The main developments in Competition Law and Policy for 2024 – Switzerland
In 2024, the Swiss competition law underwent significant changes. The first case of abuse of relative power was determined using the new offense introduced in 2022. The Secretariat of the Swiss Competition Commission (
“ComCo”) also determined that antitrust principles apply to labor markets, marking a pioneering stance among authorities in its detailed examination of the application of antitrust law in the labor sector. Swiss Post’s decision to block a merger proposal is noteworthy, as it is a rare occurrence in Swiss merger control because of the high thresholds for notification and intervention. The Federal Supreme Court (“FSC”) issued rulings on horizontal price agreements and a case of abuse in a Swiss Post tender in 2008, overturning the ruling of the Federal Administrative Court (“FAC”). In addition to the partial revision of the Swiss Cartel Act (“CartA”) initiated by the Federal Council in 2023, Swiss competition law is now undergoing further institutional reform, with a minor regulatory change regarding the standardization of procedural fees.In the following, we provide a brief overview of some of the main developments on cartels, abuse of dominance, merger control, regulatory changes, and a brief outlook.
Unlawful Agreements / Cartel Cases
In its decision of April 16, 2024, the FSC rejected the appeal in the VPVW Stammtische/Projekt Repo 2013 case. The case concerned a sanction order issued by ComCo in 2015 affecting four companies belonging to the Association of Partners of the Volkswagen Group (
“VPVW”). The case concerned a list of conditions governing maximum discounts and flat delivery rates for new VW Group brands as well as an organization of regulars’ tables in order to communicate the agreed discount policy. ComCo ruled at the time that the agreement on a common list conditions constituted a pricing agreement. In 2022, a sanctioned licencee appealed against this decision. The licensee appealed the FSC’s decision, arguing primarily that the short duration of the agreement implementation (three day) should be considered a minor case. The FSC argued that the question of whether the agreement was material did not depend on its implementation, and that any potential competition should also be protected. The FSC upheld the lower courts decision. This is the culmination of all grievances that the FAC has considered in this matter. The FAC found that ComCo’s assumptions about price and business partner arrangements in the “Engadin III”, “Engadin VIII”, and “Engadin 9” cases were valid. Contrary to ComCo’s position, the FAC assumes that there is sufficient external competition and rejects the presumption that effective competition has been eliminated as set out in Art. 5 para. 3 CartA. It rejects a trivial situation and affirms that there is a significant loss of competition based on the Gaba judgment (BGE 143 I 297). Accordingly, agreements pursuant Art. 5 para. 3 KG are especially harmful and generally meet the criterion for materiality. The court found that there was no justification. The FAC then reduced the sanction on each of the companies involved in “Engadin III”. This decision was notable because it was the first time the FAC had to explain its position regarding the implications of a reduced sanction when a self-indicator raises legal or factual objections against the agreement and these objections are later proven to be unfounded. The FAC determined such actions could be considered, in principle as hindering the goal of streamlining the procedure. In such circumstances, a complete waiver of the sanctions would not be permitted. Exercise of the fundamental rights of defence would be reserved. The FAC does specify which procedural right it considers fundamental, and can be exercised with no objection. In this scenario, given the stated objectives of the bonus regulation, it may be deemed necessary or at least appropriate to acknowledge this cooperation by reducing sanctions. In this scenario, given the stated objectives of bonus regulation, it could be deemed necessary, or at least appropriate, to acknowledge the cooperation by reducing sanction. The FSC received an appeal against this decision. The FSC is also currently hearing appeals in the Engadin I, Engadin VI and Engadin VII cases. Therefore, it remains to be seen how the FSC will rule on bid-rigging agreements in the canton of Graubunden.In June 2023, ComCo initiated two parallel investigations with the objective of identifying long-term solutions for the domestic interchange fees associated with Visa and Mastercard debit cards. Mastercard and ComCo could reach an agreement that would provide a long-term safe harbour for domestic debit card interchange fees. This agreement does not affect the ongoing investigation into Visa. ComCo’s settlement with Mastercard qualifies a debit interchange fee agreement as a vertical contract to fix a price. However, ComCo concludes that the agreement is justified on grounds of economic efficiency.
In late August 2023, Visa Visa requested ComCo to issue interim measures preserving it from fines for its domestic interchange fees set. Visa’s request was rejected by both ComCo and the Federal Administrative Court. Visa appealed to the Federal Supreme Court, which The upheld ComCo’s decision in its judgment of December 4, 2024.
ComCo imposed sanctions on Kies AG Aaretal (
“KAGA”
) and its shareholders, amounting to a total of CHF 5.3 million. The third and most recent legal proceeding against “Baustoffe und Deponien Bern” (KAGA) has now been concluded. KAGA is the biggest gravel and landfill in the Bern region. Seven of its shareholders are also involved in this sector. These shareholders allegedly entered an agreement to cooperate in order to reduce competitive pressures within KAGA’s gravel and landfill sector. ComCo claims that the agreements were based on the prevention and mitigation of competition in the gravel rich Aare valley. They also stated that the agreements regulated the competitive behavior of KAGA to be favorable to the shareholders. The illegal practices included, for example, the right of every shareholder to appoint a member to the Board of Directors of KAGA. These appointees held key positions within the appointing shareholders. The shareholders also received preferential terms compared to their competitors. A non-competition provision was also included, which prohibited the acquisition of mining rights in the KAGA region and the extraction or gravel. KAGA also temporarily linked the dumping excavated material with the purchase of gravel at the expense of non shareholders. ComCO concluded that the gravel mining industry is characterized with strict regulations, significant barriers to entry, and limited competitiveness. ComCo concluded that the prevalence and use of illegal practices had exacerbated the market competition and negatively affected SMEs and the public sectors. ComCo also examined a specific type of collaboration among three waste disposal companies. The investigation revealed that the companies had developed a platform to improve the efficiency of waste transportation. In this case, the companies shared confidential information that was sensitive under antitrust laws, even though they were not cooperating. ComCo and the other entities involved reached an agreement to refrain from any future conduct that was deemed to be in breach. The only sanction imposed is approximately CHF 100,000. The only sanction imposed is approximately CHF 100,000.
As indicated previously, the ComCo Secretariat stated that agreements between employers regarding remuneration or other benefits as well as non-solicitation are subject to Swiss Competition Law and may therefore be considered anticompetitive agreements in accordance with the Cartel Act. The Cartel Act does not apply to agreements between social partners. This includes collective employment contracts and contracts between employees. A preliminary investigation, launched following a voluntary disclosure from a Swiss bank revealed that over 200 firms had been sharing wage trends and working conditions with each other for years. The Secretariat decided not to investigate up to 241 parties, as it would have taken a lot of time and effort. The Secretariat’s objective is to establish a best practice for antitrust-compliant behavior in the labor market. Abuse of Dominance
In its ruling of March 5, 2024, the FSC upheld Swisscom’s (Schweiz) AG (
“Swisscom”
) appeal in connection with a decision made by ComCo in 2015.
The following are the facts of the case: In 2008, Swiss Post issued a request for tenders for the construction and operation of a wide area network (
“WAN”) for its approximately 2,300 postal locations. Swisscom won the contract. Sunrise Communications AG (“Sunrise”
), the losing proponent, subsequently filed a complaint with ComCo. ComCo determined in 2015 that Swisscom abused its dominant market position. ComCo made this determination based on findings that Swisscom had imposed unreasonably high prices on Sunrise, Swiss Post and Sunrise as well as imposed a margin squeeze. Swisscom appealed the sanction of CHF 7,9 million imposed in this case by ComCo to the FAC. The FAC dismissed the appeal in 2021 on the primary issues, but reduced the sanction to CHF 7.5 million.However, in 2024, the FSC reversed the decision of the FAC. The FSC reversed the decision of the FAC in 2024. The Court found that Swisscom did not abuse its position. Swisscom did not impose unreasonable prices to Sunrise or Swiss Post. In both cases, the element of “forcing”, is already absent. Swisscom’s behavior towards Sunrise was appropriate in setting wholesale prices. The wholesale prices were not excessive. Swisscom did not unilaterally set the surcharge for Swiss Post. It was a result of negotiations. Swisscom’s profit margin and the surcharge price were also determined to be reasonable. There is also no evidence that Sunrise would suffer from a margin squeeze. In this regard, there is no evidence of a two-stage abusive use of a dominant situation. Further, a margin squeeze would not exist from a calculatory point of view, since according to the scenario recommended by the Federal Office of Communications (“OFCOM”) and to be respected, Sunrise’s wholesale costs are below Swisscom’s surcharge price.In its decision of April 23, 2024, the FSC rejected an appeal filed by Swisscom. The case concerns Swisscom’s abuse of its dominant position in the transmission of football matches and ice hockey games on pay television. ComCo’s decision of 9 May 2016 determined that Swisscom (formerly CT Cinetrade AG), and Blue Entertainment had engaged in abusive behavior, leveraging their dominance in the provisioning of sports broadcasts between 2006 and 2013. Swisscom’s dominant situation was due to the fact that Blue Entertainment, a subsidiary of Swisscom, had long-term exclusive rights for sports broadcasting. Swisscom was found guilty of abusing its dominant position, including by refusing to offer its competitors the right to broadcast their live sports content on their own pay-tv platforms and differentiating between the scope of live sports content offered to its competitors. Swisscom was found to have abused its dominant position by refusing to allow its competitors to broadcast their live sports content on pay-tv platforms, and by limiting the content that they could offer. . ComCo fined Swisscom CHF 71.8 Million. ComCo’s decision was previously upheld by the FAC in a judgement on May 10, 2022. Swisscom appealed the FSC’s decision, but the FSC rejected Swisscom’s appeal in its April 23, 2022 judgment. This decision was made following a change in the configuration of Swisscom’s fiber optic network. ComCo claims that the revised network design will not allow competitors to have direct access to the Swisscom network, and will only permit them to sell Swisscom’s services under their own names. ComCo, in order to maintain a competitive balance, has taken the precautionary step of prohibiting Swisscom’s implementation of this design modification by late 2020. This prohibition was deemed to be necessary in order to prevent Swisscom from changing the market structure and establishing a defacto monopoly. This change would have severely restricted the ability of competitors to innovate and pursue business opportunities. Moreover, consumers and businesses would have been restricted in their choices of service providers and products. Swisscom rationalizes its departure from the former structure, primarily based on lower costs and faster growth. ComCo rejects that, as the savings are not enough to justify the elimination for generations of competition. Swisscom has appealed this order to the FAC.
In an initial case involving the French publishing industry ( “Marche du livre ecrit en francais”,) that ComCo concluded in 2013 various French publishing houses used contractual agreements to prevent Swiss booksellers sourcing directly from France, especially from parallel imports to Switzerland. ComCo and the courts ruled that these agreements were illegal, as they constituted illegal territorial agreements. In the wake of this decision, it was established that parallel imports and direct procurement from foreign nations are not prohibited. Since January 1, 2022 the provisions on relative power have allowed dependent companies to buy at the same conditions as abroad. A company has relative market power when another company is dependent on it and does not have reasonable and sufficient alternatives. ComCo has made the first finding since the introduction to the new legal provision of abuse of relative power. The case in question is the refusal of the French publishing group Madrigall (one of France’s largest publishing groups) to allow Swiss bookseller Payot to purchase books in France under standard conditions. Payot is known for its focus in French-speaking countries. Until now, Swiss booksellers relied on the official Swiss distribution channels to obtain Madrigall’s books. Payot, however, wanted to import Madrigall books directly from France. Madrigall requires Payot to pay significantly higher prices than is customary in France. Payot has no other reasonable and adequate sources of supply. ComCO determined that Payot is dependent on Madrigall and that it would be impossible to sell Madrigall’s books. ComCo deems Madrigall’s behavior as an abuse of relative market power in light of these circumstances.
ComCo launched an investigation into BMW on January 2024. The investigation will examine if BMW has relative market power with respect to a garage and if it has engaged in abusive behaviour as defined by Cartel Act. The investigation will include an inquiry into whether BMW forced this garage to invest substantial amounts of money and then unilaterally ended the cooperative relationship without adequate transitional measures. The continued operation of the business relationship between the garage and BMW is crucial for the amortization of the aforementioned investments.
Moreover, in its decision of June 24, 2024, ComCo examined, whether a company, specifically the Fresenius Kabi Group (
“Fresenius Kabi”), was abusing its relative market power vis-a-vis Galexis AG. This investigation was prompted by Fresenius’ refusal to supply Galexis AG in Germany and The Netherlands with drinking and tube feedings. ComCo concluded Fresenius Kabi did not have relative market power compared to Galexis AG. ComCo concluded that Fresenius’s Kabi actions did not meet abuse criteria, even if relative market power was assumed. This determination was made on the basis that foreign conditions were marginally better. Consequently, ComCo closed the investigation.
Merger Control
In May 2024, the Swiss Financial Market Supervisory Authority (“FINMA”) concluded the merger control proceedings with regard to UBS Group AG (
“UBS”
) and Credit Suisse Group AG (
“CS”) without imposing any conditions or commitments. ComCo’s statement and recommendations were published simultaneously with the FINMA ruling. The following is a brief summary of ComCo’s key statements:ComCo found that the merger would possibly create a dominant position in individual markets. ComCo, however, held that the question could be left unanswered in the absence of a possibility of eliminating the competition. In the potentially affected markets, ComCo recommends that FINMA monitors prices and fees and reports any anomalies to the Price Supervisor.Additionally, ComCo rejected the parties’ “failing company defense”. ComCo believes that there would have been competitors who could have taken over CS’s business areas. ComCo also argued that CS would have been able to maintain its market presence, at least temporarily, if the state had taken a variety of options. This case illustrates the challenges that are posed by applying this legal concept. FINMA, on the other hand, deemed that the criteria for failing company defence were met. Its decision was influenced by the absence of a binding, concrete offer from a competitor. Consequently, the acquisition by UBS represented the most viable option.ComCo held that the entry of new market entities or the expansion of existing ones within Switzerland should not be impeded by regulatory measures.ComCo also advocated that a sector inquiry based on the European model should be introduced in Switzerland in the future.Furthermore, ComCo held that the cooperation between ComCo, FINMA, and the Swiss National Bank should be expanded, and a memorandum of understanding on informal cooperation should be formulated.
- On January 19, 2024, ComCo issued a prohibition on the planned takeover of the Quickmail Group by Swiss Post. ComCo issued a prohibition on the planned takeover of the Quickmail Group by Swiss Post on January 19, 2024. Swiss Post is also active here. The proposed merger was required to be reported in accordance with Art. 9 para. According to ComCo, Swiss Post has a dominant position on the market for national addressed bulk mailing items of over 50 grams among business customers. Quickmail operates in this market. ComCo’s analysis of the takeover revealed the merger would strengthen Swiss Post’s dominance in the market for business customers’ national addressed mass mailings of over 50 grams, thereby eliminating effective competition. 10 para. 2 lit. CartA. Swiss Post holds a 70-80% market share in this market while Quickmail holds a 20-30% share. Swiss Post’s dominant position in the letter and parcel sector, as well in the newspaper and magazines delivery market, would also be strengthened or consolidated. ComCo claims that the acquisition would create a de facto Swiss Post monopoly, which would negatively impact competition and have negative implications for both consumers and businesses. Swiss Post and Quickmail, in their defense, argued that these effects were not caused by the merger but rather a restructuring. ComCo may approve a merger, even if the result is a worsening of competition. This is because it follows the “failing-company defense” principle. If the Quickmail Group disappeared from the market in a short time without support, then a large number of customers would be forced to switch to Swiss Post. A merger would also be the only way to remain competitive. ComCo’s investigation revealed that the third requirement for the failing company defense was not met. There was another prospective buyer who had experience in the postal industry, besides Swiss Post. This entity’s acquisition of the Quickmail Group would allow the Quickmail Group maintain its presence on the market and ensure continued competition with Swiss Post. ComCo found that this outcome would be a more competition-friendly solution than the acquisition by Swiss Post.
- Regulatory Changes
- On November 6, 2024, the Federal Council amended the Ordinance on the Fees charged under the Cartel Act (
- “CartA-FeeO”
). While the Swiss Competition Commission so far charged a flat fee of CHF 5,000 for a Phase I clearance (including Phase O), it will from now on apply a time-spent fee with hourly rates of up to CHF 400.[17]
Outlook
ComCo is currently working on best practice guidelines for the labour markets. The guidelines will address wage agreements, non-poach provisions, and the exchange of HR-related information. The guidelines should be published by the middle of 2025. In this regard, the Federal Department of Economic Affairs, Education, and Research (
“EAER”) was instructed on March 15, 2024, to submit a consultation draft for such an institutional reform by mid-2025. ComCo’s current structure includes a Secretariat that is responsible for investigating and submitting proposals. The commission is the primary adjudicating body. This reform aims to improve the separation between investigative and judicial functions. In 2023, EAER created a commission of independent experts to lay the groundwork for a reform of the Competition Authorities that is well-founded and supported by the public. The Federal Council has made the following recommendations based on this expert report:Reduction and professionalization of the Commission:
The Secretariat should consistently conduct the investigation without involving ComCo.
The Commission should have 5 or 7 members (up to 9 if necessary).
If necessary, the members should have an increased workload.
Introduction of a procedural officer attached to the Commission and elected by the Federal Council.In Based on this expert report, the Federal Council has the following recommendations:Reduction and professionalization of the Commission:
- The Secretariat should consistently conduct the investigation without involving ComCo.
- The Commission should have 5 or 7 members (up to 9 if necessary).
- If necessary, the members should have an increased workload.
- Introduction of a procedural officer attached to the Commission and elected by the Federal Council, who – like the hearing officer in the EU – examines on behalf of the Commission whether the general procedural guarantees were observed in the proceedings.
- Introduction of a statement of objection so that the parties’ comments on the allegations made can be expressed and taken into account at an earlier stage of the proceedings.
- The use of specialist judges in antitrust cases at the FAC. This can speed up the proceedings and strengthen the economic expertise at the FAC.
- In its final report, the Expert Commission recommended maintaining the current organizational structure, with the following additional modifications:
Representation of interest groups in the Commission should be omitted.
- Competence of the Commission to determine the strategic focus of its activities in a general manner.
- Elimination of the ability for an Executive Committee member to engage in the investigative process.
- Nevertheless, the critique regarding the inadequate delineation between ComCo and its secretariat warrants serious consideration, particularly in light of the potential for direct imposition of criminal or quasi-criminal sanctions. The removal of interest group representatives from the Commission could help to mitigate the perceived lack independence. A statement of opposition would allow the parties to influence the proceedings earlier, while the appointment a hearing officer allows the members of ComCo more time to focus on the legal issues. The length of a cartel proceeding depends on many factors, and not just the institution framework. It is primarily related to judicial proceedings, particularly those led by FAC. The Expert Commission has determined that the recommendation does not require a clearer separation between investigation and decision.
