In brief

The Swiss government has opened the consultation process on a further revision of the Swiss Cartel Act (“CartA“) after previous failed attempts.

The main objective of the proposed revision is the modernization of Swiss merger control. By changing the current qualified market dominance test to the Significant Impediment to Effective Competition (SIEC) test, the regulation of mergers shall be adapted to the standards already prevailing in the EU and the threshold for prohibiting a transaction should thus become lower.

In addition, the proposed revision clarifies the assessment of hardcore agreements and introduces new rules to further facilitate civil antitrust claims and administrative antitrust procedures. 

While the consultation has now been opened, an actual revision of the CartA is not expected before 2023/2024. During the political debate, Parliament may change the proposed amendments. The last time it did so, the revision proposal became overloaded and ultimately lacked approval by Parliament.

Therefore, we shall all stay tuned for further developments with this proposed revision of the CartA.
 

---

Contents

1. Key takeaways
2. Merger control 
   • New exemption from the obligation to notify
   • SIEC test
3. Clarification of anticompetitive agreements
4. Strengthening of civil antitrust law
5. Procedural changes 

---

Key takeaways

Should the government’s proposed changes enter into force, the following features are noteworthy: 

• Transactions may be prohibited if they significantly impede effective competition, even if they remain below the threshold of market dominance.
• Companies may be able to argue that their hardcore agreements still do not constitute a significant restriction of competition due to a lack of quantitative effects.
• Civil antitrust claims from consumers will take off.

Merger control 

New exemption from the obligation to notify

Up to now, any transaction which meets the turnover thresholds stated in Article 9 (1) CartA must be notified to the Swiss Competition Commission (ComCo). The proposed revision offers an exception to this rule for cross-border mergers, provided they a) do not have an exclusive Swiss focus (so must include Switzerland and at least the EEA), and b) are reviewed by the European Commission.

The aim is to simplify notification procedures and save time and resources for companies already conforming to EU notification standards (“one-stop shop”). It remains to be seen though whether this can be achieved in practice as this will still boil down to the market definitions.

SIEC test

Under the current law, transactions are assessed by ComCo with a qualified dominance test and ComCo can only prohibit a transaction if the transaction creates or strengthens a dominant position and if such dominant position eliminates effective competition. By introducing the SIEC test, ComCo could request remedies or prohibit transactions, if a) they significantly impede effective competition, and b) any proven efficiency benefits specifically arising for customers do not outweigh the downsides caused by the significant impediment to competition. Therefore, even transactions below the threshold of market dominance may be prohibited or approved subject to remedies only though the proposed provision still states the creation or strengthening of a dominant position as notable example.

The adoption of the SIEC test aims to harmonize the CartA with international, in particular EU, practice, to adapt the CartA to increasingly digitalized markets, without yet creating special rules for the same, and to allow ComCo to take both positive and negative, and in particular also unilateral, effects of transactions into due account. Again, it remains to be seen how other than clear market dominance cases will pan out.

Clarification of anticompetitive agreements

Currently, following the GABA case law (BGE 143 II 297), hardcore horizontal and vertical agreements (Articles 5(3) and (4) CartA) are considered to constitute a significant restriction of competition per se, meaning they are automatically deemed unlawful, even if they do not actually have any negative effect on competition, unless there is a sufficient justification, which in practice is difficult to prove. This per se assumption would change with the proposed revision. Re-introduction of the pre-Gaba effects control would require competition authorities to take into account not only qualitative criteria but also quantitative criteria when assessing whether even hardcore agreements significantly restrict competition.

The proposed revision aims to give companies more leeway for competitively desirable behavior. However, it is yet to be seen whether in practice companies will be allowed to enter into hardcore agreements which have an insignificant impact on competition.

Strengthening of civil antitrust law

The proposed revision aims to strengthen civil antitrust law by enabling more parties to bring civil actions. The most important remedies are the following:

• Consumers and public authorities shall be granted a right to assert civil claims.
• The statute of limitations shall be suspended from the opening of an investigation by ComCo until a legally binding decision is rendered.
• Companies providing voluntary compensation to victims for their anti-competitive practices may receive milder administrative sanctions. 

Procedural changes 

Administrative procedures shall be improved with the following instruments:

• The proposed revision aims to improve the notification procedure, allowing companies to notify their planned conduct to ComCo prior to implementation. Currently, ComCo has up to five months to open proceedings after the reported conduct. This time limit for the consultation procedure is to be reduced to two months. In addition, the risk of sanctions after such a notification shall only arise with the opening of a formal investigation and no longer merely with a preliminary investigation as is currently the case. But even with these improvements, the current lack of legal certainty still remains, since the risk of sanctions can arise if ComCo opens an investigation, even years later.
• In order to speed up the administrative procedure, the proposed revision introduces non-binding deadlines for competition authorities and courts with the requirement to either comply or explain any delays.
• Parties may receive compensation for representation costs incurred before competition authorities if the investigation is discontinued or in the case of a (partial) win.