1 The Legislative Framework of the Cartel Prohibition

1.1 What is the legal basis and general nature of the cartel prohibition, e.g. is it civil and/or criminal?

The legal bases of the cartel prohibition are Articles 4(1) and 5 of the Federal Act on Cartels and other Restraints of Competition of 6 October 1995 (CA), the equivalent to Article 101 of the Treaty on the Functioning of the European Union. The basis for fines is Article 49a CA. The Ordinance on Sanctions imposed for Unlawful Restraints of Competition of 12 March 2004 regulates details regarding the imposition of fines.

The legal nature of the Swiss cartel prohibition is civil/ administrative.

1.2 What are the specific substantive provisions for the cartel prohibition?

Article 4(1) CA defines the notion of "arrangements affecting competition" as binding or non-binding agreements and concerted practices between undertakings operating at the same or at different levels of trade which have a restraint of competition as their object or effect. In the past years, the Competition Commission (ComCo) has increasingly resorted to the notion of an "overall arrangement" to capture several infringements in one overall infringement. This notion resembles the single and continuous infringement in the EU case law; its contours are, however, less clear.

Article 5(3) CA presumes that arrangements between actual or potential competitors (a) to directly or indirectly fix prices, (b) to limit the quantities of goods or services to be produced, purchased or supplied, and/or (c) to allocate markets, geographically or according to trading partners, in order to eliminate effective competition.

Furthermore, Article 5(4) CA presumes that two kinds of vertical arrangements presumptively eliminate competition: (a) arrangements regarding fixed or minimum resale prices; and/or (b) arrangements regarding the restriction of passive sales. The presumption of elimination of effective competition can be rebutted. However, according to the practice of the Federal Supreme Court, arrangements within the meaning of Articles 5(3) or (4) CA are generally significant restrictions of competition. To be lawful, such arrangements must be justified on grounds of economic efficiency. Arrangements are justified on grounds of economic efficiency if: (a) they are necessary to reduce production or distribution costs, improve products or production processes, promote research into or dissemination of technical or professional know-how, or exploit resources more rationally; and (b) they will, under no circumstances, enable the parties involved to eliminate effective competition.

1.3 Who enforces the cartel prohibition?

The cartel prohibition is primarily enforced by ComCo and its Secretariat (the investigate body of ComCo). Civil courts may also enforce the cartel prohibition, but they have no power to impose fines. ComCo's decisions are subject to judicial review by the Federal Administrative Court and the Federal Supreme Court.

1.4 What are the basic procedural steps between the opening of an investigation and the imposition of sanctions?

Some investigations are opened after the Secretariat has conducted a preliminary investigation. A preliminary investigation is a procedure in which the Secretariat investigates whether the case is worth being pursued in a formal investigation

Investigations can be triggered as a result of leniency applications, whistleblowers (individuals), complaints by customers or competitors, press reports, through the Secretariat's own market intelligence or through a chance find of ComCo in another investigation.

Many cartel investigations start with unannounced inspections and interrogations of the representatives of the undertakings subject to the investigation. Often, undertakings file for leniency when these unannounced inspections take place. In Switzerland, immunity is generally also available after an investigation has been opened.

Following the opening of the investigation, the Secretariat will review the evidence gathered in dawn raids and/or leniency applications, send out requests for information and/or interrogate further persons.

After having concluded the review of the evidence, the Secretariat drafts the so-called "motion" (which corresponds to the Statement of Objections of the European Commission). With the motion, the Secretariat requests ComCo to discontinue the investigation, or to impose a fine or to approve a settlement with the parties, etc.

The parties can also negotiate a settlement with the Secretariat (please see question 6.1).

Once drafted, the motion is circulated to the parties to the investigation for comments.

After having received the comments of the parties, the Secretariat decides whether to conduct further investigative steps or to submit the motion to ComCo for a decision. If the Secretariat deems the motion complete, it submits the motion to ComCo together with the comments of the parties. This is the latest point prior to which a party can request the Secretariat to conclude a settlement. 

After the Secretariat has submitted its motion to ComCo, ComCo decides whether the case is ripe for a decision or whether it must be referred back to the Secretariat for further investigation. If ComCo deems the case ripe for a decision, it conducts a hearing, at which the parties can orally defend their case. After the hearing, ComCo decides on the case (or refers it back to the Secretariat for further investigation). ComCo then drafts the decision based on the motion of the Secretariat.

1.5 Are there any sector-specific offences or exemptions?

No. However, to the extent that the regulatory framework does not permit competition, that sector is exempted from the cartel prohibition. However, this exemption is applied very narrowly by the Federal Supreme Court.

1.6 Is cartel conduct outside your jurisdiction covered by the prohibition?

To fall under the jurisdiction of the CA, it is sufficient that the alleged conduct has potential effects in Switzerland. It is not necessary that such effects are direct, substantial or reasonably foreseeable.

2 Investigative Powers

2.1 Please provide a summary of the general investigatory powers in your jurisdiction.

The Secretariat has the power to order the production of specific documents or information and the power to carry out compulsory interviews with individuals. However, these powers are limited by the privilege against self-incrimination (Article 6 of the European Convention on Human Rights (ECHR)); please see question 2.7.

The Secretariat can also carry out an unannounced search of business and residential premises. The Secretariat has the right to secure premises overnight (e.g. by seal). The Secretariat claims the right to "image" computer hard drives using forensic IT tools (i.e. not only those parts of the file that relate to the investigation). In most cases, it will be regarded as disproportionate to retain the original documents. The Secretariat also has (within the limits of the privilege against self-incrimination) the right to require an explanation of the documents or information supplied.

2.2 Please list any specific or unusual features of the investigatory powers in your jurisdiction.

Unannounced inspections of the Secretariat require the approval of a member of the presidency of ComCo and not of a court.

2.3 Are there general surveillance powers (e.g. bugging)?

There are no general surveillance powers.

2.4 Are there any other significant powers of investigation?

There is a cooperation agreement in place between Switzerland and the European Commission which allows for the exchange of confidential information.

2.5 Who will carry out searches of business and/or residential premises and will they wait for legal advisors to arrive?

The Secretariat carries out unannounced searches. It is typically accompanied by the police and a neutral person (notary). The Secretariat does not wait for legal advisors to arrive.

2.6 Is in-house legal advice protected by the rules of privilege?

No, in-house legal advice is currently not protected by the rules of privilege.

2.7 Please list other material limitations of the investigatory powers to safeguard the rights of defence of companies and/or individuals under investigation.

Undertakings enjoy the privilege against self-incrimination (Article 6 ECHR). They may refuse to produce documents, explain documents and/or provide information relating to the alleged conduct. Arguably, this privilege goes further than the privilege against self-incrimination as interpreted by the European Court of Justice, which considers that "purely factual" questions must be answered. However, the Federal Administrative Court has held that undertakings would have a duty to provide turnover data, which are the basis to calculate the fines.

The privilege against self-incrimination extends to members of the formal or factual body of the company (but only to them). Members of the formal or factual body of the company cannot be compelled to incriminate the undertaking they represent. With regard to other employees and former (e.g. retired) officers, they can be interrogated as witnesses and can be compelled to incriminate the undertaking they are or were working for.

2.8 Are there sanctions for the obstruction of investigations? If so, have these ever been used? Has the authorities' approach to this changed, e.g. become stricter, recently?

Yes. Obstruction of an investigation (beyond the privilege against self-incrimination) has been taken into account as an aggravating circumstance when calculating the fine. For example, the fines of undertakings that deleted or moved aside documents during an unannounced inspection were increased by 10%. The authorities' approach has not changed in recent years. In addition, an obstruction of an inspection can be subject to criminal sanctions.

3 Sanctions on Companies and Individuals

3.1 What are the sanctions for companies?

The cap of the fine is 10% of the turnover of the respective group generated in Switzerland in the last three business years prior to the decision of ComCo.

The fine is calculated as follows:

  • The starting point for the fine is the basis amount. The basis amount is up to 10% of the turnover generated in Switzerland in the relevant market during the last three business years before the end of the infringement. Hardcore cartels are usually fined with a basis rate of 6–10%. In some cases, however, lower basis rates of 1–5% were applied. Unlawful resale price maintenance and the restriction of passive sales have been fined with a basis rate of 2–6%.
  • If the infringement lasted more than one year, this basis amount is generally increased by 0.8333% for each month the infringement lasted.
  • This amount is then increased and/or reduced for aggravating/mitigating circumstances.
  • To this resulting amount, a potential leniency rebate is applied.
  • Furthermore, aside from ordering the parties to bring the infringement to an end, ComCo usually orders the parties to refrain from engaging in conduct like the infringement in the future.
  • In the case that the parties violate such order, ComCo can impose fines.

3.2 What are the sanctions for individuals (e.g. criminal sanctions, director disqualification)?

There are no sanctions for individuals unless they violate an order of ComCo. Fines are up to CHF 100,000.

3.3 Can fines be reduced on the basis of 'financial hardship' or 'inability to pay' grounds? If so, by how much?

Yes. Fines can be reduced on the basis of "financial hardship" or "inability to pay" grounds based on the principle of proportionality. In order to benefit from such a reduction, the undertaking must demonstrate that it would be likely to exit the market as a result of the fine or that the fine would significantly reduce its competitiveness.

3.4 What are the applicable limitation periods?

The limitation period is five years. This limitation period starts to run when "the restraint of competition has not been exercised anymore". In the case of a so-called overall infringement, ComCo is of the view that the five-year period starts when the overall infringement has come to an end. ComCo is of the view that it can impose a fine against any undertaking participating in the infringement, provided ComCo has opened the investigation against any undertaking participating in the infringement within the five-year period. This means that if ComCo opens an investigation against some members of a cartel within the fiveyear period but not against others, the latter cannot argue that a fine should be time barred.

3.5 Can a company pay the legal costs and/or financial penalties imposed on a former or current employee?

This is not applicable; please see question 3.2.

3.6 Can an implicated employee be held liable by his/her employer for the legal costs and/or financial penalties imposed on the employer?

In theory, an employee could be held liable by his/her employer for the legal costs and/or financial penalties imposed on the employer. In practice, however, it would be challenging to recover the full legal costs and financial penalties or even a fraction of them. Depending on the degree of negligence, courts may limit the liability to the amount of one monthly salary or a multiple of this. Furthermore, the employee may argue that the compliance programme (if any) was not robust enough, the infringement was tolerated by his/her superiors, etc.

3.7 Can a parent company be held liable for cartel conduct of a subsidiary even if it is not itself involved in the cartel?

Yes. A parent company can be held jointly and severally liable for the cartel conduct of a subsidiary, even if it is not itself involved in the cartel, if it is capable of exerting a decisive influence over the subsidiary. The case law is not consistent as to what extent a buyer can be held liable for the conduct of the target prior to its acquisition.

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