling of food supplements and the maximum levels of vitamins and minerals in particular. In Summer 2007, the European Commission will evaluate if items other than minerals and vitamins need to be included in this Directive.

Key link: http://ec.europa.eu/food/food/labellingnutrition/supplements/index_en.htm

Tobacco

The EU Tobacco Advertising Directive bans tobacco advertising in print media, radio, Internet and sponsorship of cross-border events or activities. Advertising in cinemas and on billboards or merchandising is allowed, though these are banned in many Member States. Tobacco advertising on television has been banned in the EU since the early 1990s, and is governed by the TV Without Frontiers Directive.

Key link: http://ec.europa.eu/health/ph_determinants/life_style/Tobacco/tobacco_en.htm

Pricing

Austrian prices are among the highest in the European Union, reflecting the high cost of labor, extensive agricultural subsidies, small size of the market, and high taxes. High labor costs include the cost of social benefits such as mandatory health insurance and pension fund contributions for employees. The value-added tax (VAT) on most products and services is 20 percent and is charged at point of sale. Special taxes are levied on luxury goods, fuel, drinks, tobacco, and other items. These costs and taxes should be taken into account when pricing products for sale in Austria.

Sales Service and Customer Support

Customer service and support in the consumer industries is improving with EU integration. Starting on January 1, 2002, the basic warranty for consumer purchases was increased from six months to two years, and the burden of proof was reversed. The customer is no longer required to prove that he did not break the item; rather, the store must show that he did. Despite this improvement in the warranty rules, a customer who purchases a defective product still cannot in most cases bring it back to the store for replacement, but instead must wait weeks while the product is shipped for repair. Stores often impose more restrictive exchange policies for articles purchased on sale or with a credit card. American-style guarantees and customer service are gradually becoming more common, and publicizing them is a popular marketing tool.

Business customers demand a different level of support, and most wholesalers or distributors offer excellent support. If a part on a machine breaks, the customer will demand that it be replaced or repaired within 24 hours, which may present logistical problems for smaller U.S. suppliers who cannot warehouse replacement parts in Europe.

Conscious of the discrepancies among Member States in product labeling, language use, legal guarantee, and liability, the redress of which inevitably frustrates consumers in cross-border shopping, the EU institutions have launched a number of initiatives aimed at harmonizing national legislation. Suppliers within and outside the EU should be aware of existing and upcoming legislation affecting sales, service, and customer support.

Product Liability

Under the 1985 Directive on liability of defective products, amended in 1999, the producer is liable for damage caused by a defect in his product. The victim must prove the existence of the defect and a causal link between defect and injury (bodily as well as material). A reduction of liability of the manufacturer is granted in cases of negligence on the part of the victim.

Key link: http://ec.europa.eu/comm/consumers/cons_safe/prod_safe/defect_prod/index_en.htm

Product Safety

The 1992 General Product Safety Directive introduces a general safety requirement at the EU level to ensure that manufacturers only place safe products on the market. It was revised in 2001 to include an obligation on the producer and distributor to notify the Commission in case of a problem with a given product, provisions for its recall, the creation of a European Product Safety Network, and a ban on exports of products to third countries which are not deemed safe in the EU.

Key link: http://ec.europa.eu/comm/consumers/cons_safe/prod_safe/index_en.htm

Legal Warranties and After-sales Service

Under the 1999 Directive on the Sale of Consumer Goods and Associated Guarantees, professional sellers are required to provide a minimum two-year warranty on all consumer goods sold to consumers (natural persons acting for purposes outside their trade, businesses, or professions), as defined by the Directive. The remedies available to consumers in case of non-compliance are:

- repair of the good(s);

- replacement of the good(s);

- a price reduction; or

- rescission of the sales contract.

Key link: http://ec.europa.eu/comm/consumers/cons_int/safe_shop/guarantees/index_en.htm

Other issues pertaining to consumers’ rights and protection, such as the New Approach Directives, CE marking, quality control, and data protection, are dealt with in Chapter 5 of this report.

Protecting Your Intellectual Property

Austria is a member of all international intellectual property rights agreements. To begin the process of registering a patent in Austria or in the EU, contact the U.S. Commercial Service in Vienna (tel. (0043 1) 313 39 2243) or the Austrian Patent Office:

Oesterreichisches Patentamt
(Austrian Patent Office)
Dresdner Straße 87, 1200 Vienna, Austria
Tel. (43 1) 534-24-0
Fax. (43 1) 534-24-535
Email: info@N0SPAM.patentamt.at
Web: http://www.patentamt.at/

A list of patent attorneys is available through the Austrian Patent Attorney Chamber:

Oesterreichische Patentanwaltskammer
Museumstrasse 3
A-1070 Vienna, Austria
Tel. (43 1) 523 4382
Fax: (43 1) 523 4382-15
Email: info@N0SPAM.oepak.at
Web: http://www.patentanwalt.at

Copyright

The EU’s legislative framework for copyright protection consists of a series of Directives covering areas such as the legal protection of computer programs, the duration of protection of authors’ rights and neighboring rights, and the legal protection of databases. Almost all Member States have fully implemented the rules into national law; and the Commission is now focusing on ensuring that the framework is enforced accurately and consistently across the EU.

The on-line copyright Directive (2001/29/EC) addresses the vexing problem of protecting rights holders in the on-line environment while protecting the interests of users, ISPs, and hardware manufacturers. It guarantees authors’ exclusive reproduction rights with a single mandatory exception for technical copies (to allow caching), and an exhaustive list of other exceptions that individual Member States can select and include in national legislation. This list is meant to reflect different cultural and legal traditions, and includes private copying "on condition right holders receive fair compensation."

Key Link: http://ec.europa.eu/internal_market/copyright/index_en.htm

Patents

EU countries have a "first to file" approach to patent applications, as compared to the "first to invent" system followed in the United States. This makes early filing a top priority for innovative companies. Unfortunately it is not yet possible to file for a single EU-wide patent that would be administered and enforced like the Community Trademark (see below). For the moment the most effective way for a company to secure a patent across a range of EU national markets is to use the services of the European Patent Office (EPO) in Munich. It offers a one-stop-shop that enables rights holders to get a bundle of national patents using a single application. However these national patents have to be validated, maintained, and litigated separately in each Member State. EPO’s web site is http://www.european-patent-office.org/.

Key Link: http://ec.europa.eu/internal_market/indprop/index_en.htm

Trademarks

The EU-wide Community Trademark (CTM) can be obtained via a single language application to the Office of Harmonization in the Internal Market (OHIM) in Alicante, Spain. It lasts ten years and is renewable indefinitely. For companies looking to protect trademarks in three or more EU countries, the CTM is a more cost effective option than registering separate national trademarks. On October 1, 2004, the European Commission (EC) acceded to the World Intellectual Property Organization (WIPO) Madrid Protocol. The accession of the EC to the Madrid Protocol establishes a link between the Madrid Protocol system, administered by WIPO, and the Community Trademark system, administered by OHIM. As of October 1, 2004, Community Trademark applicants and holders are allowed to apply for international protection of their trademarks through the filing of an international application under the Madrid Protocol. Conversely, holders of international registrations under the Madrid Protocol will be entitled to apply for protection of their trademarks under the Community Trademark system.

Key Links: http://oami.eu.int/en/default.htm

http://www.wipo.int/madrid/en

Designs

The EU adopted a Regulation introducing a single Community system for the protection of designs in December 2001. The Regulation provides for two types of design protection, directly applicable in each EU Member State: the registered Community design and the unregistered Community design. Under the registered Community design system, holders of eligible designs can use an inexpensive procedure to register them with the EU’s Office for Harmonization in the Internal Market (OHIM), based in Alicante, Spain. They will then be granted exclusive rights to use the designs anywhere in the EU for up to twenty-five years. Unregistered Community designs that meet the Regulation’s requirements are automatically protected for three years from the date of disclosure of the design to the public.

Key Link: http://oami.eu.int/en/design/default.htm

Trademark Exhaustion

Within the EU, the rights conferred on trademark holders are subject to the principle of "exhaustion." Exhaustion means that once trademark holders have placed their product on the market in one Member State, they lose the right to prevent the resale of that product in another EU country. This has led to an increase in the practice of so-called "parallel importing" whereby goods bought in one Member State are sold in another by third parties unaffiliated with the manufacturer. Parallel trade is particularly problematic for the research-based pharmaceutical industry where drug prices vary from country to country due to national price regulation. Community wide exhaustion is spelled out in the Directive on harmonizing trademark laws. In a paper published in 2003, the Commission indicated that it had no plans to propose changes to existing legal provisions.

Key Link: http://ec.europa.eu/internal_market/indprop/tm/index_en.htm

Due Diligence

The Austrian economy is highly regulated, which means that there are checks and controls against fraud, though they do not stop all fraudulent activity. Due diligence is necessary, as it is anywhere. Basic information on a company, such as confirmation of registration, and confirmation that no bankruptcy proceedings are in process, is available from official and semi-official sources. More extensive commercial background checks on a company can be obtained through private sector resources. Please contact this office(CS Vienna)for assistance.

Local Professional Services

The same professional services that are available in other highly developed market economies are readily available locally in Austria. Business service providers known to this office (CS Vienna) are offered an online listing on the U.S. Commercial Service website. The website is a good source for such service providers.

A wide variety of service providers is available to support U.S. companies doing business in the European Union (EU), from the largest global firms to small niche players. The U.S. Commercial Service EU website (see below) lists various professional service providers and additional information is available upon request.

Key link: http://www.buyusa.gov/europeanunion/services.html

Also, see EU Member State Country Commercial Guides which can be found at the following website: http://www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=no

Web Resources

There are innumerable web resources available in Austria, some of which have some English content. Here is a small sampling of sites:

http://www.buyusa.gov/austria/en -- The website of the U.S. Commercial Service in Vienna, containing market research on Austria in English, as well as contact points, a list of business service providers, and information on CS services.

http://portal.wko.at -- The website of the Austrian Federal Economic Chamber, containing information on the Chamber and contact points in German, and basic information in English.

http://www.virtualvienna.net -- A website in English designed for expatriates living in Austria and for prospective transferees to Austria, introducing the reader to life in Austria.

http://www.austria.org -- The official Austrian government source of information on Austria for readers in the United States.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31986L0653:EN:HTML -- EC Directive on Commercial Agents

http://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/c_368/c_36820011222en00130015.pdf --Guidelines on “Vertical Agreements”

http://ec.europa.eu/comm/enterprise/regulation/late_payments/ -- EC Directive on Late Payments

http://ec.europa.eu/justice_home/fsj/privacy/law/index_en.htm -- EC on Data Protection

http://www.export.gov/safeharbor/ -- Safe Harbor

http://ec.europa.eu/justice_home/fsj/privacy/modelcontracts/index_en.htm -- Model contracts for the transfer of personal data

http://ec.europa.eu/consumers/cons_int/safe_shop/index_en.htm -- Ensuring safe shopping across the EU

http://ec.europa.eu/consumers/cons_int/fina_serv/index_en.htm -- Financial services

http://ec.europa.eu/internal_market/e-commerce/index_en.htm -- Electronic commerce

http://www.buyusa.gov/europeanunion/eu_tenders.html -- European public procurement tenders open to U.S. companies

http://www.buyusa.gov/europeanunion/euopportunities.html -- Procurement