New revision of the Swiss Cartel Act on its way

Background

Following the revision of Swiss dominance provisions, which will come into force on 1 January 2022, today, the Federal Council has published further proposed amendments to the Swiss Cartel Act ("CartA") for consultation (the "Proposal"). The aim of the Proposal is to modernise Swiss merger control, strengthen civil antitrust law, clarify the interpretation of hard-core agreements, and improve administrative procedures.

Although the Federal Council and the parliament are likely to amend at least parts of this new proposal after the consultation process, already today the following is noteworthy:

Merger control

New exemption from filing obligation

Under current law, transactions that meet the turnover thresholds of Article 9(1) CartA must be notified to the Swiss Competition Commission ("ComCo"). There is no exception to this filing obligation for cross-border mergers.

The Federal Council is now proposing such an exemption. A filing shall no longer be necessary if two cumulative conditions are met:

• First, the proposed transaction must not have a Swiss focus, i.e. all product markets affected by the transaction must geographically comprise Switzerland and at least the EEA.
  If the transaction affects a national Swiss market, the filing obligation remains in effect.

• Second, the proposed transaction must be reviewed by the EU-Commission.
  If the transaction is not notified to the EU-Commission, the exemption does not apply, even if the relevant markets geographically comprise Switzerland and at least the EEA.

In summary, the Federal Council proposes the introduction of a one-stop-shop principle for cross-border transactions that do not have a Swiss focus and are notified to the EU-Commission.

However, the practicability of the proposed rule is questionable. In its decisions, ComCo often does not provide a conclusive geographic market definition. It would therefore be necessary to specify in more detail on which basis the market definition, which is relevant for the assessment of the filing obligation, would have to be carried out.

Adoption of SIEC-Test

The Proposal adopts the Significant Impediment to Effective Competition-Test ("SIEC-Test") as the relevant standard for merger control. Today, Swiss merger control still assesses transactions based on the dominance test, i.e. a transaction may only be prohibited (or subject to remedies) if it creates or strengthens a dominant position liable to eliminate effective competition. This arguably very high threshold has led to only three prohibition decisions of ComCo.

Under the proposed SIEC-Test, ComCo could prohibit a transaction (or make clearance subject to remedies) if the following two cumulative conditions are met:

• First, the transaction must significantly impede effective competition, in particular by establishing or strengthening a dominant position.

• Second, the transaction may not produce any efficiency benefits proven by the notifying parties for customers, which result specifically from the transaction and offset the disadvantages of the significant impediment to competition.

The adoption of the SIEC-Test leads to harmonization with EU practice. It furthermore allows ComCo to take unilateral and coordinated effects as well as efficiency benefits into account.

The SIEC-Test would lower the existing threshold for intervention. If introduced, it is therefore likely that ComCo will intervene more often in (domestic) mergers.

Strengthening of civil antitrust law

With regard to the civil enforcement of competition law claims, the Proposal provides for an extension of the civil law remedies to anyone whose economic interests are threatened or violated by an unlawful restriction of competition. This means that in the future, also consumers and public authorities may seek such remedies.

To ensure that the duration of administrative competition law proceedings does not preclude the civil enforcement of claims, the statute of limitations is suspended from the opening of an investigation until a legally binding decision is rendered.

In order to avoid duplication of financial burdens and to promote voluntary compensation for victims of anti-competitive practices, voluntary compensation for damages or surrender of profits may be taken into account for the amount of the competition law sanction. With this, the Federal Council mirrors the recent practice of ComCo.

Clarification regarding unlawful agreements

The Proposal suggests that competition authorities must take into account both qualitative and quantitative criteria when assessing whether agreements significantly restrict competition and, therefore, are unlawful. This proposed clarification is a response to the criticised GABA case law of the Federal Supreme Court, according to which certain hard-core agreements constitute a significant restriction of competition already by virtue of their object and no quantitative effects such as market shares have to be taken into account.

Although the Proposal now aims to modify this case law, it remains unclear whether this will actually make hard-core agreements with insignificant impact on competition permissible again.

Procedural amendments

With regard to the administrative procedures, the Proposal provides for the following amendments:

• Regulatory time frames: In order to speed up the administrative procedures, the Proposal suggests specific time frames for both competition authorities and courts. These time frames are merely indicative and not enforceable. In case the authority is not in a position to meet them, it must explain the reasons for this to the parties.

• Consultation procedure: The proposal seeks to improve the consultation procedure (Widerspruchsverfahren) which allows companies to notify planned conduct and agreements to ComCo before implementation, thereby avoiding sanctions. With the proposed amendments, the Federal Council intends to make the consultation procedure, which is currently hardly used, more attractive.

• Compensation: The Federal Council proposes that parties shall be compensated for costs incurred also in proceedings before the competition authorities in case of a (partial) win. So far, compensation may only be granted before the Swiss courts.

Outlook

Interested parties may comment on the Proposal until 11 March 2022. After evaluation of the results of the consultation, the Federal Council will then define the parameters of the new draft legislation before it is dealt with in parliament. The final new provisions are not expected to come into force before 2023/24.

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Legal Note: The information contained in this Smart Insight newsletter is of general nature and does not constitute legal advice.