In Switzerland, competition law is governed by the Federal Act on Cartels and other Restraints of Competition (the Cartel Act) of 6 October 1995. The regulatory framework is complemented by numerous federal ordinances and general notices, as well as communications of the Federal Competition Commission (COMCO).
Amendment of the notice on the Competition Law Treatment of Vertical Agreements (Verticals Notice)
In light of the Gaba landmark decision (see below) of the Federal Supreme Court (FSC), officials of the authority have announced that COMCO will amend the Verticals Notice to reflect the new decision.
Prohibition of price differentiations (the Altherr parliamentary initiative)
Because the strong Swiss currency challenges export-oriented companies and the tourist industry, a committee for ‘fair import prices' proposed the introduction of the concept of relative market power into the Cartel Act. The rules of conduct that apply to dominant undertakings would also be applicable to undertakings that are not dominant, but only ‘relatively dominant'. According to the committee, this measure would prevent international companies from selling branded goods, raw and input materials, and preliminary products at higher prices in Switzerland than abroad. The committees of the Council of States and the National Council have approved the parliamentary initiative and are now going to draft a proposal for a new legislation. Further discussions will be held in the second quarter of 2017. It is very doubtful whether the proposed amendments of the Cartel Act could effectively address the concerns of the committee for fair import prices. It is especially not clear whether potential COMCO decisions could be enforced outside Switzerland.
Prohibition of price differentiation (the ‘fair price' people initiative)
Like the Altherr parliamentary initiative, the ‘fair price' initiative aims to crack the ‘Swiss island of high prices'. The people initiative was launched in September 2016. The collection of signatures is still in progress and will end in 2018. The initiative proposes to introduce an obligation for entities based outside of Switzerland to sell products and services to Switzerland-based customers at the same prices as they sell such products and services to local customers. Like the Altherr parliamentary initiative it also proposes to introduce the concept of relative market power into Swiss law. Furthermore, it aims to protect non-discriminatory online sales. Regarding the suitability of the proposed initiative to reach the declared goals, the same concerns as for the Altherr parliamentary initiative apply. It is very doubtful whether the implementation of the initiative would protect Swiss consumers or help Swiss companies to compete on an international level. However, it is clear that this proposition would increase antitrust compliance costs for medium-sized and even small companies.
Modernisation of merger control regulation
On 22 June 2016 the Federal Council decided to take steps towards modernising the merger control regulation. The Federal Council is of the opinion that the negative and positive effects of a merger are given too little consideration. According to the current substantive test a merger can only be blocked if it would create or strengthen a dominant position that could lead to the elimination of effective competition. Compared to the Significant Impediment to Effective Competition (SIEC) Test of the European Union, the threshold to block a merger or to impose obligations and conditions of the Swiss merger control regulation is very high. Therefore, the Federal Council proposes to replace this threshold by the SIEC-Test.
The Swisscom subsidiary Cinetrade held long-term exclusive rights regarding the broadcast of sports content on Swiss pay-TV since 2006. In 2011, the exclusive rights were renewed for another five-year period. In a ruling released on 9 May 2016 the COMCO concluded that Swisscom has abused its dominant position on the pay-TV market for the live broadcasting of games of the Swiss football and ice hockey leagues as well as of certain foreign football leagues. Therefore, COMCO imposed a fine in the amount of approximately 72 million Swiss francs. COMCO stated that the full or partial refusal to supply rival TV platform operators with live sports content constituted an abuse of dominance. Furthermore, Swisscom's practice to only allow the competing platform operators to offer their customers the sports content in a bundle with a basic subscription of Swisscom's own pay-TV offering was qualified as an abuse of market dominance as well. The decision of COMCO is now subject of an appeal before the Federal Administrative Court (FAC). On 30 May 2017 COMCO announced that it had initiated an investigation against UPC Switzerland GmbH, which belongs to the Global Liberty Group. UPC has in the meantime acquired the exclusive TV broadcasting rights of the Swiss Ice Hockey Federation for five seasons. Because UPC has announced to commercialise this content only on its own pay-TV channel, My Sports, and refuses to supply Swisscom's TV platform, a new procedure started with opposite roles: UPC, who has initiated the first investigation against Swisscom, is now confronted with abuse allegations.
General Electric Company (GE)
COMCO approved an amicable settlement with GE and its subsidiaries in a decision released on 23 May 2016. The settlement was concluded after a voluntary report by GE itself had led to the opening of an investigation related to the prevention of direct imports of GE ultrasound scanners from abroad into Switzerland. The investigation revealed that there were unlawful agreements affecting competition between GE Healthcare (Germany) and its sales partners. In the amicable settlement GE agreed not to impede the passive sales of German dealers to their Swiss customers in the future. In addition, GE agreed to adapt and clarify the wording of its existing contracts with the German dealers. Since GE assisted in the discovery of the restraint of competition, COMCO did not impose any fine on GE.
Road construction and engineering companies in the districts of See-Gaster, March and Höfe
On 8 July 2016, COMCO imposed fines on eight road construction and engineering companies amounting to a total of around 5 million Swiss francs. COMCO was of the view that ‘market assessment meetings' had been held regularly until mid-2009 to discuss and share the tenders among the involved companies. In case the companies agreed on which company would be awarded a project, the other companies would submit bids offering their services at higher prices. COMCO considered this bid rigging behaviour as especially harmful and a serious breach of the Cartel Act. Several companies have challenged the decision before the FAC.
Commercialisation of electronic medical information
In its ruling dated 19 December 2016, COMCO imposed fines on Galenica AG and HCI Solutions AG amounting to 4.5 million Swiss francs. COMCO concluded that HCI Solutions AG had prevented competitors from accessing the market (exclusionary abuse) and had made their commercial partners accept combinations of services (tying). However, from the six different conducts the Secretariat of COMCO investigated, COMCO has only qualified two of them as being abusive. It especially dropped the excessive pricing allegation. The decision is now pending before the FAC.
LIBOR manipulation proceedings
On 2 February 2012, COMCO opened an investigation into 21 parties, 16 banks and five brokers. COMCO has later split the investigation into five different procedures. The first seven rulings in relation to these investigations were reported on 21 December 2016:
- Swiss franc LIBOR: An amicable settlement and sanctions were approved; the case against the brokers was abandoned.
- Bid-ask spreads based on Swiss franc-interest rate derivatives: an amicable settlement and sanctions were approved.
- EURIBOR: An amicable settlement with the parties that have settled with the European Commission has been approved. Proceedings are continuing against several other parties.
- Yen LIBOR/Euroyen TIBOR: An amicable settlement with the parties that have also settled with the European Commission was approved. The case against the Japanese banks was abandoned. The proceedings are continuing against several parties.
- The Yen TIBOR case was abandoned against all involved parties.
In total, COMCO's sanctions amounted to 99. 1 million Swiss francs. Two of the five cases - the EURIBOR case and the Yen LIBOR Euroyen TIBOR case - are continuing.
Ticketcorner and Starticket
On 23 May 2017, COMCO released a public statement about its prohibition of the merger between Ticketcorner and Starticket. Both undertakings distribute tickets for concerts and shows, advertise on different channels and provide software solutions for the direct sale of tickets. If the merger were cleared, Starticket would have become wholly owned by Ticketcorner. COMCO reasoned Ticketcorner may have a dominant position in the market of the distribution of tickets by third parties and the merger would have enabled the new entity to strengthen its dominance and would have eliminated effective competition. COMCO stated that the actual and potential competitors such as Spotify, Google and Facebook could not have exerted sufficient competitive pressure on the new entity and there were no suitable obligations that could be imposed to safeguard effective competition. This is only the second merger COMCO has prohibited since the merger control regulation was introduced in Swiss law in 1996. The decision has not been published yet and may be appealed to the FAC.
The FAC essentially rejected the appeal of Nikon AG (Switzerland) against the decision of the COMCO in its judgment dated 16 September 2016. It reduced the imposed sanction of around 12.5 million Swiss Francs by 0.5 million Swiss Francs stating COMCO had made an error in its assessment. The FAC confirmed that the Swiss branch of Nikon had prevented the parallel import of Nikon products into Switzerland. This behaviour was considered a significant restriction of effective competition. The reasoning partly relied on the Gaba/Elmex decision of the FSC and no quantitative effects were evaluated. The decision is now legally binding.
In a ruling dated 24 November 2016, the FAC has set aside a decision of COMCO in the Hallenstadion/Ticketcorner case and remitted the matter to COMCO for a reassessment. The case goes back to 2009 where competitors of the ticketing provider Ticketcorner AG had reported to COMCO about an alleged anti-competitive behaviour. In particular, they complained about an agreement between Ticketcorner and the Hallenstadion concerning their cooperation relating to ticket sales for events that take place in the Hallenstadion. On the basis of this ticketing cooperation agreement, the Hallenstadion had to oblige the organisers of public events in the Hallenstadion to sell at least 50% of the tickets via Ticketcorner. However, the COMCO did not see any breach of competition law in the reported behaviour and therefore closed the proceedings in 2011. Several competitors appealed against the ruling. On 5 June 2013, the FSC ultimately confirmed the appellants right to appeal and referred the case back to the FAC. The court stressed that there is sufficient evidence that: (i) the ticketing cooperation agreement constitutes an anticompetitive agreement; (ii) the application of the ticketing clause by the Hallenstadion is an abuse of the market; and (iii) the enforcement of an obligation to conclude a ticket sales contract by the organisers constitutes conduct in abuse of the dominant position by Ticketcorner.
In the Gaba/Elmex case, the FSC rejected an appeal against the judgement of the FAC on 28 June 2016. The reasoning of this landmark decision was published on 21 April 2017. In its decision the FSC confirmed the fines of 4.8 million Swiss Francs against Colgate-Palmolive Europe Sàrl (former Gaba International AG) and 10,000 Swiss Francs against its Austrian licensee Gebro Pharma LLC. Gebro had been granted a licence to produce and distribute Elmex toothpaste in Austria by Gaba. According to COMCO this agreement prohibited Gebro from exporting the toothpaste from Austria to Switzerland. COMCO therefore qualified the respective clause as a ban on passive sales within the meaning of article 5 paragraph 4 of the Cartel Act
The decision of the FSC has been long awaited because there was uncertainty about the interpretation of the significance criterion within the meaning of article 5 paragraph 1 of the Cartel Act. Whereas one part of the doctrine was of the opinion that price-fixing, market-allocating and quantity-limiting agreements (article 5 paragraph 3 and 4 of the Cartel Act) are significant competition restraints by their very nature, the other part was of the opinion that such agreements are only significant if they actually have an appreciable effect on competition in Switzerland which has to be measured by quantitative aspects such as market shares of the involved undertakings. The FSC states that an agreement that is caught by one of the presumptions contained in article 5 paragraphs 3 and 4 of the Cartel Act has ‘in principle' or ‘as a general rule' to be regarded as significant even if the presumption of the elimination of competition can be rebutted. The decision does not seem to accept that there is any room for a de minimis/cases of minor importance exemption. The court stated that in ‘presumption-cases' it is not even necessary to define the relevant market because the proof that an agreement had an effect on competition is not required.
Another key point of the decision was the geographical scope of the Swiss Cartel Act (effects-doctrine). The Supreme Court stated that it is sufficient if a behaviour outside of Switzerland has a ‘potential' or ‘possible' effect on the Swiss market. COMCO is not required to demonstrate that such effect has a certain intensity. The FSC has a very broad understanding of the effects doctrine: the authority only has to verify whether a certain anticompetitive behaviour has a potential effect on Swiss markets, it does not need to prove that the behaviour has an actual or real impact.
Additionally, there were contradictory statements regarding the impact of EU law. On the one hand, the FSC stated that the legislator had the intention to create parallelism between Swiss and EU law. On the other hand, the FSC refused to apply the principles contained in the European Technology Transfer Block Exemption Regulation (EU TTBER) by arguing the legislator did not intend to establish parallelism in the area of technology transfer/licence agreements.
In conclusion, the application of this ruling could influence the drafting of various types of contracts and may have an impact on agreements that originate outside of Switzerland (eg, export bans in contracts without the involvement of any Swiss entity would qualify as an agreement within the meaning of article 5 paragraph 4 of the Cartel Act and could be sanctioned by COMCO although such contracts had no impact on Swiss markets).