The Private Competition Enforcement Review

Author:Mr Bernhard Lauterburg and Philipp E. Zurkinden
Profession:Prager Dreifuss
 
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I OVERVIEW OF RECENT PRIVATE ANTITRUST LITIGATION ACTIVITY

Civil antitrust litigation remains limited in Switzerland. Since the enactment of the Act on Cartels and Other Restraints of Competition (the ACart) in 1995, only roughly 50 cases are known to have been brought before the civil courts.2 The bulk in the enforcement of antitrust and competition law largely rests upon the competition authorities. The reasons for this lack of private competition law enforcement are manifold.

First, it seems more appealing for an aggrieved party to file a complaint with the competition authorities, rather than bearing the burden of proof in a civil proceeding. Unlike claimants in private enforcement proceedings who regularly face evidentiary difficulties, the competition authorities may compel the production of evidence. However, if (e.g., for discovery reasons) the claimant opts to file a complaint with the competition authorities, the claimant should be aware that his or her civil claim may become timebarred (see Section X, infra), an issue that shall be resolved with the current revision of the ACart. Also, an aggrieved party filing a complaint with the competition authority normally is not subject to costs, unlike in a civil proceeding. Moreover, upstream market participants may regularly pass on an overcharge incurred as a result of a cartel or other infringement of antitrust law to downstream market participants and therefore sustain no damage in the legal sense. 3

Finally, according to the current majority view among Swiss legal scholars, consumers do not have standing under the ACart. Thus, an entire group of persons that may be potentially harmed by an unlawful restraint of competition is precluded from seeking damages pursuant to the rules set forth in the ACart. 4

Since the last report, only one civil antitrust case has come to our attention. On 23 August 2013, the Supreme Court of the Canton of Zug rejected a motion by a former Renault car dealer against a Renault primary partner to be admitted to Renault's aftersales market. An earlier sales and service agreement was validly terminated and the former car dealer argued that the legislative framework in Switzerland would entitle it to admission to the Renault selective aftersales market and that its rejection amounted to an abuse of dominance. Pursuant to the Competition Commission's guidelines on the Motor Vehicle Notice, all motor vehicle suppliers must organise their aftersales market (i.e., repair market) in a selective distribution system based solely on qualitative criteria. Hence, all independent repairers satisfying these criteria must be admitted to the supplier's repair market. 5 In the instant case, the plaintiff failed to show that it satisfied the admission criteria. Moreover, given that (1) the plaintiff did not satisfy the selective criteria at the time the previous and terminated contract was in effect; and (2) the new contract would now require full compliance with these criteria, the refusal to admit the car dealer to the distributors did not constitute abuse. Given this outcome, the court did not have to examine whether the respondent had a dominant market position. 6

Civil antitrust litigation may increase after the envisaged amendments to the ACart become effective; however, to date it is unclear whether the government's proposal (see Section XV, infra) will be adopted by Parliament. The government's proposal was submitted to Parliament on 22 February 2012. The Council of States discussed the government's proposal and adopted it with no changes on 21 March 2013 as far as it concerned private enforcement (changes were made with respect to the substantive antitrust provisions). The National Council rejected consideration of the proposal and referred it back to the Council of States for reconsideration.

II GENERAL INTRODUCTION TO THE LEGISLATIVE FRAMEWORK FOR PRIVATE ANTITRUST ENFORCEMENT

Unlawful restraints of competition may be prosecuted under both civil and administrative law. While every person may file an administrative complaint with the competition authorities, only persons who are impeded from entering or competing in a market by an unlawful restraint of competition may seek civil remedies such as damages and injunctions. Thus, according to a majority view, consumers who may be affected by an unlawful restraint of competition are not entitled to seek damages in civil courts based on the ACart, and therefore may only initiate an investigation by the authorities, while competitors and market entrants may opt for both civil and administrative enforcement of antitrust regulation.

The competition authorities have significant discretion regarding whether to open an investigation. The ratio legis for the ACart was primarily the protection of the principle of competition. Only on a secondary level does the ACart serve to protect individual interests. Accordingly, if public interests do not outweigh the private interests of the complainant, the competition authorities are unlikely to initiate formal proceedings and will refer the claimant to the civil courts.

Domestic antitrust claims before civil courts in Switzerland are governed by Articles 12 to 17 of the ACart (Articles 14, 16 and 17 of the ACart were repealed with effect from 1 January 2011 by the Civil Procedure Code (CPC)). Article 12 ACart sets forth the remedies that are available to a claimant, these being the elimination of the hindrance, or requiring defendants to desist from it, damages and satisfaction or the surrender of unlawfully earned profits. Article 13 ACart governs the enforcement of cease-and-desist orders and Article 15 ACart stipulates an obligation for the civil courts to refer questions on the lawfulness of a restraint of competition to the Competition Commission. 7 If the context of the antitrust litigation is international, the applicable substantive law is determined by Article 137(1) of the Act on Private International Law (PILA), which provides that the applicable law shall be the law of the country in which the restraint of competition has a direct effect on the claimant.

In domestic antitrust cases, the venue for a civil proceeding is governed by the CPC, according to which the case shall be heard by the competent court at the place of business of the claimant or the respondent. The claim may also be brought at the place where the restraint of competition occurred or took effect (Article 36 CPC). 8 In international cases, the venue is determined by Articles 2 and 5 of the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the Lugano Convention), or by Article 129 PILA if the Convention is not applicable. Both the Lugano Convention and PILA provide for the same venues as the CPC, except for the place of business of the claimant, which is not available in international contexts.

The CPC requires each canton to designate a court that shall act as the sole cantonal authority to hear claims with respect to antitrust law in its territory (Article 5(1)(b) CPC). In those cantons that have established a commercial court, notably the cantons of Aargau, Berne, Saint Gall and Zurich, civil antitrust disputes must be brought before the respective commercial courts. The judgments of the commercial courts may be appealed against to the Federal Supreme Court. A party seeking to initiate civil antitrust proceedings must file a detailed statement of claim with the competent court, which will then serve process on the respondent and set a deadline for filing a statement of defence. If the court considers it necessary, it may order the parties to file a reply and a rejoinder respectively, particularly if a party raises new facts. Frequently, courts encourage the parties to hold settlement talks under their guidance, and in this context may give an indication on their preliminary view of the case and the legal assessment.

The recognition and enforcement of foreign judgments is subject to the Lugano Convention and the PILA. Serving process in foreign proceedings is subject to the applicable domestic rules, the 1954 Convention on Civil Procedure and the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, to which Switzerland is a contracting party.

A civil antitrust proceeding based on the ACart is subject to the same substantive rules as an administrative proceeding conducted by the competition...

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