Swiss merger control is governed by the Federal Act on Cartels and other Restraints of Competition (Cartel Act) and the Ordinance on the Control of Concentrations of Undertakings (Merger Control Ordinance, MCO).
In addition, the Swiss Competition Commission (ComCo) and its Secretariat have published communications and guidelines on the application of the relevant merger control provisions.
There is currently no general foreign investment control regime in force in Switzerland. Special requirements apply in certain sectors where the conduct of business requires prior authorisation (in particular in sectors that were formerly served by public monopolies), such as telecommunications, broadcasting and airline transport services. Furthermore, the acquisition of a real estate company (a company with the primary purpose of holding real estate) in Switzerland may require a permit from the competent cantonal authority under the Federal Act on the Acquisition of Real Estate by Foreign Persons.
This legislative framework may change, however. In March 2020, the Swiss parliament asked the Federal Council (Switzerland's executive body) to propose foreign investment control legislation, aimed in particular at protecting Swiss know-how, employment, public order and safety. The Federal Council now has to propose such regime for further review in the parliament within two years.
Swiss merger control law is enforced by the ComCo and the Secretariat. The ComCo consists of 11 to 15 members (currently 12), elected by the Federal Council, and is the decision-taking body. The Secretariat conducts investigations, prepares the decisions of the ComCo and, together with one member of the presiding body of ComCo, issues the necessary procedural rulings.
The total headcount of the Secretariat amounted to 68 employees (60.9 FTE), as per the end of 2018 (most recent report available). The Secretariat is split into four departments responsible for product markets, services, infrastructure and construction; a fifth department, resources and logistics, provides administrative and technical services within the Secretariat).
In the banking sector, the Swiss Financial Market Supervisory Authority (FINMA) may intervene if it considers that the concentration risks impairing the interests of creditors. In such case, the FINMA takes the place of ComCo, which it shall invite to submit an opinion.
Notification is compulsory if the relevant turnover thresholds are exceeded or if an undertaking concerned has been held to be dominant in a relevant market in a final and binding decision (see 2.5 Jurisdictional Thresholds). There are no exceptions to this regime.
If a notifiable concentration is implemented without prior notification, the undertaking that was obliged to notify may be fined with up to CHF1 million. In such case, the ComCo may investigate the concentration ex officio and impose any necessary remedies. In addition, the responsible individual person(s) may be fined with up to CHF20,000.
There have been several cases where undertakings have been fined for failing to notify. These fines are made public. So far, no individuals have been fined.
If a notifiable concentration is not notified, its legal effect under civil law is suspended (ie, the closing is null and void).
The following transactions constitute concentrations subject to merger control:
Control is understood under Swiss merger control as the ability to exercise a decisive influence over the activities of another undertaking by the acquisition of rights over shares or by any other means. It is irrelevant whether control is acquired directly or indirectly, de jure or de facto. The means of obtaining control may in particular involve the acquisition of the following, either individually or in combination:
The acquisition of minority or other interests that do not confer control are not notifiable in Switzerland. However, such acquisition may be reviewed as a potentially anticompetitive agreement. According to the ComCo, an acquisition may constitute an anticompetitive agreement if the parties intend to co-operate.
Swiss merger control in the first instance applies a turnover test. A concentration is notifiable if two turnover thresholds are cumulatively met: in the financial year preceding the concentration, the undertakings concerned together reported a turnover of at least CHF2 billion or a turnover of at least CHF500 million, and at least two of the undertakings concerned reported a turnover in Switzerland of at least CHF100 million. Compared to international standards, these turnover thresholds are relatively high. Undertakings concerned are, in case of a merger, the merging parties and, in case of an acquisition of control, the acquiring and the acquired undertaking (ie, excluding the seller).
In addition, notification of a concentration is mandatory – irrespective of the turnover achieved – if one of the undertakings concerned (acquirer and target, but excluding the seller) has in a final and non-appealable decision been held to be dominant in a market in Switzerland, and if the concentration concerns either that market, an adjacent market or a market upstream or downstream thereof. For this threshold to be applicable, dominance needs to be determined in the binding part of the decision – ie, the notification obligation is not triggered if an undertaking is only held to be dominant in the reasoning of a decision.
Turnover is calculated on a consolidated basis (excluding intra-group sales). Turnover is geographically allocated to the place where competition for the relevant customer has taken place, which normally is the domicile of the customer. If the parties to the concentration make no sales to customers in Switzerland, but merely the invoicing is carried out via billing addresses in Switzerland for transaction taking place outside of Switzerland, such turnover is not considered to be achieved in Switzerland.
In the case of insurance companies, "turnover" is replaced by "annual gross insurance premium income", and in the case of banks and other financial intermediaries by "gross income".
Sales booked in a foreign currency shall be converted into Swiss francs in accordance with generally accepted accounting principles applicable in Switzerland. In practice, the average yearly exchange rates published by the Federal Tax Administration are regularly used to convert foreign currencies.
The turnover of an undertaking concerned comprises the turnover of the entire group – ie, the turnover of its subsidiaries, parent companies, sister companies and joint venture companies, but excluding intra-group sales. The seller's turnover need not be included with that of the target. The turnover of a joint venture that is jointly controlled by undertakings concerned shall be apportioned among those undertakings in equal parts (again, excluding any intra-group sales).
Changes in the business during the reference period are reflected similarly as under EU competition law. The turnover of a business divested in the financial year preceding the concentration must be fully subtracted, and the turnover of acquired businesses fully added.
Foreign-to-foreign transactions are subject to merger control in Switzerland if the relevant thresholds are met. According to the Federal Supreme Court, the fact that the thresholds are met in a certain case sufficiently indicates local effects.
An exception applies to foreign joint ventures. The Secretariat has published a notice according to which it does not consider the establishment of a joint venture in Switzerland notifiable (even if the turnover thresholds are met by the joint venture's parent companies) if the joint venture does not have any activities in Switzerland and such activities are neither planned nor foreseeable.
Jurisdictional thresholds in Switzerland are in the first instance turnover-based. The additional notification obligation based on one party's confirmed dominance (see 2.5 Jurisdictional Thresholds) requires that the concentration concerns either that market or an adjacent market or a market upstream or downstream thereof. Therefore, confirmed dominance of one party is in itself not sufficient to trigger a notification obligation.
Conversely, it is also not required that there is a substantive overlap in that market where one party is dominant for this threshold to be met, but it is sufficient that the transaction has a competitive relation to such market.
Three types of joint ventures are subject to merger control:
If the jurisdictional thresholds are not met, the ComCo does not have power to investigate a transaction or to impose any corrective measures if a transaction creates or strengthens a dominant position liable to eliminate effective competition.
Implementation of a transaction must be suspended prior to clearance.
If a notifiable transaction is implemented before clearance, the undertakings concerned may be fined up to CHF1 million. The responsible individual(s) may in addition be fined up to CHF20,000. These fines are made public. Fines have also been imposed in the case of foreign-to-foreign transactions.
The parties may request the ComCo to authorise implementation of the concentration prior to the review period. The parties need to show good cause for such implementation in that the concentration could otherwise not be implemented or that third parties may suffer significant harm if implementation is suspended during the review period.
Special rules apply to concentrations of banks that are deemed necessary for reasons of creditor protection. Such concentrations are reviewed by the Swiss Financial Market Supervisory Authority (FINMA) which may allow implementation at any stage of the proceedings.
There are no specific rules for public takeover bids. The ComCo should be contacted in advance in case of such bids in order to allow for co-ordination of their proceedings with the proceedings of the competent takeover board. It is also possible to request authorisation prior to the expiry of the review period in such cases or to propose arrangements on voting rights (see 2.15 Circumstances Where Implementation Before Clearance is Permitted).
To our knowledge, a carve out of affected businesses or assets to allow for closing of global transaction before receipt of clearance in Switzerland has so far not been accepted by ComCo. In particular, in the case of takeover bids, the ComCo has in practice accepted arrangements on the limitation of voting rights during pending merger control proceedings.
There are no specific deadlines for notification. Notification must be submitted prior to the implementation of the concentration, and the concentration must not be implemented prior to clearance (or grant of a derogation from the suspensive effect). Implementation without notification (see 2.2 Failure to Notify) or during pending proceedings (see 2.13 Penalties for the Implementation of a Transaction Before Clearance) may be fined up to CHF1 million.
In addition, the responsible individual(s) may be fined up to CHF20,000.
In principle, a concentration can only be notified once the parties have reached a binding agreement. In practice, the ComCo accepts notifications already at an earlier stage when the parties can document a good faith intent to reach a binding agreement, as expressed in particular in a letter of intention or memorandum of understanding. There has yet to be any cases where a notification has been accepted at a stage where such good faith intention could not be documented in writing.
For the Phase I review period a filing fee of CHF5,000 is charged. Usually, the notifying undertaking is asked for payment after expiry of the review period. For a Phase II investigation, the fees are charged based on the time spent by the ComCo and the Secretariat. Hourly rates range from CHF100 to CHF400, depending on the urgency of the matter and the seniority of the respective individuals.
In case of a merger, both merging parties need to jointly submit the notification. In case of an acquisition of control, the notification obligation is upon the undertaking(s) acquiring control. If a joint notification is made, the notifying companies have to designate at least one joint representative.
The ComCo has published a form for the notification of concentrations. Essentially, the notifying undertaking(s) are required to submit the following information:
In addition, copies of the following documents needs to be provided:
The notification form may be submitted in any official Swiss language – ie, German, French or Italian. Accompanying documents may also be submitted in English. There are no requirements for formalisation of submitted documents, such as certification, notarisation or apostillation.
There are no penalties for incomplete notifications. However, the review period will only commence once the notification is complete. Within ten days as of submission of the notification, the Secretariat confirms its completeness, or requests additional information.
An undertaking submitting incorrect or misleading information may be fined up to CHF100,000. In addition, the ComCo may withdraw the clearance decision.
The ComCo is required to notify the undertakings concerned within one month from receipt of the complete notification whether it intends to open an investigation (Phase I). If no such notice is given within that time period, the transaction may be implemented. Regularly, the ComCo provides the companies in such case with a comfort letter that it considers the concentration as unobjectionable.
If the ComCo decides to open an investigation, it must be completed within four months, unless the ComCo is prevented from doing so for reasons attributable to the undertakings concerned (Phase II).
The parties can and typically do engage in pre-notification with the Secretariat. The parties submit a draft filing that the Secretariat will review and comment upon with regard to information missing for the notification to be considered complete. In complex transactions, pre-notification is generally welcomed by the Secretariat and highly recommended.
The Secretariat regularly requests information during the review process. If the request pertains to information that the Secretariat considers required for completeness of the notification, the review period only starts once such information has been submitted. The Secretariat may also request additional information that is not required for completeness of the notification.
The parties are obliged to provide such information within the deadline set by the Secretariat, but the request does not suspend the review period.
Prior to the notification of a concentration, the undertakings concerned and the Secretariat may mutually agree on the details of the content of the notification. The Secretariat may grant exemptions from the obligation to submit particular information or documents. In practice, this is relevant in particular for foreign-to-foreign mergers with limited effects on the Swiss market.
The substantive test is based on a dominance test supplemented by an additional test on the remaining degree of competition. According to this "dominance-plus test", a concentration may only be prohibited, if:
Compared to other jurisdictions, this threshold is comparatively high. In view of this high threshold, in the last 22 years (the current merger control system was introduced in 1996), only four mergers have been prohibited by the ComCo: Berner Zeitung/Thuner Tagblatt (1998, notification withdrawn prior to formal prohibition); Berner Zeitung/20 Minuten (2004, subsequently cleared upon appeal subject to obligations), France Télécom/Sunrise Communications (2012) and Ticketcorner/Starticket (2017).
It is currently contemplated to replace this dominance-plus test by the SIEC test (significant impediment to effective competition) as applied in the EU. A proposal for an amendment of the relevant provision of the Cartel Act is expected to be published in the autumn of 2020.
Markets are considered affected by the transaction if either two or more of the undertakings concerned jointly hold a market share of 20% or more in Switzerland, or in which one of the undertakings concerned holds a market share of 30% or more in Switzerland.
The ComCo regularly considers the practice of the European Commission, in particular with regard to market definitions. Furthermore, the case law in neighbouring countries of Switzerland will also be considered, namely the practice of the German Federal Cartel Office.
As mentioned in 4.1 Substantive Test, the current substantive test in Switzerland is a dominance-plus test. Applying this test, the ComCo investigates unilateral effects, co-ordinated effects in case of oligopolies, conglomerate effects, as well as vertical concerns and the elimination of potential competition.
In the past, the ComCo regularly did not consider economic efficiencies as a mitigating factor. In theory, efficiencies may be taken into account if they are likely to prevent the elimination of effective competition.
Further, under the Swiss substantive test, economic efficiency gains in one market may outweigh the effects of the creation or strengthening of a dominant position in another market (see 4.1 Substantive Test). This part of the test has for a long time not had practical relevance. In a recent case, however, the ComCo has for the first time authorised a concentration (Gateway Basel Nord, 2019) explicitly based on that provision, which indicates an increased role of efficiencies in Swiss merger control law.
The ComCo does not consider non-competition issues, such as industrial policy, national security, foreign investment, employment or other public interest issues, in its review of planned concentrations. As an exception to that principle, the Cartel Act provides that in a concentration of banks that is deemed necessary by the Swiss Financial Market Supervisory Authority for reasons related to creditor protection, the interests of creditors may be given priority (Article 10(3) Cartel Act). In such a case, the Financial Market Supervisory Authority takes the place of the ComCo.
Further, in case of a prohibition of a concentration by the ComCo, the undertakings concerned may request the Federal Council of Switzerland to authorise the concentration for reasons of public interest. In such a case, the Federal Council may take into account both competition-related and non-competition-related considerations in its assessment of the concentration. Up to now, no such authorisation has been granted.
No specific rules are applicable to joint venture, but they are assessed under the dominance-plus test as well (see 4.1 Substantive Test).
The ComCo may prohibit or interfere with a transaction only if the conditions of the dominance-plus test (see 4.1 Substantive Test) are met. If the companies do not comply with a prohibition decision, the ComCo may take all necessary steps to restore effective competition. In particular, the ComCo may order the separation of any combined undertakings or the cessation of the controlling influence. In addition, the ComCo may sanction companies that do not comply with a prohibition decision with a fine of up to CHF1 million.
A concentration may be cleared subject to certain conditions or obligations. The law does not specify the types of conditions or obligations that may be ordered. In practice, both divestitures and certain behavioural remedies have been implemented, and the scope of these remedies will be discussed by the parties with the ComCo.
In case of international transactions, it is particularly important to co-ordinate the remedies offered with those offered to other competition authorities, in particular the European Commission.
The law does not set a standard that remedies must meet to be deemed acceptable.
Both behavioural and structural remedies have been used in practice, and their choice depends on the characteristics of the affected markets and the identified competition concerns. While the ComCo prefers structural undertakings (ie, divestitures), it has shown to be more open to behavioural remedies than the European Commission. Remedies ordered by the ComCo can only take into account competition issues.
Other than in EU merger control proceedings, there are no procedural provisions under Swiss law as regard to remedies, such as the timing of their negotiations. The most appropriate moment to commence remedy negotiations has to be determined in the individual case.
The ComCo does not depend on the parties to propose remedies, ie, it can order remedies on its own. However, in practice the parties are closely involved in the development of potential remedies.
Swiss law distinguishes between conditions and obligations: conditions need to be implemented before the concentration is completed, whereas obligations need to be implemented thereafter. In the latter case, according to the practice of ComCo, the remedy must be implemented within a specified period – ie, it is not sufficient for the parties to commit to divest certain assets "as early as possible".
If remedies are not fully complied with, the ComCo may impose sanctions of up to CHF1 million or, in case of repeated non-compliance, an amount of up to 10% of the overall turnover of the undertakings concerned in Switzerland.
At the end of Phase I proceedings (preliminary investigation), the ComCo may issue an order to clear the transaction if conditions and obligations are imposed. Without remedies, the ComCo regularly does not issue a formal order at the end of Phase I, but provides the parties with a comfort letter clearing the transaction. The ComCo cannot prohibit the transaction at the end of a Phase I.
At the end of Phase II proceedings (in-depth investigation), a formal decision is ordered clearing (potentially subject to conditions and/or obligations) or prohibiting the concentration.
In 2017, the ComCo issued a prohibition decision (one of only four prohibitions since 1996) regarding the proposed concentration of Ticketcorner and Starticket. There has not been a clearance subject to conditions and/or obligations recently.
The ComCo only considers ancillary restraints to the extent they are directly related to and necessary for the concentration. Whether these conditions are given is assessed according to criteria that are comparable to the criteria applicable under EU competition law, as set out in the European Commission's Notice on Ancillary Restraints.
However, ancillary restraints that qualify under these criteria are not automatically covered by the clearance of the transaction, but only upon specific request. The ComCo expects the notifying undertaking(s) to specifically describe the ancillary restraints and provide an assessment in the notification as to why they qualify as directly related and necessary to the concentration.
The Secretariat regularly sends out questionnaires to third parties, in particular customers and competitors, to solicit their opinion on a planned concentration and to obtain a better understanding of the market conditions and the competitive environment. These third parties do not have any formal procedural rights. The ComCo is neither obliged to send out questionnaires nor to consider the replies received.
Third parties also do not have legal standing to appeal merger decisions.
The Secretariat regularly contacts third parties as a part of its review process by sending out questionnaires. In case remedies are offered, the Secretariat may obtain the assessment of such remedies by market participants (ie, market testing).
The fact of the submission of a notification is not made public. Conversely, the decision to open an investigation proceeding (Phase II) and the final decision of the ComCo authorising or prohibiting a concentration are published in the Official Federal Journal. Further, the ComCo regularly publishes the reasoning of its merger decisions in its quarterly journal.
The undertakings concerned may specify what information they consider as business secrets and ask the ComCo to keep such information confidential. In the event of a difference of opinion on whether certain information constitutes a business secret, the ComCo will issue an appealable order.
The agreement between the EU and Switzerland concerning the co-operation on the application of their competition law provides a framework for the co-operation between the ComCo and the European Commission. By virtue of this agreement, information may under limited circumstances be shared with the other authority without consent of the undertakings concerned (second generation agreement). In such case, the ComCo has to notify the undertaking concerned and invite it to state its views before transmitting the data to the European Commission.
With regard to other authorities, such exchange of information is only possible with the consent of the parties. Typically, the ComCo will then request a waiver letter from the undertakings concerned.
Decisions of the ComCo in merger control cases are subject to an appeal to the Federal Administrative Court. The Federal Administrative Court has full jurisdiction to review the ComCo's findings of fact, legal assessment and sanctions/penalties, under all aspects of fact and law.
The judgment of the Federal Administrative Court may be appealed to the Federal Supreme Court. The Federal Supreme Court can review the judgment only with respect to its conformity with the law. It is bound by the facts that have been established before the Federal Administrative Court, unless they are manifestly incorrect or have been determined in violation of legal provisions.
An appeal to the Federal Administrative Court needs to be filed within 30 days of formal notification of the ComCo's decision. The duration of the appeals proceedings vary, but regularly amount to significantly more than a year.
An appeal to the Federal Supreme Court needs to be filed within 30 days as of receipt of the formal notification of the judgment of the Federal Administrative Court. The duration of the proceedings regularly amounts to a year or more.
Third parties cannot appeal a clearance decision.
The Swiss government is currently considering whether the substantive test for assessing mergers should be changed from the dominance-plus test currently in force to the SIEC test, as applied in the EU. It is expected that the Swiss government will submit such a proposal for consideration by the Swiss parliament in the course of 2018.
In 2017, the ComCo issued its fourth prohibition decision in the 22-year history of merger control in Switzerland by prohibiting the proposed merger between Ticketcorner and Starticket, two Swiss ticketing companies that are controlled by Tamedia and Ringier, two Swiss media groups. The two companies are active, among others, in the market for distribution of tickets for events, such as concerts and shows, through physical and online channels (primary ticketing). The ComCo concluded that the proposed merger would eliminate effective competition in primary ticketing, and strengthen the market position of the two ticket companies.
For lack of feasible remedies, the concentration was prohibited.
Given the high threshold for intervention that requires a dominant position liable to exclude effective competition (4.1 Substantive Test), single-firm dominance (unilateral effects) is rather rare. Instead, there is a certain focus of the ComCo on collective dominance (co-ordinated effects), where it is assumed that the merged entity may enter into collusive practices together with another company. A full analysis of these effects was recently conducted in a proposed merger in the telecommunications sector (Sunrise/UPC, 2019).
The Swiss merger control regime has continued to operate in the COVID-19 pandemic. In contrast to other jurisdictions, the ComCo has not explicitly encouraged parties to delay notifications, and in practice has accepted merger filings, both electronically submitted and hard-copies. Merger control review periods have not formally been extended by legislative act.
ComCo itself can only extend the review period if it is prevented from completing its investigation for reasons attributable to the undertakings concerned. Hence, if the parties are able to deliver requested information, ComCo has to conduct its examination within the ordinary review period despite the COVID-19 pandemic.
Description of the current Swiss merger control system
With the total reform of 1995 a preventive merger control system has been introduced in the Federal Act on Cartels and other Restraints of Competition (CartA). A proposed merger must be notified to the Swiss Competition Commission (ComCo) if in the audited annual reports of the business year before the notification the turnover figures of the undertakings concerned exceeded CHF2 billion worldwide or CHF500 million in Switzerland and if at least two of the undertakings concerned each had a turnover of more than CHF100 million in Switzerland.
A proposed concentration is always subject to clearance by the ComCo even if the turnover thresholds are not met, if one of the undertakings concerned has, in proceedings under the CartA in a final and formally binding decision, been held to be dominant in a market in Switzerland, and if the concentration concerns either that market or an adjacent market, or a market upstream or downstream thereof. This was the case in many transactions involving the media and telecoms sector, where the two largest companies active in these sectors were found to be dominant.
A substantive assessment criteria, the dominance test was introduced. Accordingly, a proposed merger may only be prohibited by the ComCo if the newly merged entity would create or strengthen a dominant position that results in an elimination of effective competition (qualified dominance). Practice shows that this qualified dominance-test makes it very difficult to prohibit mergers. The threshold as described before is very high.
Furthermore, as a matter of law, unilateral effects below the market dominance threshold are not within the scope of the ComCo's review powers.
The preventive character of the merger control system is secured in that notified concentrations within the meaning of the CartA may in principle only be closed after their approval by the ComCo. The merger control procedure is divided into two phases. Following the submission of a complete merger notification, the ComCo and respectively its Secretariat examine within a period of one month whether there are indications that the proposed concentration would create or strengthen a dominant position. Absent such indications, the ComCo is barred from further examining the proposed concentration and it may be implemented without reservations.
Although a formal notice that no in-depth investigation will be conducted is not foreseen in the CartA, the ComCo regularly informs the undertakings concerned of this fact. Conversely, if the preliminary examination shows indications that the concentration would create or strengthen a dominant position, the ComCo and respectively its Secretariat conduct an in-depth investigation which can take up to four months. The ComCo may either approve, prohibit or approve subject to conditions notified concentrations.
From the rough description above it results that the current Swiss merger control system was mainly inspired by the first EU merger control regulation.
Recent practice under the Swiss merger control
The current substantive dominance test (qualified dominance) makes it difficult for the competition authorities to prohibit merger projects. This is proved by the fact that since the introduction of the preventive merger system in 1995 only three merger projects were prohibited; only one prohibition decision became final and binding.
The first case was a merger in the media sector which was approved on appeal. The second case was the merger between France Telecom Switzerland (Orange) and Sunrise. ComCo stated the creation of a collective dominance between the newly merged entity and the Swiss incumbent Swisscom. The decision was not appealed.
The third case concerned a merger between Ticketcorner and Starticket, the two only significant ticketing enterprises active in Switzerland. The ComCo determined that the proposed merger between Ticketcorner and Starticket would have strengthened Ticketcorner’s dominance and eliminated effective competition in the market of the distribution of tickets by third parties. In its competition assessment, the ComCo examined the position of the current providers of ticketing services active in Switzerland as well as potential market entries. It examined the market development as well as the role technology could play, such as Spotify, Facebook or Google. Despite advances in technology, the ComCo concluded that current and potential competitors would not be able to exert sufficient competitive pressure on the merged entity. This decision is currently under appeal before the Federal Supreme Court after the first appeals instance, the Federal Administrative Court, dismissed the appeal.
Apart from these three merger cases prohibited by ComCo, there are other mergers that were highly discussed within ComCo and its Secretariat. In 2015, the ComCo was called upon to make an in-depth examination of a planned joint venture between Swisscom, the national broadcaster SRG and Ringier, one of the leading Swiss media groups. By combining forces, the three companies aimed to strengthen their position in the marketing of online, TV, print and radio advertising, and planned broadcast target-ed television advertising through Swisscom TV.
The joint venture was eventually cleared in view of a sufficient level of competition remaining in the TV, online, radio and print sectors and uncertainties in the development of targeted TV advertisement.
Mergers in 2018
In 2018, the ComCo threw an eye on various mergers in the media sector.
Proposed acquisition of Goldbach Group
In May 2018, the ComCo announced to conduct an in-depth examination of the proposed acquisition of Goldbach Group, a leader in the marketing of electronic media by the Tamedia Group, one of the leading Swiss media groups with a portfolio of more than 50 media and digital platforms reaching a large part of the Swiss population in all language regions. On the basis of a preliminary examination, the ComCo had concerns that the proposed acquisition could lead to economies of scope across the individual advertising channels (TV, radio, print, online, poster or outdoor advertising) which could create a dominant position or strengthen an already existing one. This case was apparently seen very critical also in view of the existing joint venture of Swisscom, SRG and Ringier and concerns were raised that a duopoly situation could emerge.
Proposed joint venture of AZ Medien and Neue Zürcher Zeitung AG (NZZ)
In June 2018, the ComCo announced to conduct an in-depth examination of the proposed joint venture of AZ Medien and Neue Zürcher Zeitung AG (NZZ). AZ Medien was predominantly active in the north western part of Switzerland whereas NZZ was active on the whole of Switzerland. Both companies publish various newspapers and magazines and operate online platforms, television and radio stations.
Concerns arose that the merger could create or strengthen a dominant position in the reader markets for daily newspapers in the cantons of Solothurn and Aargau and in the magazine advertising market in the building services engineering sector. Furthermore, there were indications that collective dominance could be created or strengthened in the reader market for daily newspapers in the Basel area (with the Basler Zeitung) and in the reader market for Sunday newspapers (with the Ringier Group).
Proposed acquisition of Basler Zeitung
In August 2018, the ComCo announced to conduct an in-depth examination of the proposed acquisition of Basler Zeitung, the leading newspaper in Basel, by the Tamedia Group. There were concerns that that the acquisition could create or strengthen a dominant position in the markets for advertisers of (print/online) job classifieds in German-speaking Switzerland and the Basel area. Furthermore, there were indications for the creation or strengthening of a collective dominant position in the reader market for daily newspapers in the same geographic area, in the market for the provision of national print company advertising (daily, Sunday, weekly and commuter newspapers) in German-speaking Switzerland and in the markets for advertisers in (print/online) real estate classified ads in German-speaking Switzerland and in the Basel area.
The ComCo eventually cleared all three merger cases after it concluded that none of them would result in an elimination of effective competition, a threshold that must be passed in order for any measures to be taken by the ComCo.
Mergers in 2019
A number of noteworthy merger decisions were seen in 2019. The first case concerned a joint venture between SBB, the Swiss national (state-owned) railway group, Hupac, a rail company active mainly in the north-south corridor and Rethmann, the parent company of Rhenus Logistics. The joint venture partners aimed at creating the Gateway Basel Nord hub (GBN) for import and export movements and the trans-Alpine transit traffic of goods.
Once completed, GBN shall provide both landside (road and track) and ship-borne goods handling services. Although the ComCo considered that GBN could eliminate effective competition in the transhipment of containers, swap bodies and semi-trailers in import and export traffic, it took into account, when clearing the joint venture, legal requirements for non-discriminatory access to GBN and that GBN would likely lead to substantial cost and time savings in combined transport. Furthermore, the ComCo assumed that competition in import and export transport by rail will improve to some extent.
In sum, the ComCo took the view that these advantages would outweigh the disadvantages of GBN's dominant position in the market for transhipment services. The merger decision was not appealed, however, the project has been blocked by complaints of a competitor, for instance against the federal government’s decision on funding for the GBN or a complaint based on procurement laws.
The second case concerned the merger between Sunrise and Liberty Global Switzerland. In its preliminary opinion after the one-month assessment period, ComCo stated serious concerns, in particular about the creation of collective dominance of the newly merged entity with the Swiss incumbent Swisscom. Prager Dreifuss Ltd was, together with a team of economist experts of Polynomics, after the launch of the in-depth period, mandated by Sunrise to draft a legal and economic opinion to mainly show that the merger project would, contrary to the abovementioned prohibited merger in the Telecom sector (France Telecom Switzerland/Sunrise) not create a collective dominant position. The merger project was finally approved by ComCo without any conditions.
Reform of the Swiss Cartels Act
After the total reform of the CartA in 1995, a partial revision in 2003 and a failed re-form attempt in 2012, the Swiss Federal Council has mandated on 12 February 2020 the Federal Department for Economy, Education and Research (EER) to draft amendment proposals. The main focus of this new reform lies on the reform of the merger control. Apart from some procedural adaptations to EU law the change from the cur-rent substantive dominance test to the "Significant Impediment to Effective Competition test (SIEC test) will be the main element of the amendment proposals of the EER.
Before mandating the EER with the drafting of amendment proposals the Swiss government and the Swiss Federal office for Economy asked Prager Dreifuss Ltd and a specialised team of experts of Polynomics (www.polynomics.ch) for an opinion on the consequences of a change to the SIEC test. In this legal and economic opinion, merger decisions of the ComCo concerning wholesalers and retailers, telecommunication companies and media were analysed and compared them with transactions examined by competition authorities applying the SIEC test. It was concluded that the SIEC test is suitable for preventing harmful merger below the qualified dominance threshold whereas the current Swiss substantive test allows a prohibition or approval subject to conditions only in such cases where the concentration would result in qualified dominance.
Cartel civil tools and the opposition proceeding
Two further points to which the EER shall draft amendment proposals are the strengthening of the cartel civil tools and the opposition proceeding. In civil antitrust law which is part of the CartA, only undertakings could proceed against undertakings participating in an unlawful agreement, or in an abuse of dominance. The amendment shall introduce such entitlement also for natural persons.
The current opposition proceeding is similar to the "comfort letter" system in the EU before the introduction of the EU procedural regulation 1/2003 but now appears to be too long in time and too complicated. In this context it is interesting to see that with the COVID-19 pandemic situation the European Commission is apparently offering this "comfort" guidance policy again, even if in a much more informal way.
After the EER will have issued its amendment proposals the Swiss Parliament will discuss the proposals.
Apart from the official reform process another important amendment could be introduced in the CartA in the near future. A popular initiative demands to enlarge the abuse of dominance provision (Article 7 CartA), which corresponds to Article 102 TFEU, in that not only dominant undertakings shall be addressed by the abuse prohibition but also undertakings with market power. A second demand of the same popular initiative is the introduction of a Geoblocking clause into the CartA.
The popular vote on these rather revolutionary amendments will take place not before autumn of this year. The Swiss Federal Council has issued an alternative proposal to be submitted to the Swiss parliament. The alternative differs from the original popular initiative text in that they delete the Geoblocking clause and that international undertakings with market power shall just be obliged to offer their products in Switzerland to the same price they offer them outside Switzerland without undertakings with market power in general being covered by the abuse provision in Article 107 CartA.
The latter alternative would correspond best with the original popular initiative as its purpose was to adapt Swiss consumer prices to those abroad. It is however not to be expected that an eventual introduction of market power into the CartA will in any manner affect current merger control reform as described above.