Recent Decisions and Legislation Regarding Cartels in Switzerland

Overview

The Swiss Competition Commission (“ComCo”) is continuing to pursue its traditional enforcement focus in the area of cartels and horizontal conduct more generally, namely the investigation into bid rigging, in particular in the construction sector. At the same time, ComCo and its Secretariat (the “Secretariat”) have been active more broadly in cartel matters in the recent past and extended their scope of review to new activities and theories of harm. Specifically, ComCo has continued to address the application of horizontal conduct rules to sports matters. Further, ComCo is involved – for the first time in a while – in a new co-ordinated international cartel enforcement effort (in the fragrance industry).

The Secretariat has also expanded its analysis of information exchange on online comparison platforms and continued its longstanding focus on the investigation of bid rigging and cartels in the construction sector. In this area, two new investigations were opened, and several decisions on older cases were issued by the Federal Administrative Court. This article sets out selected important developments of decisional practice and case law of the recent past, as well as expected and imminent legislative changes, in the area of cartels and horizontal conduct.

Secretariat of ComCo: online comparison platforms and continued focus on construction industry cartels

In a consultation procedure regarding an online comparison platform for fuel prices at gas stations, the Secretariat assessed whether it is permissible under competition law for gas station operators as well as consumers to submit their fuel prices in real time to the TCS (Swiss Touring Club) comparison platform. Via this platform, fuel prices, in particular for gasoline and diesel, can be retrieved from gas station operators in Switzerland. The ComCo Secretariat came to the conclusion that the transmission of current fuel prices with full publication on the TCS comparison platform leads to an exchange of competitively sensitive price data. According to the Secretariat’s assessment, this entails a certain risk of collusion, which in individual cases can lead to unlawful price agreements between the gas station operators. This risk of collusion can be considerably reduced if only the most affordable fuel prices of the gas station operators are published, rather than all of them.

In a second consultation procedure regarding data platforms in the sports industry, the Secretariat assessed the exchange of data between manufacturers, wholesalers, and retailers via a platform with optimised digital processes. The Secretariat saw two problematic areas. On the one hand, it held that the data platform must ensure that no competitively sensitive information can be exchanged between competitors – at supplier or retailer level. On the other hand, it noted that electronic (non-binding) price recommendations from suppliers that are fed directly into the retailers’ POS systems can lead to price fixing (this corresponds to the practice in Switzerland as confirmed by the Federal Supreme Court in its Gaba Decision). However, the electronic transmission of individual purchase prices is permissible if it is ensured by the participants that the retailers set their own sales prices.

In the area of construction, there is a continued investigative focus of the ComCo in addition to an interesting case that surfaced in the context of a court case.

In July 2021, the canton of Fribourg tendered around 30 lots for winter road maintenance on cantonal roads. Some of these tender procedures were cancelled between March and April 2022 due to inexplicably high prices. An appeal against six of these tender lots was filed with the cantonal court. In its decisions of December 2022, the cantonal court found that the prices of the tenders submitted were obviously abusive and that there may have been collusion between the bidders. Thus, in April 2023, the Secretariat opened a preliminary investigation to ascertain whether there are indications of collusion between several of the companies regarding winter services in the canton of Fribourg.

In November 2023, the Secretariat opened two new investigations. One involves alleged bid-rigging in the canton of Neuchâtel. Apparently, there are indications that several companies have been co-ordinating their bids and prices for public and public–private authorities and private individuals in building construction and civil engineering. The second investigation concerns the steel trade. It is suspected that three steel traders linked the sale of reinforcing steel to the simultaneous purchase of spacer cages. The three companies allegedly appear to demand higher prices for the reinforcing steel in particular if construction companies want to purchase spacer cages and reinforcing steel from different dealers. Dawn raids were performed for this investigation.

In the area of Sports law, the ComCo has continued to examine the applicability of competition law to sports.

In December 2022, FIFA adopted the “FIFA Football Agent Regulations” (FFAR), which aim to regulate the activities of football player agents. In March 2023, a complaint was filed against FIFA in connection with the entry into force of the FFAR. These provide for a cap on the remuneration of football player agents and rules concerning the possibility of representing several parties at the same time. The complaint was accompanied by an application for interim measures aimed at preventing the contested articles from entering into force in October 2023. The Secretariat decided not to apply to ComCo to order interim measures as the requirements were not met in the view of the Secretariat. However, the Secretariat decided to open a preliminary investigation to further examine the compatibility of certain articles of the FFAR with Swiss competition law.

Competition Commission

In March 2023, ComCo opened an investigation against four companies in the fragrance industry as part of a co-ordinated international enforcement effort. The investigation aims at establishing whether several companies active in the production of fragrances have co-ordinated their pricing policies, prevented their competitors from supplying certain customers and restricted the production of certain fragrances. Dawn raids were carried out at various sites. These were co-ordinated with other competition authorities, namely the EU Commission, the US Department of Justice Antitrust Division and the UK Competition and Markets Authority.

Federal Administrative Court: information exchange and decisions concerning construction cartels

In a judgment of June 2023, the Federal Administrative Court (FAC) upheld a decision of ComCo of 2019 in the car leasing sector. ComCo had imposed sanctions totalling CHF30 million on eight car leasing companies. The companies had exchanged information on advertising campaigns and elements for calculating the leasing rates over several years. One company appealed against the decision to the FAC. The FAC dismissed the company’s appeal, confirming the contested decision and thus ComCo’s practice on the exchange of confidential information between competitors.

A few years ago, ComCo conducted a total of ten investigations into bid-rigging agreements in the canton of Graubünden. Three of these proceedings dealt with a large number of construction projects and seven with a total of ten collusive construction projects. The FAC issued its judgments in many of the appeals proceedings against these ComCo investigations last year. Largely, the FAC confirmed ComCo’s decisions and sanctions in these proceedings. In a few cases, the FAC reduced the sanctions. Notably, this was the case in the so-called Engadin I cases, which concern an estimated 400+ public and private construction projects in building construction and civil engineering affected, with a procurement volume of over CHF100 million. The FAC reduced several sanction amounts, in some cases to a large extent. These reductions were mainly attributable to a different assessment of the leniency applications. For example, ComCo demanded greater co-operation from the companies than the FAC. In addition, the FAC took into account half of the compensation payment subsequently made by one company to the canton. Many of the construction cases have in the meantime been appealed to the Federal Supreme Court.

Legislative developments: partial revision of the Cartel Act and Institutional Reform

In November 2021, the Federal Council published a preliminary draft for an amendment to the Cartel Act. Eight years after the failure of the last revision in parliament, a new attempt to revise the Cartel Act is gaining traction and aimed in particular at implementing the undisputed parts of the reform. The draft law was published on 24 May 2023. In addition, the Federal Council, in March 2023, created an expert commission that should assess, by the end of 2023, whether the institutions of Swiss cartel enforcement need changing. To the extent relevant here, the draft suggests the re-introduction of effects control for hardcore anti-competitive agreements.

In addition, the Swiss Federal Council indicated in March 2024 the broad outlines for a reform of the institution of Swiss cartel enforcement. Most importantly, it does not intend to fundamentally adapt the current structure, but to improve the current structure by more clearly separating the decision body (Competition Commission) from the investigative body (Secretariat of the Competition Commission).

The Secretariat must now conduct an investigation strictly without the involvement of ComCo in order to strengthen the independence of ComCo when making decisions. Furthermore, ComCo is to be reduced from the current 11–15 to 5–7 members and the members’ workloads are to be increased. This is intended to professionalise ComCo and strengthen its Secretariat.

The Federal Council also intends to strengthen the appeals procedure before the Federal Administrative Court (FAC). Specialist (part-time) judges are to be appointed to the FAC for antitrust cases. The Federal Council is thus aiming to speed up the proceedings and strengthen the economic expertise at the FAC. In addition, the appeal deadlines for the parties are to be loosened for extensive rulings by ComCo. The Federal Council requested the administration to prepare a consultation draft until May 2025.

The agreement on co-operation between ComCo and the German Federal Cartel Office (FCO) entered into force on 1 September 2023. Modelled on the existing co-operation agreement between Switzerland and the EU, the agreement with Germany allows in particular the co-ordination of proceedings and the exchange of confidential information in parallel proceedings. In one respect, the agreement with Germany goes even further than the agreement with the EU, allowing the competition authorities of one country to directly serve administrative orders onto the parties in the other country via the local competition authority.

These changes help to strengthen Switzerland’s capability when handling cartel-related cases. It will be interesting to see to what extent they achieve their purpose, and what further developments may be needed to continue to improve processes and outcomes.