The statutory basis for challenging cartel behaviour is the Federal Act on Cartels and other Restraints of Competition (the "Cartel Act"). The central provision for challenging cartel behaviour is Article 5 of the Cartel Act.
Articles 18 et seqq of the Cartel Act provide for public enforcement by the Competition Commission (COMCO) and its Secretariat. Articles 12 et seqq of the Cartel Act allow private plaintiffs to bring antitrust violations before the civil courts.
According to Article 49a of the Cartel Act, administrative sanctions (ie, fines) may be imposed on cartel participants. The details are set forth in the Ordinance on Sanctions imposed for Unlawful Restraints of Competition (the "Sanctions Ordinance"). Swiss competition law does not provide for criminal sanctions against individuals for violations of substantive competition law.
In addition, abusive prices may be challenged under the Price Monitoring Act, which applies to prices that are not the result of effective competition.
Public enforcement of the Cartel Act is the responsibility of COMCO and its Secretariat. COMCO is a 12-member decision-making body. Its decisions are prepared by the Secretariat, which conducts investigations and, together with one member of COMCO's presiding committee, issues the necessary procedural orders. The total headcount of the Secretariat amounted to 75 employees at the end of 2020.
In cases regarding cartels, COMCO may issue a declaratory decision and determine appropriate measures (eg, approval of an amicable settlement), including sanctions (ie, fines; see 4. Sanctions and Remedies in Government Cartel Enforcement). While the Cartel Act was conceived as an administrative act leading to administrative sanctions, it has been confirmed by the Federal Supreme Court (judgment 139 (2012) I 72 – Publigroupe) that fines based on the Cartel Act are criminal in nature in the meaning of the European Convention on Human Rights (ECHR). Therefore, an investigation addressing sanctionable cartel behaviour must in principle comply with the rule of law guarantees as set forth in the ECHR.
Swiss competition law does not provide for criminal sanctions against individuals for violations of substantive competition law. However, wilful non-compliance with amicable settlements and certain rulings by the competition authorities and appellate bodies may lead to criminal sanctions against individuals.
Prevention or termination of abusive prices under the Price Monitoring Act is the responsibility of the Price Regulator and its staff.
Any person hindered by an unlawful restraint of competition from entering or competing in a market is entitled to request the following by way of private enforcement before the civil courts:
According to the prevailing doctrine, only companies, not consumers, are authorised to bring these claims under the Cartel Act. Consumers may, however, bring claims under general tort law.
Cartel conduct is defined in Article 5 of the Cartel Act.
Agreements that significantly restrict competition in a market for specific goods or services and are not justified on the grounds of economic efficiency, and all agreements that eliminate effective competition, are unlawful (Article 5(1), Cartel Act).
The notion of agreement refers to binding or non-binding agreements and concerted practices between undertakings operating at the same or at different levels of production that have a restraint of competition as their object or effect (Article 4 (1), Cartel Act). A restriction of competition by object requires that the elimination or impairment of one or more parameters of competition (eg, price, quantity, territory, customers, supply) is made part of the programme (judgment B-8430/2010 (2014) – Paul Koch AG). A restriction of competition by effect exists if an agreement leads to the elimination or restriction of one or more parameters of competition, even though its regulatory content is not designed to do so (judgment B-3618/2013 (2016) – Hallenstadion).
Three types of agreement are presumed to lead to the elimination of effective competition if they are concluded between actual or potential competitors (horizontal agreements; Article 5(3), Cartel Act):
In addition, the elimination of effective competition is also presumed in the case of vertical agreements regarding fixed or minimum prices (resale price maintenance) and the prohibition of passive sales in distribution contracts (Article 5(4), Cartel Act).
Even if the presumption of the elimination of effective competition can be rebutted in a specific case, these agreements principally qualify as significant restrictions of competition, as confirmed by the Federal Supreme Court (judgment 143 (2016) II 297 – Gaba). Therefore, such agreements are admissible only if they can be justified on economic efficiency grounds – a justification that so far has rarely succeeded in practice.
There are no sectors or industries that are exempt from public cartel enforcement actions per se. However, statutory provisions that do not allow for competition in a market for particular goods or services (eg, provisions that establish a state-controlled market or price system and provisions that grant special rights to specific undertakings (eg, a monopoly) to enable them to fulfil public duties) take precedence over the provisions of the Cartel Act (Article 3(1), Cartel Act). For certain industries, this may result in at least a partial exemption from the application of the Cartel Act (eg, in the public health sector).
According to case law (judgment B-831/2011 (2018) – SIX DCC; pending before the Swiss Federal Supreme Court), the limitation period for the initiation of an investigation amounts to ten years as from the time of the termination of the anti-competitive conduct. This limitation period is deemed interrupted when the competition authorities initiate an investigation pursuant to Article 27 of the Cartel Act. According to the same case law, the limitation period for enforcement also amounts to ten years and begins running once a decision by COMCO or an appellate body becomes final.
Regarding cartel conduct that is subject to sanctions (ie, fines), if at the time of the initiation of the investigation the relevant conduct has already been discontinued for more than five years, sanctions may no longer be imposed (Article 49a paragraph 3 litera b, Cartel Act).
The Cartel Act applies to practices that have an effect in Switzerland, even if they originate in another country (Article 2(2), Cartel Act). This provision is applied broadly. The Swiss Federal Supreme Court held that any behaviour that may have effects in Switzerland falls within the scope of application of the Cartel Act, without further qualification of these effects (judgment 143 (2016) II 297 – Gaba).
In a decision upholding the Gaba principle, the court stated that vertical agreements between American companies restricting exports to Canada did not come within the purview of the Cartel Act because competition on Swiss markets would neither actually nor potentially be restricted (judgment 2C_63/2016 (2017) – BMW). Case law still has to clarify where the boundary between (relevant) potential and (irrelevant) purely hypothetical effects lies.
The principle of comity is not explicitly provided for in the Cartel Act. Where practices may have an effect in Switzerland, they are subject to the Cartel Act, and COMCO will generally apply the provisions of the Cartel Act, regardless of enforcement in other jurisdictions.
In 2014, an agreement between Switzerland and the European Union relating to co-operation on the application of their competition laws entered into force (the "Co-operation Agreement"). The Co-operation Agreement contains non-binding provisions on conflict avoidance (negative comity, Article 5), as well as on the opportunity to request the beginning or expansion of enforcement activities (positive comity, Article 6) (judgment B-5911/2014 (2017) – Air Cargo). Although there is not yet any published practice applying the Co-operation Agreement, COMCO has to consider these provisions when conduct is potentially subject to enforcement by the European Commission.
In a press release dated 26 March 2020, COMCO provided information on the application of competition law in Switzerland during the COVID-19 outbreak. The competition agency emphasised that, as a general rule, competition law was applicable in the usual manner. It specifically mentioned that it was co-ordinating its activities with other authorities with regard to excessive prices (eg, for face masks), but that the Cartel Act could only apply to the extent that there was illegal price fixing or abusive behaviour by dominant companies. On 1 April 2021, the Secretariat of COMCO opened proceedings against three distributors of COVID-19 self-tests for possible price fixing.
Public enforcement of competition law regularly starts with informal market observations by the Secretariat, which may lead to a preliminary investigation (also see 2.17 Leniency, Immunity and/or Amnesty Regime).
The Secretariat may conduct preliminary investigations ex officio, at the request of undertakings involved or in response to a complaint from third parties (Article 26, Cartel Act). The Secretariat investigates if there are indications of an unlawful restraint of competition. If there is no prima facie evidence to this end, the Secretariat closes the preliminary investigation, regularly by way of a short report on the market and the undertakings concerned.
If there is prima facie evidence of an unlawful restraint of competition, the Secretariat, in consultation with a member of the presiding body of COMCO, may open a formal investigation (Article 27, Cartel Act). COMCO may also directly open an investigation. Moreover, the Secretariat is required to open an investigation whenever asked to do so by COMCO or by the Federal Department of Economic Affairs, Education and Research. Upon opening an investigation, the Secretariat collects evidence and proceeds to hearings. On this basis, the Secretariat writes a draft decision, which is comparable to the European Commission's statement of objections. It is then that COMCO formally takes the decision, regularly after having held further hearings with the parties.
The competition authorities may conduct surprise visits ("dawn raids"); ie, searches without prior notice in order to be able to seize evidence (Article 42(2), Cartel Act). These dawn raids may be conducted at the companies' premises, at the private residences of company employees or with regard to vehicles. The person searched has the right to have a public officer present. Hence, the competition agency is generally accompanied by members of the police or other local authorities.
A dawn raid requires a sufficient initial suspicion that competition law has been infringed, a likelihood of finding evidence where the inspection takes place and that the action is proportional to the suspected offence. It must be based on a written warrant signed by a member of COMCO's presiding committee. Dawn raids are regularly conducted immediately upon opening a formal investigation.
In the context of a dawn raid, companies are not obliged to co-operate with the authority, but they are required to tolerate it. The Secretariat considers that the obligation to tolerate the dawn raid also comprises an obligation to open premises and provide passwords.
The company concerned has a right to be represented by outside counsel upon such a dawn raid. While legal literature argues in favour of a short grace period for outside counsel to arrive (eg, 30 minutes), the Secretariat considers it unnecessary to await the arrival of outside counsel before it starts the dawn raid.
In the context of a dawn raid, the Secretariat may seize hard copies of documents (although it will usually take copies only) as well as electronic documents and emails. Electronic documents and emails are regularly collected by way of "mirroring" (ie, by making a forensically valid copy of) the data on the company's servers and computers of specific employees (custodians). For this purpose, members of the Secretariat are accompanied by IT forensics specialists (eg, of the police of the canton where the dawn raid takes place or of the federal police).
As to the subject matter of the seized documents, the Secretariat considers it sufficient that they are potentially relevant for the purposes of the investigation. At the same time, the scope of the seizure is limited by the principle of proportionality (requiring that the measure is suitable, necessary and reasonable to achieve the intended goal) and the attorney-client privilege (see 2.12 Attorney-Client Privilege).
It is a criminal offence to prevent a public authority from carrying out an act that is one of its official duties (Article 286, Swiss Criminal Code). Spoliation of evidence by removing, destroying or deleting potentially relevant information may meet the elements of this offence.
Moreover, the Secretariat may take a (potential) spoliation of information into account as an aggravating factor when determining an undertaking's fine.
The Secretariat may interview company employees during the dawn raid or thereafter. As to the form of the interview, the Secretariat distinguishes between party examination and witness examination. Formal corporate bodies of the company (in the case of a corporation in particular, the members of the board) as well as the higher management are interviewed as parties. All other employees and former employees are interviewed as witnesses.
The distinction is particularly relevant for the question of whether the interviewee has an obligation to provide information. In the case of a party examination, the interviewee has a right to remain silent (but the Secretariat considers them obliged nevertheless to appear before the Secretariat). A person interviewed as a witness has an obligation to testify. In the case of lack of co-operation, a witness may be summoned to testify and/or may be fined.
Interviews with employees usually take place at the premises of COMCO or, exceptionally, at the company's premises or another place. In recent cases, the Secretariat has requested that interviews with company employees be conducted on site at the company's premises or at a police station, during a dawn raid or very shortly thereafter. If the interviewee requests legal counsel to be present at the interview, the Secretariat normally grants a preparation time of no less than four hours after the commencement of the dawn raid.
Immediately after conclusion of the dawn raid or shortly thereafter, the company receives copies of all documents seized by the Secretariat. In the case of hard copies seized or copied, the company receives an electronic copy of scanned documents. With regard to electronic copies and emails seized by the Secretariat, the company receives its own copy of the mirrored data.
If interviews are conducted, the Secretariat drafts minutes that have to be signed by the interviewee at the end. The interviewee receives a copy of the protocol.
Any officers or employees interviewed have a right to be represented and accompanied by their individual counsel. Counsel for the company may attend the interviews as well.
According to the Secretariat, the attorney is not to provide answers in place of the respondent, but an attorney may, eg, ask supplementary questions. The Secretariat therefore routinely requests counsel to be seated behind the interviewee, rather than next to them, in order to avoid answers of interviewees being influenced by counsel.
Under Swiss law, counsel may potentially represent both individuals (eg, officers or employees of the company) as well as the company, provided that such fact is disclosed to all parties and there is no conflict of interest. It is generally advisable to seek independent legal advice for individuals and the company as there may be conflicts of interest. The Secretariat considers it generally inadmissible that company counsel at the same time acts as individual counsel of the interviewee.
Defence counsel commonly take the following steps when asked to assist a client in a dawn raid:
Counsel also needs to quickly assess whether the company should file a leniency application. If a leniency application (marker) is being made, the undertaking immediately has to co-operate fully with the competition authorities to have the benefits of leniency (see 2.17 Leniency, Immunity and/or Amnesty Regime).
Furthermore, defence counsel needs to make sure all documents that must not be seized are duly sealed; eg, if they are subject to the attorney-client privilege (see 2.12 Attorney-Client Privilege) or personal secrecy laws (such as files on employees).
Parties to agreements, undertakings with market power and affected third parties must provide the competition authorities with all information required for their investigations and produce the necessary documents (Article 40, Cartel Act). The Secretariat can send to companies requests for documents or information (eg, questionnaires requesting information on specific conduct or, more generally, on a market).
An obligation to produce documents principally applies to all documents that are relevant for the investigation of competition authorities. This obligation is limited by the principle of proportionality and by privileges (attorney-client privilege, privilege against self-incrimination; see 2.12 Attorney-Client Privilege and 2.13 Other Relevant Privileges).
In addition to documents (obtained through dawn raids or requests for information), COMCO mainly uses responses to questionnaires and interviews as elements of proof for the alleged cartel conduct.
In the opinion of the Secretariat, the competence of the competition authorities to seize documents or other evidence during a dawn raid pertains to all evidence accessible in the premises of the company that is subject to the dawn raid ("accessibility principle"). Therefore, electronic documents may also be seized if they are located on servers abroad, provided they can be accessed from the company's premises. The same principle is in practice applied to the scope of documents to be produced by companies.
A further-reaching obligation to produce documents that are not accessible from Switzerland applies when the company has filed for leniency and thus is required to co-operate fully with the competition authorities.
Any objects and documents pertaining to the communication between a company and its external counsel must not be seized and need not be produced by the company (attorney-client privilege). The attorney-client privilege applies to a company's external counsel if it is authorised to represent parties in front of courts in Switzerland, but not to a company's in-house counsel. The attorney-client privilege applies to documents regardless of where they are located (ie, including documents located in the premises of the company).
Where the existence of legal privilege is in dispute, a company may request that the document(s) in question be sealed, pending a decision of the Federal Criminal Court on whether it may be seized and analysed. In the view of the Secretariat, it remains permissible that they make a summary assessment of the document in order to evaluate the existence of legal privilege.
The obligation of a company to produce documents, and of interviewees interviewed in the form of party examination to provide information, is limited by the privilege against self-incrimination (nemo tenetur principle), where proceedings relate to sanctionable cartel behaviour and thus qualify as criminal proceedings under the ECHR (see 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards). However, the scope of the privilege against self-incrimination has not yet been fully determined by the Federal Supreme Court.
In the case of a witness examination, the right to refuse to provide information applies only where the interviewee would risk criminal prosecution, a severe reputational disadvantage or a proprietary damage for themselves or close relatives. (As to the distinction between party and witness examination, see 2.5 Procedure of Dawn Raids.)
Individuals and firms commonly comply with requests for documents or information, potentially after discussion with the Secretariat on adequate limitations of the request. If a company does not comply with a request for a document or information, the company may be fined up to CHF100,000 and the responsible individual up to CHF20,000.
Principally, evidence that forms part of the investigation (other than evidence submitted by a potential leniency applicant) is available to all parties to COMCO's investigation, which may also include companies that did not, allegedly, participate in the cartel (but, according to the practice of the Federal Administrative Court, not those companies that have been damaged by cartel conduct). However, the competition authorities are bound by the rules on official secrecy (Article 25(1), Cartel Act). Companies can thus claim confidentiality with respect to specific facts constituting business secrets, also vis-à-vis other parties to the investigation. The mere fact of an involvement in an infringement of competition does not constitute a business secret.
Due to the lack of precedent, it is not clear whether a plaintiff that was not a party to COMCO's investigation may successfully demand the disclosure of evidence collected through use of investigative powers in a private damage action.
In a set of bid-rigging decisions, the Federal Supreme Court and the Federal Administrative Court granted public authorities (cantons and municipalities) limited access to the investigation file. File access was granted to the extent necessary for the authorities to assess potential sanctioning under procurement law or the enforcement of damage claims, and did not include the file of the leniency applicant (judgments 2C_1039/2018, 2C_1040/2018 (2021) – Canton of Aargau; judgment A-6315/2014 (2016) – Municipality of Meilen; judgments A-6320/2014 and A-6334/2014 (2016) – Canton of Zurich). According to Federal Supreme Court case law, it is not a prerequisite for granting access to the file that the cartel decision has become legally binding because antitrust cases can be complex and often take longer to be concluded than the absolute limitation period of ten years, which is relevant for private plaintiffs (judgments 2C_1039/2018, 2C_1040/2018 (2021) – Canton of Aargau).
Special rules apply to the access to information submitted by a leniency applicant (as to leniency, see 2.17 Leniency, Immunity and/or Amnesty Regime). If a leniency application is not anonymous, confidential treatment is usually afforded to the applicant, at least until an investigation has been opened and dawn raids have been conducted. At a certain point in the investigation, possible (co-)defendants will be entitled to due process and will therefore be granted access to the file. In practice, the Secretariat grants access to the file of the leniency applicant only in its premises and does not allow any copies to be made. This occurs at the latest when the draft decision (statement of objections) is issued. At this stage of the investigation, the identity of the leniency applicant will become known to the parties to the investigation. Once the decision of COMCO is published, the identity of the leniency applicant will become publicly known, at least indirectly, because no fine is imposed on the leniency applicant.
Defence counsel may raise legal and factual arguments towards the competition authorities throughout the investigation proceedings (or a potential preliminary investigation). In particular, defence counsel has a right to consult and comment on the case files, to suggest hearings of the party and witnesses and to participate in such hearings. Defence counsel may comment on the draft decision that the Secretariat produces based on the investigation, and on a potential hearing summoned by COMCO.
The Cartel Act provides for a leniency regime, which is based on Article 49a(2) of the Cartel Act and is specified in detail in the Sanctions Ordinance. As a general principle, a sanction (ie, fine) may be waived by COMCO if an undertaking assists in the discovery and elimination of the restraint of competition.
In order to receive full immunity, an undertaking must (i) report its own participation in a restraint of competition (in the sense described in Article 5(3) and/or 5(4) of the Cartel Act), and (ii) must be the first undertaking (a) to provide information that enables COMCO to open an investigation, or (b) to provide evidence that enables COMCO to establish a restraint of competition in accordance with Article 5(3) or 5(4) of the Cartel Act (Article 8(1), Sanctions Ordinance).
Immunity is granted only if the company:
In practice, the Secretariat accepts relatively general information for a marker (without evidence being submitted), provided that the company subsequently provides further, more detailed information and specifies its leniency application. The marker may also be submitted electronically via COMCO's website. In the view of the Secretariat, the marker needs to contain, as a minimum, the following:
Following receipt of the marker, the Secretariat sets the undertaking a deadline to submit its voluntary report.
Full immunity from fines is granted only to the first company reporting to COMCO. For "second-in-the-door" companies and latecomers, a reduction of the fine by up to 50% is available if a company voluntarily co-operates in a proceeding and, at the time the evidence is submitted, has ceased participation in the anti-competitive practice (Articles 12(1) and 12(2), Sanctions Ordinance). The importance of the company's contribution to the success of the proceedings is decisive in determining the amount of the reduction of the fine.
Besides, a reduction of the fine by up to 80% is available if a company voluntarily provides information or submits evidence on further infringements on competition in accordance with Article 5(3) and (4) of the Cartel Act (Article 12(3), Sanctions Ordinance).
The company seeking a reduction of the fine must submit to COMCO all necessary information on the reporting company itself, on the nature of the reported infringement of competition, on the other companies participating in the infringement of competition and on the affected or relevant markets (Article 13, Sanctions Ordinance).
There is no limit to the number of companies that are eligible for a reduction of the fine. Accordingly, in principle, not only is the "second-in-the-door" company eligible for a reduction of the fine, but this principle applies to any other reporting company that fulfils the conditions. However, since the reduction depends on the company's contribution to the success of the investigation, in general it is unlikely that companies co-operating at a later stage of the proceedings (when COMCO may already have sufficient information) will be able to profit from a substantial reduction, if any.
Therefore, there is ex ante transparency with regard to the conditions for a reduction in the fine and the range of the reduction (but not the specific reduction that will ultimately be granted).
The Secretariat may interview company employees. All formal corporate bodies of the company and the higher management are interviewed in the form of party examination, which means that they can refuse to provide information. All other employees and former employees are interviewed in the form of witness examination and thus principally have an obligation to provide information (see 2.5 Procedure of Dawn Raids). According to the Federal Supreme Court, this even includes former directors and officers of companies under antitrust investigation, who therefore may be examined as witnesses (judgment 2C_383/2020 (2021) – A. AG).
Parties to agreements, undertakings with market power and affected third parties are obliged to provide the competition authorities with all the information required for the investigation and produce the necessary documents. The obligation is limited by the principle of proportionality, the attorney-client privilege (see 2.12 Attorney-Client Privilege) and the privilege against self-incrimination (see 2.13 Other Relevant Privileges).
The obligation under the Cartel Act to provide the competition authorities with requested information and to produce requested documents is not explicitly limited to companies located in Switzerland. However, any measures taken against the refusal to provide requested information or documents will in practice be unenforceable where a company is located outside (and does not have any presence in) Switzerland. In practice, the Secretariat sends its information requests both to foreign companies directly and to their Swiss subsidiaries.
The Secretariat as the investigating body is separate from COMCO as the decision-taking body. In practice, the two authorities regularly interact as, for example, a member of COMCO's presiding committee needs to approve the opening of an investigation or the conduct of a dawn raid. There are no rules limiting the exchange of information between COMCO and the Secretariat.
In view of the interactions between COMCO and the Secretariat, concerns have been voiced that the separation between the investigating body and the deciding body is mere theory, and that COMCO does not exercise effective judicial control over the Secretariat.
There is no general legal framework that would allow COMCO to co-operate with foreign competition authorities, but there are several specific agreements on international co-operation in force. Most importantly, Switzerland and the European Union are parties to an agreement relating to co-operation on the application of their competition laws (the "Co-operation Agreement"), which entered into force in 2014. The Co-operation Agreement is a second-generation agreement in that it allows, inter alia, the transmission of information and documents between COMCO and the European Commission even without the consent of the company concerned.
There are three further agreements on international co-operation in existence. An agreement between Switzerland and the European Community on air transport, dated 21 June 1999, provides for co-operation of COMCO with the EU authorities. Also, free trade agreements between Switzerland and Japan (concluded in 2009) and between Switzerland and China (concluded in 2013) contain basic provisions on co-operation between the competition authorities of the contracting countries.
Finally, COMCO has regular contact with foreign competition authorities on a general, non-case-specific basis; for example, in the framework of the International Competition Network.
Public enforcement of competition law is implemented in administrative proceedings, even though the sanctions imposed qualify as criminal in nature under the ECHR. As to the steps of the administrative proceedings, see 2.1 Initial Investigatory Steps.
Civil enforcement of competition law in Switzerland is limited to private civil litigation (see 5. Private Civil Litigation Involving Alleged Cartels for further details on private civil litigation).
Enforcement actions are regularly brought against multiple parties in single proceedings, and COMCO takes a decision in a single order. If one party enters a settlement with COMCO during pending proceedings, proceedings will be closed for that party separately with a partial order and continued for the other parties (so-called sequential hybrid proceedings).
According to the inquisitorial principle, which applies in administrative proceedings in general and investigations into cartel behaviour in particular, the competition authorities and the courts have to investigate the facts ex officio. They bear the burden of proof for the alleged cartel behaviour.
As the sanctions (ie, fines) of the Cartel Act are criminal in nature (see 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards), the procedural guarantees of Articles 6 and 7 of the ECHR (and of Articles 30 and 32 of the Swiss Federal Constitution) apply. Accordingly, the standard of proof to be discharged in cartel cases that may lead to the imposition of a fine is "proof beyond reasonable doubt". This is the case, in particular, for the types of horizontal agreements set forth in Article 5(3) of the Cartel Act and the types of vertical agreements described in Article 5(4) of the Cartel Act (see 1.4 Definition of “Cartel Conduct”). With respect to market definition and questions of substitutability, which require proof of complex factual circumstances, the Federal Supreme Court ruled that the requirements for proving such connections must not be overstated, because exact proof would hardly be possible (judgment 139 (2012) I 72 – Publigroupe).
In cartel cases that may not lead to the imposition of a fine (ie, unlawful agreements in the sense of Article 5(1) of the Cartel Act that do not fall under the types of agreements set forth in Article 5(3) or 5(4) of the Cartel Act), COMCO considers that a lesser standard of proof of "preponderance of the evidence" applies.
In public enforcement proceedings, the Secretariat acts as the fact-finding body and conducts the investigation. It presents a draft decision to COMCO, which issues the order and applies the law to the facts.
It has not been decided whether, and under what circumstances, a third party that was not part of the investigation of COMCO may claim disclosure of evidence of such investigation for the purpose of private civil litigation. COMCO is under no express obligation to co-operate and provide assistance to civil courts. In principle, such claim could be based on the rules of document production under the Code of Civil Procedure, or the right of information under the Data Protection Act.
In a special setting, the Federal Supreme Court and the Federal Administrative Court granted public authorities (cantons and municipalities) limited access to the investigation file. File access was granted to the extent necessary for the authorities to assess potential sanctioning under procurement law or the enforcement of damage claims, and did not include the file of the leniency applicant (judgments 2C_1039/2018, 2C_1040/2018 (2021) – Canton of Aargau; judgment A-6315/2014 (2016) – Municipality of Meilen; judgments A-6320/2014 and A-6334/2014 (2016) – Canton of Zurich; see 2.15 Protection of Confidential/Proprietary Information).
Special rules apply to access to the information submitted by a leniency applicant. COMCO aims at protecting such information in order to maintain the companies' incentives to submit leniency applications intact, therefore strictly limiting the access to such information (see 2.15 Protection of Confidential/Proprietary Information).
Under Swiss law, the principle of free appraisal of evidence applies in that there are no formal rules as to the evidentiary value of certain means of proof. Limits arise under the constitutional right of due process of law, according to which, for example, competition authorities must not rely on means of proof that have not been made accessible to the companies concerned.
In competition proceedings, experts relied upon are regularly economists. External economists may provide reports on behalf of parties subject to an investigation into cartel conduct. Such reports are regularly commissioned in relation to questions of whether allegedly competitive behaviour had the effect of restricting competition, whether such effect was significant, or whether a significant effect may be justified on grounds of economic efficiency. COMCO has issued guidelines for such economic expert reports.
The taking of evidence by the competition authorities is subject to the attorney-client privilege (see 2.12 Attorney-Client Privilege) and, in proceedings that may lead to fines for the undertakings concerned, the privilege against self-incrimination (see 2.13 Other Relevant Privileges).
It is within the discretion of the competition authorities whether or not to divide up related facts into different proceedings. By way of example, investigations into bid rigging of construction companies in the canton of Graubünden have been divided up into several proceedings according to the geographic scope of the alleged cartel, although the same companies are (in part) affected.
Sanctions are imposed by COMCO, the decision-making authority. The Secretariat assists COMCO in the preparation of its decision, but cannot itself impose sanctions.
If the Secretariat considers that a restraint of competition is unlawful, it may propose an amicable settlement to the companies involved concerning ways to eliminate the restraint (Article 29(1), Cartel Act). The amicable settlement is to be formulated in writing and approved by COMCO (Article 29(2), Cartel Act). The instrument of an amicable settlement is often used in practice.
An amicable settlement under Swiss law is broadly comparable to an EU type of settlement (but more important in practice), rather than to the US style of plea bargaining. The Secretariat proposes the wording for a settlement; in particular, the wording for certain commitments of the company in respect of compliance with competition law in the future. In addition, the settlement generally contains the range of fines that the Secretariat will ask COMCO to impose.
While actual "plea bargaining" is not anticipated, discussions with the Secretariat may nevertheless be used by companies in order to discuss a reduction of the fine that the Secretariat will request that COMCO impose, in return for commitments of the parties and at least an implicit acknowledgement of the unlawfulness of the conduct under discussion. In practice, reductions of the fine of up to 50% have been granted. Furthermore, the Secretariat, at least implicitly, expects that the company will not submit an appeal against COMCO's decision confirming the amicable settlement. Upon its conclusion, the amicable settlement is binding on the company, but becomes effective only when approved by COMCO. The breach of an amicable settlement is subject to a fine for the company (of up to 10% of its Swiss turnover in the preceding three financial years) and criminal sanctions for the responsible individual (a fine of up to CHF100,000).
The establishment of cartel behaviour by COMCO does not have any legally prejudicial effect upon potential private civil litigation. However, it is conceivable that there is a relevant factual effect of prejudice if a decision of COMCO establishing cartel behaviour has become final and binding.
According to the Swiss Public Procurement Act, a procuring authority may exclude companies from a procurement procedure or delete them from a list of qualified companies in the event of cartel conduct. Furthermore, several cantonal procurement acts provide for a possible ban of several years for companies having committed illegal cartel conduct.
Administrative sanctions (fines) – qualifying as criminal sanctions in the meaning of the ECHR – can be imposed on companies for participation in an unlawful agreement pursuant to Article 5(3) and/or 5(4) of the Cartel Act (Article 49a(1), Cartel Act). In addition, sanctions can be imposed for the breach of an amicable settlement, a final and non-appealable ruling of the competition authorities, or a decision of an appellate body (Article 50, Cartel Act).
The maximum amount of the fine is 10% of the (group) turnover achieved by the company (and its group) in Switzerland in the preceding three financial years (Article 49a(1) and Article 50, Cartel Act). In determining the amount of the fine, due account shall be taken of the profit likely to have resulted from the unlawful behaviour (Article 49a(1) and Article 50, Cartel Act).
The actual amount of the fine is calculated as follows (Sanctions Ordinance, Article 2 and following, in detail): a so-called basic amount is set at up to 10% (in most cases decided by COMCO, it is 5% to 7%) of the turnover in the affected relevant markets in Switzerland during the preceding three financial years. This basic amount can be increased depending on the duration of the infringement. It is further increased in the case of aggravating circumstances and reduced in the case of mitigating circumstances. However, in no case is the fine to exceed the maximum amount described in the preceding paragraph.
COMCO may further impose an administrative sanction of up to CHF100,000 on a company that does not entirely fulfil its obligation to provide information or produce documents (Article 52, Cartel Act).
Criminal sanctions can be imposed on the responsible individual(s) for wilful violations of an amicable settlement, a final and non-appealable ruling of the competition authorities or a decision of an appellate body (a fine not exceeding CHF100,000). In addition, company employees who wilfully do not comply completely with a ruling of the competition authorities in respect of the obligation to provide information will be liable to a fine not exceeding CHF20,000 (Article 55, Cartel Act).
Swiss competition law does not provide for sanctions for individuals having participated in an unlawful agreement pursuant to Article 5(3) and/or 5(4). Furthermore, Swiss competition law does not provide for the imprisonment of company employees (such as managers or employees participating in a cartel).
Civil enforcement of competition law in Switzerland is limited to private civil litigation (see 5. Private Civil Litigation Involving Alleged Cartels).
There is no statutory provision establishing that the existence of a compliance programme affects the level of a fine. While legal literature proposes that its existence should be taken into account as a mitigating factor, COMCO has, in its practice, been reluctant to do so, which has so far not been overruled by the courts.
There is no basis for sanctions to extend to mandatory consumer redress.
Decisions by COMCO (or, exceptionally, by the Secretariat) are subject to judicial review by the Federal Administrative Court upon appeal within 30 days of receipt. This appeal can be filed either by:
The Federal Administrative Court has full jurisdiction to review COMCO's findings of fact, legal assessment and sanctions/penalties, under all aspects of fact and law. However, the Federal Administrative Court exercises restraint with regard to the review of technical factual questions. The Federal Supreme Court accepts this restraint and considers it compatible with the procedural guarantees of the ECHR (see 3.9 Burden of Proof).
The decision of the Federal Administrative Court is subject to a further appeal to the Federal Supreme Court within 30 days. This appeal can be filed:
The Federal Supreme Court can review the appeals decision of the Federal Administrative Court only with respect to its conformity with the law. It is bound by the facts that were established before the Federal Administrative Court, unless they are manifestly incorrect or have been determined in violation of legal provisions.
The decision relating to the unsealing of documents that were seized in a dawn raid and subsequently sealed upon the company's request (see 2.8 Initial Steps Taken by Defence Counsel) is, exceptionally, made by the Federal Criminal Court, at the request of the Secretariat. This decision is subject to an appeal before the Federal Supreme Court.
A party that is hindered by an unlawful restraint of competition from entering or competing in a market is entitled to request:
These claims may be brought by companies. Conversely, it is generally considered (although no precedents are known in this respect) that end customers – in particular, consumers – have no standing to sue.
There is no threshold requirement for a civil action based on alleged cartel behaviour. Proceedings in competition law matters are initiated with the submission of the statement of claim at the competent court.
Local jurisdiction of courts in Switzerland for competition law matters is determined according to the general rules for civil proceedings. Jurisdiction differs depending on whether the matter qualifies as an international or national case, and whether claims are made under tort law or contract law.
As regards substantive jurisdiction, the Swiss Code of Civil Procedure provides that every canton has to determine one court where competition matters are heard. In cantons that have a commercial court (Zurich, Berne, Aargau and St. Gallen), this court is competent for competition law matters. In all other cantons, competition law matters are to be brought before the cantonal appellate court.
Under both private civil litigation and administrative proceedings, elimination of, or desistance from, the restraint of competition may be ordered. Administrative proceedings may lead to fines with a deterrent effect, while financial relief under civil litigation is limited to compensation of actual damage or surrender of actual profits.
Based on general principles of Swiss law, a tort law claim for damages based on Article 41 of the Code of Obligations requires the following elements to be fulfilled:
All elements have to be proven by the claiming party.
Claimants in a civil damage claim can ask for compensatory damages (ie, compensation for losses and forgone profits caused by the cartel). Punitive damages (ie, damages in excess of the actual damage incurred by the claimant) are not provided for in Swiss law. Pursuant to Swiss principles on the conflict of laws, punitive damages may not be awarded by Swiss courts even if a claim based upon a restraint of competition is subject to foreign law that provides for punitive damages (Article 137(2) of the Federal Act on Private International Law).
Civil enforcement of competition law has so far played a limited role in Switzerland, for a number of reasons: a private claimant may instigate proceedings only on its own behalf, bears the burden of proof and the financial risk (court costs, compensation of the defendant, their own attorneys' fees) if they lose a civil claim, and faces considerable evidentiary hurdles to prove the cartel behaviour.
There are only very few cases relating to civil damage claims, due to the notoriously difficult proof of damage and of a causal nexus between the wrongful act and the damage. Claims as to elimination of, or desistance from, cartel behaviour that do not require such proof are somewhat more common, but still rather limited.
Swiss law does not offer means of collective redress, either in the form of genuine "class actions" or in the form of actions brought by consumer groups or other institutional organisations representing specific interest groups, unless they have been assigned the claims of individuals.
Indirect purchasers can bring a damage claim, unless they qualify as consumers (see 5.1 Private Right of Action).
While there are no known precedents to date, it is generally considered that defendants (eg, participants in a cartel) may raise a "passing-on" defence against claims brought by direct purchasers. Since consumers are generally considered to have no standing to sue, it is possible that defendants will not be liable for civil damages if the increased price was passed on by the direct purchasers.
The general rules of document production in civil procedure apply to evidence from administrative investigations or proceedings into cartel behaviour. Under Swiss law of civil procedure, there is no pre-trial discovery, as known in common law jurisdictions. The court will order a litigant or a third party to produce documents requested by a party where, in particular, the documents are sufficiently described. This is often a significant hurdle for claimants in cartel matters, as they have not been involved in the administrative proceedings and thus cannot specifically describe potential documentary evidence of cartel behaviour.
There are no figures available for the settlement quota for competition law matters. As a general proposition, settlement is fairly common in Switzerland – for example, approximately 65% of all cases are settled at the Commercial Court of Zurich.
Attorneys for successful claimants are compensated in that the court obliges the losing defendant(s) to repay the prevailing claimant for the cost of party representation. In contrast to court costs, the compensation of parties is not determined ex officio; the court awards party compensation only on request. Each canton has its own tariff that is normally based on the amount in dispute and the complexity of the proceedings. The compensation therefore varies from canton to canton.
Generally, the losing party must bear procedural costs. Procedural costs consist of court costs (judgment fee, costs of evidence-taking) and party costs (costs of legal representation and expenses; see 5.6 Compensation of Legal Representatives). The amount of procedural costs is based on the applicable tariff. Each canton has its own tariff that is normally based on the amount in dispute and the complexity of the proceedings. Procedural costs thus vary from canton to canton.
The decision of the court of first instance (see 5.1 Private Right of Action) may be appealed to the Federal Supreme Court. The grounds for appeal are limited to infringements of federal law, international public law and constitutional law. The Federal Supreme Court is bound by the facts established by the court of first instance, unless they are manifestly erroneous. As a general proposition, new facts and evidence may not be submitted.
There is no other pertinent information.
COMCO and the Secretariat have published a number of communications and guidance documents relating to cartel conduct and enforcement, partly available in English at the following link: https://www.weko.admin.ch/weko/en/home/rechtliches_dokumentation.html.
While over the past year COVID-19 has had a major impact on our lives in many areas, it left Swiss cartel regulation practice refreshingly unimpressed. At the end of March 2020 the Swiss Competition Commission (ComCo) issued a clear message: Swiss competition law continues to apply during the pandemic.
Subsequently, ComCo made some minor organisational adjustments (swift handling of requests for advice on measures in connection with COVID-19, electronic submission of merger notifications, letters are usually sent without a signature, contact with ComCo via Skype), but otherwise ran its operations as usual and even conducted three dawn raids at several companies.
In 2020, ComCo conducted a total of 20 investigations, of which seven were newly opened (compared to three in 2019). Furthermore, ComCo took six decisions (compared to 11 in 2019). Four of these were settled by amicable settlement and four resulted in sanctions.
With regard to cartels, ComCo maintained a focus on bid rigging. However, 2020 was rather calm as there were no landmark decisions in this area. In contrast, several high-profile cases related to abuse of dominance were in the focus of ComCo.
In civil competition law, landmark developments are taking place. The main novelty for 2019 was the facilitation of damages for those affected by a cartel. More recently, the Federal Supreme Court (FSC) issued two decisions regarding access to files by public cartel victims. The planned revision of the Cartel Act is also expected to facilitate civil claims for damages. The public consultation is planned for 2021.
As an emerging trend, there are indications that ComCo will increasingly make use of interim measures. So far, interim measures were an absolute exception. Recently, ComCo imposed two interim measures, however, both concerning abuse of dominance. It remains to be seen whether this trend will extend to the area of cartels.
In the following, the authors will provide an overview of the latest developments on inability to pay and damages in civil cartel procedures, and discuss the recent case law regarding nemo tenetur and the continued trends of tightened practice, in particular in the field of resale price maintenance. The trend to amicable settlements in cartel proceedings will also be reviewed.
Inability to Pay
Particularly against the backdrop of the COVID-19 crisis, the question of whether a sanction is sustainable for a company at all is likely to arise more and more frequently.
As recently as April 2020, the Federal Administrative Court (FAC) ruled on an appeal by a musical instrument seller, in which the seller argued that the sanction was not sustainable due to its financial situation. Although the FAC dismissed the appeal, it held that the sanction must be economically sustainable (principle of proportionality) and neither cause bankruptcy of the company (market exit) nor significantly impair its competitiveness. However, there are extensive obligations of the enterprise to co-operate in the determination of its financial situation. The criteria for assessing the economic viability of a sanction are, inter alia, the capitalisation (half capital loss or over-indebtedness situation?) and liquidity (unused credit volume/credit limit reductions?). In the meantime, a corresponding form is also available on the ComCo website to apply for inability to pay. It will be interesting to see how the practice will develop in the future.
Taking into Account Damages
The demand for civil law claims has increased, particularly due to ComCo's intensive detection of bid rigging. In last year's annual report, ComCo extensively discussed a decision from the preceding year in which it had reduced antitrust fines for the first time due to damages compensation paid to cartel victims.
Twelve companies active in the road construction industry in the canton of Grisons (Graubünden) met and allocated cantonal and municipal road construction projects among themselves regularly. ComCo levied a fine of CHF11 million, an amount that would have been much higher had ComCo not deducted the damages paid by the cartelists to those suffering damages (ie, the canton of Grisons and the municipalities) in its calculation. In this case, ComCo's investigative body, the Secretariat, proposed to the cartelists to settle with the affected municipalities and the canton of Grisons, offering a significant reduction of the antitrust sanction in exchange.
As a result, nine (out of 12) companies entered into settlement agreements with the municipalities and the canton of Grisons, and approximately CHF6 million in damages was paid. In its decision, ComCo reduced the fines of the respective nine companies by approximately CHF3 million, taking into account the settlement payments as mitigating factors.
With its new practice, ComCo introduced civil damages into the administrative cartel procedure, thus circumventing the difficulties of obtaining damages in civil cartel procedures. Although the Swiss Cartel Act provides for civil damages, the barriers to reclaim damages in civil procedures are high (Switzerland is neither part of the EU Antitrust Damages Directive nor does it have anything comparable). In particular, a plaintiff has to prove the damages occurred, which is difficult as it has to be shown that the difference between the hypothetical financial situation without a violation of the law would have been significantly better.
Further, a plaintiff has to provide evidence of the unlawful restraint of competition. Such evidence is difficult to obtain as competition authorities have to protect business secrets, official secrecy and the documents provided by leniency or immunity applicants. The new practice might put commercial pressure on companies to compensate damages before the decision by ComCo is binding, as the decision whether to pay damages has to be made prior to the latter decision.
With its two decisions of March 2021, the FSC further fosters the enforcement of civil claims, by providing (public) cartel victims earlier and more comprehensive access to the files relevant to their civil claims. The decisions also concern a bid-rigging case in the road construction industry. In 2011, ComCo sanctioned various construction companies in the canton of Aargau. The publication of the decision excluded the relevant projects affected by the bid-rigging agreements. The canton of Aargau requested access to the procedural files, which was only partly granted by ComCo in 2017.
Although the new developments in civil litigation attempt to foster civil damages claims, they also raise significant concerns, in particular as they may reduce the willingness of companies to apply for leniency.
Clarification on Nemo Tenetur
Recently, the FSC clarified controversial questions regarding the privilege against self-incrimination in competition law proceedings in three much-noticed decisions. In 2018, ComCo opened proceedings against various financial institutions. ComCo suspected that the addressees of the investigation had entered into unlawful agreements to compete in order to boycott mobile payment solutions from international providers such as Apple Pay and Samsung Pay. In these proceedings, ComCo interrogated current and former employees as well as executives, including a former CEO summoned as a witness. Whether an individual is interrogated as a party representative or as a witness is relevant. Witnesses are generally obliged to testify truthfully during their examination, whereas party representatives may refuse to testify.
The financial institutions appealed against the decisions of ComCo to interrogate former executives as witnesses. The FSC now ruled in favour of ComCo.
As a consequence, former executives do not have the right to refuse testimony based on nemo tenetur as this principle only protects the rights of defence of the company investigated. In the view of the FSC, the rights of defence of the company are not at stake as witness statements of former executives cannot be attributed to the company. The company investigated is still free to refute such statements.
Continued Trend of Tightened Practice
With the landmark Gaba judgment in the matter of Elmex toothpaste, the FSC ruled in 2016 that hardcore agreements on prices, quantities and territories constitute per se, in principle, significant restraints of competition and are unlawful if they cannot be justified on economic efficiency grounds. A review of quantitative effects such as market shares is no longer necessary. This strict approach has been confirmed by the FSC in its BMW decision in 2017 and its Altimum SA decision in 2018. In both cases, the FSC clarified that the barriers to justify otherwise unlawful anti-competitive agreements based on grounds of economic efficiency are high, in particular for hardcore restraints.
The trend towards a tightened practice continued in 2019 and 2020, not only for agreements but also for abuse of dominance cases. In particular, for agreements, the qualification as type of agreement (either vertical or horizontal) is becoming less important and the practice as regards exclusivity clauses and price recommendations is being further tightened.
Reduced Importance of Qualification of Type of Agreement
Early in 2010, ComCo opened an investigation against Hallenstadion, an event venue, and Ticketcorner, a ticketing distributor. Hallenstadion and Ticketcorner had concluded an agreement according to which Ticketcorner had the right to distribute 50% of the tickets for events at the Hallenstadion. ComCo concluded that the agreement did not contain an unlawful competition agreement, but the FAC came to the opposite conclusion.
In its decision in February 2020, the FSC confirmed that the 50% clause in the agreement was unlawful (notably because of Hallenstadion's dominant position), albeit an agreement that did not trigger fines as it does not contain a hardcore restriction. Usually, for the definition of the market affected by the agreement, the court has to define the type of agreement at hand. However, in this case, according to the FSC, the agreement between Hallenstadion and Ticketcorner was neither a horizontal nor a vertical agreement, but rather another type of agreement.
Furthermore, also in the French-language book market case, an investigation was opened for a presumed cartel but extended to a behaviour that now qualifies as a vertical agreement.
Tightening of Practice Regarding Exclusivity Clauses
In the French-language book market case, the FAC issued nine judgments in October 2019. Contractual agreements between Swiss distributors and foreign editors often provide for territorial exclusivity. These exclusivity regimes should not be problematic as long as passive sales remain available for the downstream market; ie, supply requested by the Swiss retailers and booksellers directly from foreign editors.
A peculiarity of the nine cases is the wording of these exclusivity clauses. They did not provide for an exclusion or restriction of passive sales. Under the concept of "proof by indication", however, ComCo and the FAC concluded that the exclusivity clauses were to be qualified as hardcore restraints because there were, according to ComCo, sufficient indications of a restriction of parallel imports, or restriction of passive sales, on the downstream market. Surprisingly, ComCo and the FAC excluded sales of books by Amazon from the relevant market. This approach is not in line with ComCo's own practice, which in general considers that internet sales are essential in order to prevent absolute territorial protection. Furthermore, neither ComCo nor the FAC examined in detail (through queries or interrogation) how these unclear contractual clauses were applied in practice by the editors located abroad; ie, if passive sales were, in fact, not possible in practice.
If the FAC decisions were to be confirmed by the FSC (eight appeals are pending), the practice on hardcore restraints would be further tightened. Unclear clauses that do not expressly mention the authorisation of passive sales, combined with some indication of restriction of parallel import on the downstream market, could already lead to a sanction, notwithstanding the fact that the relevant market in question is completely open to internet sales.
Tightening of Practice Regarding Price Recommendations
In February 2021, the FSC assessed whether vertical price recommendations for Viagra constituted a concerted practice. This is a landmark decision in the matter of concerted practices and recommended prices. The court confirms that the trend towards stricter practice is continuing, not only in the case of agreements, but also in the case of concerted practices.
Although the FSC clarified that mere adherence to the price recommendation is not sufficient in itself, the court also indicates that pressure or further elements are not necessarily required in order for a price recommendation to be unlawful. Rather, an overall assessment is to be carried out and the requirement regarding actual adherence is not too high. This means that Swiss antitrust law in the area of price recommendations is stricter than European competition law.
In the specific case, the court concluded that due to compliance with the recommended prices of more than 50% and the design of the electronic system, which showed the retailer the current recommended price when the product was scanned, there was an unlawful price recommendation.
Trend of Reaching Amicable Settlements
With four out of six decisions concluded with amicable settlements, 2020 confirms the trend of recent years towards more amicable settlements.
Of particular interest are four investigations: the Forex investigation, the Yen LIBOR/Euroyen TIBOR and the EURIBOR investigations, as well as the automobile leasing investigation. In all four investigations, not all parties to the proceedings were part of the settlement agreement and, thus, the investigations have been ongoing since 2010 and 2014 and will continue – in the Forex and automobile leasing investigations, for only one party – in an ordinary procedure and will result in an ordinary decision only for the non-settling parties.
In the car leasing investigation, eight parties concluded an amicable settlement because of alleged exchanged information on the level of leasing interest rates. The sanctions amounted to approximately CHF30 million. The case was initiated by a leniency application.
No agreement could be reached with only one company. ComCo is expected to reach its decision against this company in 2021. In addition, one company, which was party to the amicable settlement, has filed both a contractual claim and an appeal against the settlement decision to the FAC. In the contractual claim, it is requested that the settlement decision should be shortened from currently 45 to a maximum of five pages since a short decision was foreseen in the preliminary remarks of the amicable settlement. With its decision of 13 October 2020, the FAC refused to consider the contractual claim on its merits.