National state aid control - competent authorities
1. Which national authority or body is responsible for the oversight of state aid in your country, in particular the identification of new aid measures and their notification to the European Commission, the monitoring of existing aid measures for compliance with EU state aid rules and decisions, the submission of annual reports on existing aid schemes to the European Commission and cooperation more generally with the European Commission on state aid matters?
Switzerland is not a member state of the European Union and has no specific legislation regarding state aid. However, the absence of comparable legislation in this field of law does not mean that state aid could be granted at discretion. In particular, state aid that could distort competition in Switzerland could be caught by public law meant to provide a fair and competitive level playing field, especially with regard to state-owned companies. Further, Swiss competition law might be applicable to a limited extent.
First, with regard to the internal market, Switzerland and the European Community concluded a bilateral agreement on air transport (ATA). The ATA provides rules concerning state aid, which have been drafted along the lines of articles 107–109 of the Treaty on the Functioning of the European Union (TFEU). These rules introduced de lege state aid control in Switzerland by way of an international treaty in an important economic sector. Moreover, the free trade agreement (FTA) concluded in 1972 between Switzerland and the European Community incorporated a general rule regarding state aid. Article 23(1)(iii) of the FTA provides that any state aid that could distort competition in promoting certain undertakings or certain branches of production is incompatible with the FTA. However, this provision proves problematic. On the one hand, it does not define the consequences of a violation. On the other hand, the Federal Supreme Court provided a very restrictive interpretation of the FTA in its early case law. Therefore, in practice, article 23(1)(iii) of the FTA did not introduce state aid control legislation in Switzerland.
Second, in Swiss national legislation, two sets of rules limit the ability of public authorities to provide aid for undertakings. The first set of rules, the Law on Subsidies (LSub), ensures that financial aid and compensation from the state may only be granted under certain conditions. Under the LSub, financial aid means advantages with a monetary value that are granted to recipients outside the Federal Administration to assist the fulfilment or continuation of a task chosen by the recipient. Payments are made to such recipients to reduce or compensate for financial burdens that arise from fulfilling this task to the extent that it conforms with a public task – eg, farmers are granted subsidies for the preservation of the countryside, a public task, if they fulfil certain conditions when farming, which is their chosen task. Two specific sets of conditions have a connection with state aid rules. Based on the first set of conditions, financial aid and compensation may only be granted when they are able to fulfil their goal in an efficient and economic manner. Moreover, they must be uniformly and fairly attributed. No court has yet had to deal with this first set of conditions. The second set of conditions requires that Swiss authorities respect the principle of neutrality in competition (also called competitive neutrality). This principle is guaranteed by article 94 of the Federal Constitution. Economically, the principle of neutrality in competition is based on similar grounds as state aid legislation. In Switzerland this principle plays an important role in providing a fair and competitive level playing field: it prevents public entities from supporting specific companies, for example, public-owned companies, at the expense of other competitors. Violations of this principle may generally be challenged before the Federal Supreme Court.
Third, in recent cases, the Swiss competition law has begun to play a limited role with regard to state aid. The Swiss Competition Commission (COMCO), in informal proceedings, has taken the view that a state-owned entity may infringe the rules applicable for market dominant enterprises if it cross-subsidises its activities on the free market with its activities on a market for which it has been attributed a monopoly. However, this view of the COMCO has not been tested in court.
Fourth, the Swiss Federal Court, in a decision of 22 May 2017, has withdrawn the award of a contract granted to a public entity, ie, the University of Zurich, in a public tender because this public entity cross-subsidised the low price offered in the tender procedure from other services for which it received subsidies and, thereby, infringed the principle of competitive neutrality.
Since Switzerland has no specific legislation regarding state aid, no authority is explicitly empowered to enforce state aid rules at national level, except in the air transport sector.
In the air transport sector, according to the ATA and the national legislation on civil aviation (LCA), the COMCO is responsible for overseeing compliance with state aid rules. To review potentially unlawful state aid measures, the COMCO acts independently of the executive body and of the other administrative entities. The COMCO has, however, no competence to directly intervene on state aid grounds. The LCA only provides that decision-making authorities shall take into account the result of the review. This constitutes an important difference compared with the European Commission. According to the ATA, Swiss authorities shall constantly monitor all systems of aid existing in Switzerland and ensure that the European Union is informed of any procedure initiated to guarantee respect of the state aid rules governing air transport. The European Union also has the right to submit observations before any final decision is taken. Upon request, it may refer the matter to a Joint Committee, which shall discuss any appropriate measures required by the purpose and functioning of the ATA. The Joint Committee is established by the ATA and is composed of representatives of the European Union and Switzerland. Its purpose is to ensure proper implementation of the ATA. It can make recommendations and decisions in the cases provided for in the ATA, including state aid cases. So far, the COMCO has never dealt with such a state aid case in the air transport sector.
2. Does any authority monitor the national legislative process to identify potential aid measures? Does this independent authority have sufficient powers to prevent the legislature or government from adopting aid measures that do not comply with EU state aid rules?
In principle, the legal services of the government preparing a new law have to assure its compliance with the Federal Constitution, including the principle of neutrality. However, due to the separation of powers, they cannot coerce the parliament to adhere to the principle of neutrality or other constitutional principles. There is no independent, central authority monitoring the national legislative process to identify potential aid measures.
3. What are the competences of the national authority responsible for state aid control, and what is the legal basis for these powers in domestic law? Does this authority have the power to grant interim measures in addition to any interim relief that may be available in the national courts?
There is no centralised state aid control in Switzerland. If an authority is competent to decide on questions of state aid (see question 1), the general rules of Swiss administrative law apply. Generally, parties to administrative proceedings are obliged to cooperate with the authority and have to provide all information requested. The authorities can impose interim measures if a serious disadvantage might arise without interim measure and (cumulatively) if there is an urgency to take the interim measure.
Enforcement of decisions follows the general rules of administrative law. Obligations to pay money are enforced in debt enforcement proceedings. All other obligations are enforced, as the case may be, by direct coercion, execution by substitution or criminal prosecution.
4. Aside from the role played by the European Commission and national courts in enforcing EU state aid rules, does the national authority responsible for state aid control accept complaints made by competitors, other interested parties, or other third parties regarding potentially unlawful and incompatible aid measures?
In Switzerland the opportunity for competitors or other interested parties to file a complaint is governed by the general rules regarding legal standing (see question 22). State aid measures constitute no exception. Customer organisations only have a right to legal standing if a specific law provides for such a right. At present, there is no such law in the area of state aid.
In a recent case, competitors of a state-owned public company challenged the amendment of a cantonal act directly before the Federal Supreme Court. The competitors claimed that the amendment would distort competition in favour of the state-owned company. In this case the Federal Supreme Court approved the legal standing of the competitors and decided the case on its merits. Competitors could also file a complaint with the COMCO. In two recent cases, the COMCO opened informal proceedings that lead to an amicable settlement with the state-owned companies. However, according to the prevailing doctrine, there are no means for competitors to compel the COMCO to open proceedings.
Limitation rules apply based on the general rules of administrative law. For example, the deadline to appeal against a new law infringing the principle of neutrality in competition expires 30 days after publication of this law. Complaints to the COMCO can be made any time.
5. Does the national authority responsible for state aid regularly cooperate or exchange information with the state aid authorities in other member states? If so, are there formal structures to facilitate this cooperation and information exchange, or does this occur on a purely ad hoc basis?
6. Which body represents your country in state aid proceedings before the EU courts?
7. Is there a national register or other central source of data on national aid measures? Are the various state aid reports, complaints, decisions, etc, published?
There is no national register or other central source of data on national state aid measures available.The Federal Finance Administration, however, publishes on a non-comprehensive basis on its website details regarding approximately 300 federal subsidies as well as the overall expenditure and general allocation of the federal subsidies.
Decisions of administrative bodies, the COMCO or the courts are often published on the websites of the deciding body.