The soon-to-be enacted relative market power legislation has led to various car dealers that are part of a selective distribution system taking civil action against general importers or manufacturers. In particular, proceedings are pending before civil courts concerning refusals to supply. The car dealers take the position that they are still entitled to be supplied because they fulfil the selection criteria. In their view, the refusal to supply constitutes an abuse of market power.
In addition, motor vehicle manufacturers, in particular, are trying to switch from a dealer system to the so-called agent system. Through this change, the business risks according to the guidelines in the EU Vertical Block Exemption Notice, which are applied mutatis mutandis in Switzerland, are, to a large extent, transferred to the manufacturer, and, furthermore, pricing sovereignty is now with the manufacturer. This system leads to the fact that, due to the agent privilege, Article 101 of the Treaty on the Functioning of the European Union (TFEU) or the Swiss Cartel Act in principle no longer apply, because the agent is only the “extended arm” of the manufacturer, similar to a subsidiary.
The question of which risks are to be assumed by the manufacturer according to this new system and which are to be borne by the agent remains unclear. Furthermore, it is often unclear what should happen to earlier investments made by an independent dealer (eg, facade renovations) that have not yet been amortised. Does the manufacturer have to bear such costs in the event of a system change? Such questions hold great potential for conflict and could still occupy the civil courts, particularly in view of the fact that today’s independent dealers, who are to become “real agents” against their will, could plead that the manufacturers are abusing their (relative) dominant market position by imposing new unfavourable terms and conditions on them.
As of 1 January 2020, several new provisions concerning the limitation periods in Swiss civil law entered into force, while some existing provisions have been subject to an amendment.
Although the underlying revision was mainly aimed at improving an unsatisfying situation related to so-called late damages (ie, physical damages resulting from asbestos or similar causes that become visible only many years after the damaging act occurred), it has brought with it some relevant amendments for civil competition law as well.
The most important change relevant to civil competition law is arguably the extension of the relative limitation period concerning claims for damages based on tort law from one year to three years. The limitation period starts when the plaintiff has sufficient information about the damage and the person responsible for it.
There are other new provisions that might be relevant for civil competition law. For instance, under the new law, the parties may now agree that the limitation period stands still during settlement talks as well as during mediation or other extrajudicial proceedings.
Legal Basis for a Claim for Damages
Article 12 (1) litera b of the Swiss Cartel Act constitutes the legal basis for a claim for damages resulting from a breach of competition law. However, the article explicitly refers to the Swiss Code of Obligations (CO) for such claims. As a result, claimants may recover damages resulting from a breach of competition law in accordance with the ordinary principles and provisions of Swiss contract and tort law. While Articles 13 and 15 of the Swiss Cartel Act provide some specific procedural rules for civil proceedings concerning such claims, the majority of the procedural rules stem from the Swiss Code of Civil Procedure (CCP).
Follow-On and Standalone Claims
Even though there is no specific legislation for follow-on claims, both follow-on and standalone claims are available according to Swiss law. The plaintiff may take civil action based on the findings of the competition authority (COMCO). However, a decision of COMCO is not necessary, as civil proceedings may be started without an open investigation by COMCO as well.
There are neither any specialist competition courts nor any specialist competition judges in civil courts in Switzerland. In fact, civil competition cases are assigned to the common civil courts or commercial courts (if any).
As every Swiss canton is competent to establish the organisation of its courts, the court is assigned by cantonal law, the only requirement by federal law being that there may only be one single court in each canton that handles competition cases (Article 5 (1) litera b, CCP). In most cantons, the law assigns civil competition cases to a higher cantonal court. Some cantons (ie, Zurich and Berne) have established special courts for commercial matters, which are also the competent courts for civil competition cases in these cantons. However, even these courts are not specialised only in competition law, but more generally in commercial matters.
Decisions of the Competition Commission
Decisions of COMCO are not binding for civil courts. Such decisions will nevertheless be of great importance in civil proceedings, as, in practice, civil judges will hardly deviate from COMCO’s opinion. As a result, such decisions may considerably facilitate follow-on claims.
Expert Opinion by the Competition Commission
In the event that a civil court has to assess the legality of a restraint of competition, it is obliged by law to refer the case to COMCO for an expert opinion (Article 15 (1), Cartel Act). The opinion is limited to a legal assessment based on the facts provided by the court and, as is the case for COMCO’s decisions, COMCO’s expert opinion is not binding for the civil court; rather, it rests with the judge how they weigh and evaluate the expert opinion as evidence.
Decisions of National Competition Authorities (NCAs) of Other Countries
Decisions of foreign NCAs may be submitted by the parties as evidence during civil proceedings. However, as a consequence of the principle of unfettered assessment of evidence by the court, it eventually rests with the judge how they consider the decision of the foreign competition authority.
Burden of Proof
As a general principle of Swiss civil law, the burden of proof lies with the person who derives rights from the disputed fact in question (Article 8, Swiss Civil Code). Therefore, the burden of proof concerning claims for damages lies with the plaintiff. In particular, the plaintiff has to quantify and prove the damages. However, the court may estimate the damages according to Article 42 (2) of the CO if an exact quantification is impossible.
In accordance with the general rule mentioned above, the burden of proof in establishing a “pass-on” defence lies with the defendant.
Standard of Proof
The parties need to provide persuasive evidence for all relevant disputed facts for which they have the burden of proof. The judge has to be fully convinced that the facts took place as the party alleges. It is to be noted that the court is free to weigh and evaluate the evidence provided by the parties. There are no specific rules on how to assess the evidence (principle of the free assessment of evidence).
Although there are no specific rules and there has been no court ruling on this matter, claims are, in principle, not limited to those purchasers directly affected by an illicit behaviour. In order to have standing for a claim, it is therefore sufficient for the claimant to be affected by the restraint of competition even in an indirect way. As a result, it is neither necessary for the claimant to be a competitor nor does the restraint necessarily have to be directly aimed at them. According to the prevailing doctrine, consumers are, however, not authorised to bring claims based on the Cartel Act.
An estimation of an average duration of the proceedings is difficult. On the one hand, there are not many comparable cases in Switzerland. On the other hand, the duration depends on several factors, such as the complexity of the case, the workload of the court and granted extensions of deadlines to the parties. Consequently, the duration varies from case to case. Civil competition actions tend to be more complex than most other civil proceedings, which is likely to contribute to the proceedings taking longer than other civil proceedings in Switzerland. The duration can therefore range from one year to several years. This is especially true if the proceedings are suspended.
The court may stay the proceedings based on Article 126 (1) of the CCP if expediency so requires. The proceedings may be suspended if the decision is dependent on the outcome of other proceedings. This could be the case if the civil judge submits a question to the Competition Commission for an expert opinion. The judge can only make their decision once the expert opinion is available. Moreover, it is conceivable that a civil court would stay civil proceedings pending the conclusion of parallel administrative antitrust proceedings. This could be the case if the civil action is based on the cartel infringement to be established in the cartel proceedings.
The parties have the right to apply for suspension (see Article 126 (1)). The decision on this is subject to appeal in accordance with Article 126 (2) of the CCP.
Strictly speaking, the handling of precautionary measures constitutes a separate procedure from the main proceedings. Such summary proceedings last between a few days and a few months. The duration also depends on whether the counterparty will be heard by the court in advance.
Class/collective actions are not available in Switzerland – even though the introduction of class actions was discussed during the preliminary work for the CCP, the proposal was rejected in the end.
Individual claims arising from the same factual basis may, however, be bundled by way of consolidation and joinder of parties. Furthermore, it is also possible to assign individual claims to one person, who may bring all claims together.
Swiss law does not permit class actions.
Swiss law does not permit class actions.
In the context of cartel law, summary decisions are particularly relevant in connection with precautionary measures. According to Article 261 of the CCP, the court can take the necessary precautionary measures if the requesting party credibly demonstrates that:
Even if not explicitly mentioned in Article 261 of the CCP, urgency in terms of time is part of the catalogue of prerequisites for precautionary measures.
In cases of particular urgency, especially where there is a risk of frustration, the court may order the precautionary measure immediately and even without hearing the other party (Article 265, CCP).
It is in the nature of things that precautionary measures are granted even before the filing of an action. In practice, interim relief is relevant in cases of abuse of a dominant position; for example, if a manufacturer with market power no longer supplies the dealer of its selective distribution system, even though the dealer continues to fulfil the selective distribution criteria. In this case, the civil judge can uphold the status quo of the supply with a summary decision valid for the duration of the proceedings.
As in any case, summary decisions would also be possible concerning claims that are based on undisputed or immediately provable facts and where the legal situation is obvious (so-called legal protection in clear cases).
In international cases, jurisdiction for civil competition actions in Switzerland is assessed according to the Swiss Federal Act on International Private Law and the Lugano Convention. Jurisdiction in Switzerland is given in the following cases:
Similar rules apply in domestic cases. The court at the seat or domicile of the defendant has jurisdiction. Jurisdiction is also given at the place where the damaging event occurred or where it had its effects. Additionally, jurisdiction is also given at the seat or domicile of the claimant. Finally, the parties may agree on a place of jurisdiction.
Claims Based on Tort Law
For claims based on tort law, the relative limitation period is three years. The limitation period starts when the plaintiff has sufficient information about the damage and the person responsible for it. Irrespective of the claimant's knowledge, though, damage claims based on tort law become statute-barred within ten years of the damaging conduct having come to an end.
The statute of limitation period of a claim based on contract law depends first on the existing specific provisions of the contract in question. If there is no specific provision, the limitation period is ten years.
Claims for Removal or Cessation of Unlawful Restraints
There is no specific limitation period regarding claims for removal or cessation of the unlawful restraint of competition. Such claims can be brought before the court as long as the restraint exists or is imminent.
In addition, a party may waive the assertion of the limitation period for a maximum of ten years. This waiver may be repeated several times.
No General Duty of Disclosure or Pre-action Disclosure
Swiss law does not provide for a general duty of disclosure between the parties; in particular, pre-action disclosure is not available in Switzerland. Prior to the commencement of an action, a party can therefore only obtain information from the opposing party based on existing substantive information rights; for example, a contractual right to information or the right of a shareholder of a company. The Cartel Act does not grant to private plaintiffs any additional rights to access information.
Applications for disclosure in Swiss civil proceedings, meanwhile, are handled restrictively. Generally, disclosure will only be granted if the applying party succeeds in demonstrating that it requires a specific document in the possession of the other party.
Disclosure of COMCO’s Documents
If the plaintiff is a party to the administrative proceedings, it may obtain access to the competition authorities’ documents, except for leniency application files. The question of whether COMCO is obliged to also disclose files to a civil court has not yet been answered. The Federal Supreme Court recently ruled that, based on the data protection legislation, COMCO may grant a canton at least partial access to the files of the proceedings if the canton wishes to bring a civil action (2C_1040/2018, 2C_1051/2018).
The public prosecutor's office and the criminal courts can consult files from other proceedings if this is necessary to prove the facts of the case or to assess the accused (Article 194 (1), CCP). A civil plaintiff who is at the same time affected by the criminal proceedings could inspect the files of the criminal proceedings and obtain the competition commission’s files this way.
Legal Professional Privilege
Practising registered lawyers are subject to a professional duty of secrecy and may refuse not only to testify as a witness in a case on which they are advising but also to produce privileged documents. This is a comprehensive legal privilege that applies irrespective of where the documents in question are located, and irrespective of when they were created. However, this only applies to documents drawn up by a lawyer in the exercise of their traditional activities as a lawyer. If, for example, they act as a board member and prepare documents in this capacity, they are not protected.
Under Swiss law, no similar privilege exists to protect advice provided by in-house counsel. Documents prepared by, or held in the possession of, in-house counsel may therefore be requested by opposing parties in civil proceedings.
COMCO will generally deny access to statements made, and documents submitted, by leniency applicants. These files can only be inspected by the parties involved in the proceedings and are subject to a restriction on use. The Competition Commission shall decree under penalty of infringement that the files may only be used to protect the rights within the scope of its proceedings. They may explicitly not be used for the enforcement of civil claims.
If a case has been the subject of an EU investigation, claimants may apply for access to the files and records of the European Commission and if access is granted, use the documents concerned in the respective civil proceedings in Switzerland.
Witness testimony can be submitted as evidence under the CCP and, if necessary, the court may compel witnesses to give evidence. Witness statements are usually made orally, the witnesses being subject to cross-examination. If the court does not deem it necessary for the witness to be questioned, though, it may request a witness to give evidence in writing.
The subject matter of the testimony is the statement of facts potentially relevant to the decision on a certain matter, which the witness has directly perceived themselves. Since cartel agreements are often concluded orally and secretly, testimony can be of great practical importance. However, courts tend to rely on written documentation rather than on witnesses if written documentation is available.
In competition law cases, judges can rely on expert witnesses.
The court may consider expert evidence on its own or on request of a party. If the legality of a restraint of competition is in question, the court is even obliged to submit the question to COMCO for an expert opinion (Article 15 (1), Cartel Act). Since the Cartel Act calls on the Competition Commission to act as an expert witness for competition violations and since the judge can even estimate damages in compensation cases, expert witnesses have not played a central role in civil cases until now. This could change, however, as even the estimation of damages in competition law cases is complex for civil judges. It would be conceivable that a civil judge could call in experts to better assess damages.
Expert opinions will always be requested in writing. The parties are free to challenge the expert opinions with counter expert reports. As a rule, a court attaches greater credibility to a court-appointed expert than to a party expert who is paid to represent a certain opinion. The court expert is not only subject to a duty to tell the truth but is also liable to prosecution for deliberately false expert opinions. Although various expert opinions are compared and assessed by the judge, there is no actual oral hot tubbing.
The amount of awarded damages will mainly be determined on the basis of the incurred loss that a claimant is able to prove. However, if it is not possible to establish the exact amount of damages, the judge may assess them at their discretion (Article 42 (2), CO). Furthermore, the judge may also assess the damages at their discretion if it is not possible to prove that an effective damage even occurred.
If it is impossible or unreasonable for the claimant to quantify their claim at the outset of the proceedings, they may bring an action for an unspecified claim. However, it must state a minimum value, which shall be deemed to be the provisional amount in dispute. The claim must be quantified as soon as the claimant is in a position to do so after the conclusion of the evidential steps or after the defendant has provided information (Article 85 (1) and (2), CCP).
Swiss law does not provide for an award of exemplary or punitive damages. However, parties affected by competition law breaches can demand restitution of the profits realised by the defendant due to the illicit behaviour under the Cartel Act. While claims for damages purport to compensate the claimant for losses suffered due to a competition law breach, the restitution targets the return of ill-gotten gains. As such, it may, in particular, come into play where it is not possible to establish the claimant’s losses with sufficient certainty.
There are no specific legal provisions on pass-on defences and the question of their admissibility has not yet been decided by the Swiss courts. However, since the purpose of Swiss tort law consists in compensating the victim only for the damages effectively sustained, it must be assumed that the “pass-on defence” is admissible. Fundamental principles of Swiss tort law – particularly the prohibition of overcompensation in favour of the victim and the principle that a victim has to deduce any advantages and savings that they are able to achieve from the suffered damages – also lead to this conclusion.
As a result, if the defendant is able to successfully invoke the “pass-on defence”, the claimant will only be entitled to compensation for their remaining losses.
Interest on damages resulting from a competition law breach is payable under the same conditions as interest for other damages based on tort or contract law. Interest includes pre-judgment interest, if applicable, as well as post-judgment interest. Interest is payable at the rate of 5% for the year, where the parties have not contractually agreed on another rate.
Joint and Several Liability
If several enterprises have contributed to a breach of competition law together (ie, participants of a cartel), the contributors are jointly and severally liable to those who have suffered damages from the breach. Thus, the claimant has the right to claim the full amount of damages from one selected contributor, who may then subrogate against the other contributors.
Liability of Immunity Applicants
There is no legal basis under Swiss law to treat immunity or leniency applicants different from other contributors in this regard. Though leniency is offered by the Swiss Competition Commission in regard of the administrative sanctions, there is no direct link between leniency applications and civil procedures. As a result, leniency applications might fully or partly release the applicant from administrative sanctions, but not from the duty to pay damages or from the retribution of illicitly earned profits.
De facto, the Competition Commission protects immunity applicants by not releasing their files for civil actions (see 5.3 Leniency Materials/Settlement Agreements).
Except for cases of summary judgments, the defendant may bring contribution proceedings against a third party; eg, other participants of a breach of competition law (Article 81, CCP). Contribution proceedings enable the defendant to lodge their claims against third parties within the proceedings of the claim against them. This constitutes a valuable remedy for the defendant if they intend to take regressive action against other contributors when ordered by the court to pay damages.
It is possible to obtain a preliminary injunction so as to prevent one party from continuing to engage in competition law breaches. In order to do that, the applicant must provide evidence of the competition law breach and demonstrate that they are likely to suffer irreparable harm if the infringement continues. In case of extraordinary urgency, courts may even grant preliminary injunctions without hearing the other party.
Unlike in ordinary civil proceedings, the courts are not required to obtain a prior legal opinion from the Competition Commission (Article 15, Swiss Cartel Act) in such cases even if the legality of the restraint of competition is in question.
Depending on the urgency of the dispute, the order can take anywhere from a few days to a few weeks or months.
As methods of alternative dispute resolution in civil competition law cases, mediation and arbitration are available in Switzerland and international contracts often provide for arbitration in Switzerland. Civil competition law disputes may therefore be submitted to arbitration, the arbitral tribunals being obliged to apply Swiss or European competition law if these laws are relevant to the outcome of the case.
However, in the event that European competition law is not, or not correctly, applied by an arbitral tribunal, it is extremely difficult to obtain an annulment of the result as the incorrect application of European competition law does not constitute a challenge ground in terms of a public policy ground in Switzerland.
The Swiss Federal Supreme Court decided in 2004 that third-party funding is permitted in Switzerland. However, the court also pointed out that, under certain circumstances, third-party funding might affect the independence required by law of the respective lawyer. Incidentally, there are very few organisations that offer third-party funding for civil litigation in Switzerland. The organisations that do offer litigation funding assess the case based on its chances of successful trial. The litigation funder provides the financial resources for litigation funding on an ongoing basis. In many cases, they also assume the risk that the plaintiff has to pay the costs of the other party. In return, the litigation financier receives a share of the litigation profits. The participation can be determined, for example, on a percentage basis or on the basis of the investments made by the litigation funder.
As a general rule in Swiss civil law, the losing party bears the court costs and has to pay compensation for the expenses of the prevailing party. The judge has a certain amount of discretion, though, regarding the eventual allocation of the costs. The compensation is calculated based on cantonal fee schedules and does not usually cover all incurred expenses.
The decisions of the cantonal courts may be appealed to the Swiss Federal Supreme Court. Grounds for appeal are limited to false application of the law (federal law, international public law and constitutional law) by the cantonal court and to any obvious mistakes in the determination of the relevant facts. The Swiss Federal Supreme Court is bound by the facts established by the cantonal court (unless they are obviously erroneous) and, in general, new facts and evidence may not be submitted during the appeal proceedings.
Over the past year some interesting developments could be observed in the practice of the Swiss Competition Commission (COMCO). Firstly, it is important to note that COMCO stated that the COVID-19 pandemic could not be used as a justification for any violations of the Cartel Act and that the authorities would intervene regardless of the pandemic. However, this was not the only time COMCO had to address the pandemic in the past year, as it opened an investigation into possible collusions between dealers of COVID tests. The pre-investigation of the authority came to the conclusion that the attempt to collude prices was unsuccessful and therefore the investigation was closed.
Liberalisation of the Gas Market
COMCO addressed network owners in central Switzerland. Two network owners (EWL and EGZ) had refused third parties the supply to end customers via their pipeline networks, even though the third parties had explicitly asked for permission to use the pipeline networks. COMCO concluded that this was an unlawful refusal to deal and the two network owners had abused their dominant position in the transport and distribution of natural gas via their pipeline networks. This case led to the liberalisation of the gas market and end customers being free to choose their natural gas supplier.
It is noteworthy that the two network owners tried to co-operate with the authorities by submitting a ready-made network access model and therefore benefited from a reduction in fines.
Two things can be deduced from this: on the one hand, the competition authorities have underlined that they are willing to take proactive remedies into account when imposing sanctions; furthermore, they are creating an additional incentive for the parties to work towards a solution to unlawful practices.
Public Procurement Recommendation
With the entry into force of the revised procurement law, the purchase of electricity by public authorities has been subject to public procurement law since the beginning of 2021 according to COMCO. Therefore, COMCO recommended publicly to Swiss cantons and municipalities to put the purchase of their electricity out to public tender. The authority based its recommendation on the Internal Market Act (IMA). In principle, there is an obligation to invite tenders from a threshold value of CHF250,000. In its statement, COMCO reminded the public of its right to bring complaints regarding cantons' and municipalities' decisions not to publicly tender electricity procurements and therefore violating their duty under the Swiss Public Procurement Act.
Public Procurement Investigations
COMCO recently sanctioned a bidding agreement in the IT sector for the first time. COMCO also sanctioned eight electronic companies in the region of Geneva that agreed on their prices together for public and private procurements for five years. COMCO is also leading an investigation into the conduct of waste disposal companies in the canton of Valais as it assumes that illegal agreements in public procurement have taken place. This illustrates the continuous fight of COMCO against agreements in public procurement procedures that affect competition negatively.
Broadcasting of Sports Events
In a case regarding the broadcasting rights for sports events, COMCO sanctioned UPC around CHF30 million. UPC acquired the exclusive rights to broadcast matches of the Swiss Ice Hockey Championship from 2017 to 2022. Consequently, it was dominant in the live broadcasting of ice hockey matches on pay-TV. UPC abused this market dominance by refusing Swisscom any offer to broadcast live ice hockey until summer 2020. With this conduct, UPC has, according to COMCO, illicitly hindered Swisscom's possibility to compete in the market. UPC appealed this decision, which is now pending before the Federal Administrative Court.
Possible Unlawful Conduct of a Landfill Company
COMCO is investigating a landfill company that is believed to have charged its shareholders lower prices than its other clients and refused to accept waste material from some clients. COMCO has indications that the company has a dominant position in the landfill sector in the Basle economic area and has abused this position. As the investigation is ongoing, COMCO has not yet established if the landfill company does indeed hold a dominant position in the market and if the described behaviour is illegal within the meaning of the Cartel Act. The investigation is expected to take about two years.
Complaint by SIX Leads to an Investigation into Mastercard
Due to the Swiss exchange SIX’s complaint against Mastercard, COMCO started an investigation into Mastercard. SIX accuses Mastercard of obstructing the market entry of a new National Cash Scheme (NCS), which regulates ATM transactions such as cash withdrawals. According to SIX, Mastercard’s refusal to “co-badge” the NCS on the new Debit Mastercard system to the card alongside the Mastercard system constitutes an abusive conduct by a dominant company. COMCO has issued precautionary measures against Mastercard. With the precautionary measures, the competition authorities want to enable the card-issuing banks to technically prepare the debit cards for a possible later activation of the NCS.
Unlawful Leasing Conditions
Nine car leasing financing companies systematically exchanged leasing conditions over several years. They obtained information about interest rates and residual value tables for vehicles. These price elements were included in the calculation of the leasing rates of the various providers. COMCO decided that this exchange of price information violated the Cartel Act. COMCO reached an amicable settlement with eight car leasing financing companies in July 2019.
No such agreement was reached with Ford Credit. Ford contested COMCO's finding that Ford Credit was also involved in the unlawful competition agreements from July 2006 to March 2014. Since Ford Credit was not willing to enter an amicable settlement with COMCO, the authorities completed the proceedings through the ordinary channels, which, along with additional investigative measures, led to an extension of the proceedings by two years. At the end of the investigation, COMCO reached the same conclusion and fined Ford Credit Switzerland GmbH CHF7.7 million for unlawful co-ordination of leasing conditions.
In contrast, Mercedes Benz Financial Services Schweiz AG did not have to face any sanction since it was the first to apply for leniency and inform COMCO about the facts. The case at hand shows once more the effectiveness of the leniency programme and is likely to increase the incentive for filing leniency applications.
Parallel Imports of Tobacco Products
COMCO sanctioned the German tobacco manufacturer Pöschl Tabak GmbH CHF270,000. Pöschl sells snuff and roll-your-own tobacco in Switzerland. It anchored export bans in its distribution contracts with several European distributors that were not allowed to supply tobacco products to Switzerland. COMCO qualified these contractual clauses to be unlawful territorial protection agreements. According to COMCO, the export ban sealed off the Swiss market and hindered competition significantly. Pöschl co-operated with the competition authorities and offered to reach an amicable settlement. It now allows its sellers to supply their Swiss clients with their tobacco products. This co-operation resulted in a reduction of the sanction.
In a recent decision, the Swiss Federal Supreme Court has qualified non-binding price recommendations to pharmacies and self-dispensing doctors by Pfizer as sanctionable vertical price maintenance. Since more than 89% of pharmacies and 81% of doctors followed the price recommendations, the Federal Supreme Court deemed the recommendations to be unlawful even though the manufacturer did not exert pressure on the distributors or grant them special incentives.
Pfizer used an electronic system to send recommended retail prices for Viagra to its distributors. In the electronic system, the current price recommended by Pfizer automatically appeared in the retailers' checkout system when they scanned the barcode of a product. This system is used by pharmacies for all medicines for reasons of efficiency due to the very large product range. According to the Federal Supreme Court, Pfizer could assume that the retailers were always aware of the recommended price and would refrain from setting their own prices. Setting their own prices would have meant too much additional effort. The distributors, for their part, had accepted the provision of the price and assumed that all distributors had the same price information. The Federal Court qualified the non-binding price recommendation as a concerted practice between Pfizer and the distributors and rejected the justification on grounds of economic efficiency.
Because of this ruling, price recommendations that are followed by a large proportion of a manufacturer's dealers could be illicit if they are regularly updated and appear automatically in the dealers' cash register systems. This new practice on recommended retail prices seems stricter than the corresponding rules of European competition law. Companies that supply retailers in Switzerland should therefore review their recommended retail prices.
Relative Market Power and Prohibition of Geo-blocking
The Swiss Parliament took up the demands of a popular initiative aiming at lowering the threshold of market dominance in the Cartel Act (relative market dominance) and, in particular, a related supply obligation for certain companies.
An undertaking is deemed to be in a position of relative market dominance if other undertakings are dependent on it for the supply of, or demand for, a good or service in such a way that there are insufficient and reasonable possibilities to switch to other undertakings. In other words, the same rules apply to relatively dominant powerful companies as to dominant companies. Therefore, companies with relative market power must demonstrate objective reasons for the unequal treatment of:
In addition to the introduction of relative market power, Parliament has banned private geo-blocking by revising the Unfair Competition Act (UCA). To ensure non-discriminatory shopping in online commerce, this provision provides that anyone who discriminates against Swiss customers in online and distance commerce with regard to price or payment terms, who restricts customers' access to an online portal or who forwards customers without their consent is acting unfairly.
Co-operation with Foreign Authorities on the Rise
COMCO participates in various networks of competition authorities, such as the Competition Committee of the Organisation for Economic Co-operation and Development (OECD) and the International Competition Network (ICN). As Switzerland is not a member of the EU, multi- and bilateral co-operation agreements with competition authorities are of great importance. On 1 December 2014, the Agreement between the European Union and the Swiss Confederation concerning cooperation on the application of their competition laws (SR 0.251.268.1) entered into force. The agreement enables the Competition Commission and the Directorate-General for Competition of the European Commission to notify each other of enforcement measures, to co-ordinate them and to exchange information. It contains rules on compliance with the existing procedural guarantees. The agreement makes an important contribution to the efficient prosecution of cross-border anti-competitive conduct and thus to better protection of competition.
COMCO continues to actively conduct investigations into restrictions of competition. In recent years, investigations of unlawful horizonal agreements in the domain of public procurement have continued to build a focal point of COMCO's activities.
The change in the law on relative market power could lead in the coming years to competition law being enforced not only by the authorities but also by private parties through civil actions. Companies with a dominant market position have triggered some investigations in recent times as well, as they have been assumed to have abused their dominant position.
Recent developments have shown that during an investigation by COMCO, it is advisable to co-operate, as this can significantly reduce fines.