Switzerland: Competition Law

Last Updated: 15 August 2019
Article by Bär & Karrer
Most Read Contributor in Switzerland, September 2019

1. Introduction

The Swiss Act on Cartels ("CA") (Kartellgesetz, Loi sur les cartels) distinguishes three types of conduct that are subject to regulation:

  • Agreements that (i) significantly restrict competition and are not justified for reasons of economic efficiency (see below 2.) or that (i i) eliminate effective competition.
  • The abuse of a dominant position (see below 3.)
  • The concentration of undertakings (see below 4.).

2. Agreements restricting competition

2.1. Introduction

Under the Swiss Oct on Cartels ("CA")( Kartellgesetz, Loi sur les cartels) two types of agreements restricting competition are unlawful:

  • Agreements that significantly restrict competition. According to a leacing case decided by the Federal Supreme Court, agreements which presumptively eliminate competition according to the CA, i.e. horizontal price fixing, quantity fixing and market sharing (horizontal hardcore restrictions), as well as vertical price fixing and territorial protection (see below 2.3) are i n general deemed to be significant without the need to show that there is a quantitatively signifiant restriction of competition. Significant restrictions of competition are unlawful if they are not justified for reasons of economic efficiency (see below 2.2).
  • Agreements that eliminate effective competition. Such agreements are unlawful and cannot be justified for reasons of economic efficiency. As already mentioned, the CA presumes that certain restrictions, i .e. horizontal hardcore restrictions as well as vertical price fixing and territorial protection eliminate effective competition (see below 2.3).

Unlawful agreements restricting competition have no effects between the parties and are void. In accition, direct fines may be imposed on parties that entered into agreements that presumptively eliminate effective competition (i.e. horizontal hardcore restrictions as well as vertical price fixing and vertical territorial protection) (see below 2.4).

2.2 Agreements significantly restricting competition

  • There is an agreement or concerted practice;
  • which has as its object or effect the restriction of competition;
  • which is significant and;
  • which cannot be justified on grounds of economic efficiency.

2.2.1 Agreement or concerted practice

The CA does not only cover binding and non-binding agreements but also concerted practices. Concerted practices are a form of coordination which, without qualifying as an agreement, knowingly substitutes cooperation between the respective enterprises for competition. Recommendations (for examples price recommendations issued by trade associations) have also been considered as concerted practice even if only a minority of the addressees have followed them.

However, mere parallel behavior, where enterprises react in the same way but based on autonomous decisions to changes in the market, is not caught by the concept of concerted practice. This applies even if such parallel Behavior occurs consciously, ì.e. if the enterprises know that their competitors will react to market changes in a parallel way. This is because competition also implies that competitors monitor each other and the market conditions and must have the possibility to react to such changes in a profit-maximizing manner. The same is true for price leadership where competitors, based on autonomous decisions, follow the pricing behavior of the market leader.

I n the following, the term "agreement" is used as a collective term for bath agreements and concerted practices.

2.2.2 Object or effect of restricting competition

Only agreements and concertec practices having as their object or effect a restriction of competition may be unlawful. As regards horizontal or vertical agreements on prices, territorial protection and production quota, such agreements are considered by the Competition Commission ("ComCo", Wettbewerbskommission, Commission de la Concurrence) to have in principle as their object a restriction of competition.

2.2.3 Significant restriction of competition

According to the recent Gaba-judgment of the Federal Supreme Court (Bundesgericht, Tribunal fédéral), agreements which the CA presumes to eliminate effective competition, i.e. agreements among competitors to fix prices or quantities or to allocate territories or customers (horizontal hardcore restrictions), as well as vertical price fixing and territorial protection (see below 2.3) are i n general deemed to significantly restrict competition without the need for ComCo to show that there is a quantitatively significant restriction of competition. In other words, an agreement to fix prices is generally deemed to restrict competition without ComCo having to show that the parties had a big market share, consistently adhered to it etc. In the mentioned Gaba case, the Federal Supreme Court decided that an agreement between the l icensor Gaba and the licensee Gebro to prevent parallel exports out of Austria (and therefore i nto Switzerland) constituted a significant restriction of competition regardless of any quantitative aspects. Similarly, in BMW, the Federal Administrative Court held that a prohibition of BMW on its German dealers to export new vehicles to Swiss customers constituted a significant restriction of competition regardless of the fact that in the relevant period of more than a year, over a thousand new BMWs and Minis were parallel imported into Switzerland. This per se approach is not appropriate. It risks to qualify agreements such as joint buying, coinsurance schemes, joint production etc. as per se significant restrictions of competition that are, however, not anti-competitive but on the contrary procompetitive. Also, it creates inappropriate incentives for ComCo to seek to wrongly qualify agreements as horizontal hardcore restrictions or vertical price fixing and territorial protection, respectively, in order to be dispensed with a quantitative analysis.

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