Swiss Competition Law Overview

Author:Mr Silvio Venturi
Profession:Tavernier Tschanz

I. Sources

Main legislation. The main sources of Swiss competition law are the Act of 6th October, 1995 on Cartels and Other Restraints of Competition (the Competition Act) and the Regulation of 17th June, 1996 on the control of concentrations between companies (the Merger Regulation).

The Competition Act applies to restrictive practices whose effects are felt on the Swiss market, irrespective of whether such practices originate in another country or whether the undertakings concerned have no subsidiaries, branches or affiliated companies in Switzerland. Foreign-to-foreign mergers are deemed to have effects on the Swiss market where the thresholds provided by the Competition Act are reached.

The Competition Act does not apply where goods or services are excluded from competition under public law provisions or where restraints of competition result solely from the exercise of intellectual property rights. These exclusions are, however, applied restrictively by the Federal Competition Commission (FCC).

Secondary legislation and guidance. The Federal Council can adopt Regulations establishing terms and conditions under which certain agreements are "as a general rule" justified on grounds of economic efficiency. The FCC can adopt communications relating to such agreements.

While no regulations have been adopted as yet, except a regulation on fees, the FCC has begun issuing communications (see FCC Communication of 4th May, 1998 on the use of tariff structures). While regulations will have legislative authority, communications provide non-compulsory guidance on the application of the law.

EU law. The Competition Act is clearly inspired by EU law. Like EU law, it focuses on anti-competitive agreements and practices, abuses of a dominant position and control of concentrations between undertakings.

Swiss competition rules apply to restrictions on competition and concentrations, which have an effect on the Swiss market, irrespective of where the undertakings concerned are located. As Switzerland is neither an EU nor an EEA member state, Swiss competition rules apply even if a situation has an EU or an EEA dimension and is simultaneously regulated by EU or EEA laws.

Switzerland concluded a Free Trade Agreement with the EC which entered into force in 1973. According to this agreement, each contracting party may submit competition issues to a mixed committee and provide it with all information and assistance needed to examine the alleged infringement. Outside the scope of the Free Trade Agreement, there is (should be) no further cooperation between the EC and the Swiss authorities in competition matters.

II. Cartels/Unlawful Agreements

Cartels may consist of binding or non-binding arrangements (including gentlemen's agreements) or of concerted practices (e.g., parallel behaviour resulting from information exchanges) where the object or effect is to restrict competition. A known and deliberate common action of the undertakings is needed. Arrangements may be created among companies belonging to the same market level (horizontal agreements) or to different market levels (vertical agreements). The notion of cartel also encompasses agreements between associations of companies, for example, trade associations.

Swiss competition rules address the issue of restrictions on competition only to the extent that such restrictions significantly impede or eliminate competition. Cartels which only slightly impede competition are allowed. The rules depend on whether the disputed agreement merely restricts competition or eliminates it entirely. When determining the effects of cartels on competition, the internal competition (in other words, the competition between the companies concerned) and the external competition (the competition between the companies concerned and other market operators) are taken into account.

The significance of the adverse effect on competition depends on the competitive elements affected in light of the characteristics of the relevant market. The significance of the restraint is to be assessed in qualitative rather than quantitative terms. Consequently, a restraint may be significant even if it occurs in a very limited geographical market (e.g., a restraint affecting prices).

Cartels will be prohibited as being incompatible with competition rules where they appreciably restrict competition, unless they can be justified on grounds of economic efficiency (see below "Exemptions").

Cartels are further prohibited when they eliminate workable competition. Whenever this is the case, a cartel cannot be justified on grounds of economic efficiency. Horizontal agreements between competing companies are deemed to eliminate competition whenever, either:

They directly or indirectly fix prices (for example, agreements on discounts; tariffs fixed by professional associations, including non binding recommended prices if they are followed by the associations' members).

They limit the production, the sale or the purchase of goods or services (for example, quotas or a boycott).

They result in the creation of market sharing (for example, geographical market sharing or allocation of customers).

The above presumptions may, however, be rebutted by demonstrating that internal or external competition still exists despite the cartel. The presumptions are important from a procedural point of view in that they enable the FCC to render decisions without conducting an in-depth analysis of the market. The FCC only needs to prove the facts underlying the presumptions.

Retail price maintenance. A horizontal agreement, where suppliers agree to operate a...

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