Lenz & Staehelin
Lenz & Staehelin traces its roots back to two law firms founded by Conrad Staehelin in Zurich in 1917 and by Raoul Lenz in Geneva in 1951.Show more
Competition & Antitrust
Parliament recently approved a counterproposal to the Fair Price Initiative, thereby revising the Cartel Act and adopting the concept of 'relative market power'. Under the new law, prohibitions previously applicable only to dominant companies will be extended to companies with relative market power. The new law also introduces a geo-blocking ban.
The new law amending the Federal Act against Unfair Competition states that unfair competition occurs if an operator of an online platform for booking accommodation services uses general terms and conditions that restrict the pricing of accommodation facilities by means of price-fixing clauses, particularly price-parity clauses. The bill has been criticised for having been initiated not in the interest of consumers, but rather in the interest of the hotel industry, thus serving individual business interests.
Unlike EU competition law, Switzerland has no actual state aid regime. However, in the area of air transport, there is an exception. Until now, this provision had little significance in practice. Due to the ongoing downturn in air transport in light of the COVID-19 pandemic and the financial difficulties resulting therefrom, this is now changing and a practice regarding its application and interpretation from a Swiss perspective is being established for the first time.
Parliament is currently debating the so-called 'fair price initiative' and an indirect counter-proposal by the government, both of which aim to tighten the Cartel Act. Among other new provisions, the concept of relative market power will be introduced to combat foreclosure of the Swiss market and price discrimination against Swiss corporate customers. Both chambers of Parliament have agreed that the concept of relative market power will apply not only to suppliers, but also to customers.
Federal Administrative Court adopts broad interpretation of merger notification obligation for dominant undertakingsSwitzerland | 10 December 2020
Under Swiss competition law, a proposed concentration may trigger a mandatory pre-merger notification obligation if one of the undertakings concerned has been held to be dominant, irrespective of the statutory turnover thresholds. The scope of this provision is controversial. The Federal Administrative Court has now adopted a broad interpretation of the merger notification obligation for dominant undertakings, thereby exacerbating the issues associated with this provision.
While certain stakeholders consider the existing system of collective redress in Switzerland to be sufficient, it seems possible that the unsuccessful outcome of Foundation for Consumer Protection lawsuits could revive the debate on the strengthening of collective redress in the Swiss legal system, particularly in the context of the ongoing revision of the Civil Procedure Code. In the longer term, this could also lead to a facilitation of collective redress in civil antitrust law, which is currently extremely challenging.
Under Swiss law, a proposed concentration triggers a mandatory pre-merger notification if one of the undertakings concerned has been held to be dominant, irrespective of the statutory turnover thresholds. It was previously unclear whether this criterion had to be met at the time of signing or at the time of closing. The Secretariat of the Swiss Competition Commission has now clarified this question.
Companies in a wide range of industries are facing major challenges due to the COVID-19 crisis. Such challenges include strongly increased or decreased demand, possible supply chain bottlenecks and even supply shortages. Although the situation is exceptional, antitrust rules still apply. The only exceptions are if the government and authorities order measures to combat the COVID-19 crisis that restrict competition.
The Federal Supreme Court recently confirmed that Swisscom had abused its dominant position by charging abusive prices for wholesale broadband services between 2001 and 2007. Swisscom was found to have left its competitors no possibility to gain a sufficient profit margin between the wholesale prices charged by Swisscom and their retail prices (so-called 'margin squeeze'). This was the court's first judgment where it examined a margin squeeze under Swiss competition law.
The Competition Commission (ComCo) recently fined a Swiss manufacturer of skis and other sporting goods Sfr140,000 for vertical price fixing with its dealers. The fine was rather low, as the manufacturer had filed a leniency application and entered into an amicable settlement with ComCo. This settlement decision underscores ComCo's strict approach vis-à-vis hardcore vertical agreements and sheds light on how ComCo views restrictions of selective (online) distribution in Switzerland.
The Competition Commission (ComCo) recently closed its investigations into bid rigging in the construction industry and issued fines of Sfr11 million, an amount which would have been much higher had the commission not deducted the damages compensation paid by the cartelists to the victims from its claims. By introducing the possibility of compensating cartel victims for damages in antitrust proceedings, ComCo has chosen to advocate civil antitrust law to the detriment of its leniency programme.
The Federal Administrative Court recently upheld a Sfr7 million fine issued by the Swiss Competition Commission in 2010 against SIX Group regarding the processing of credit and debit card payments. This long-awaited decision dealt with numerous legal questions of relevance to dominance cases; however, it is not yet final, as an appeal is pending before the Federal Supreme Court.
Secretariat of Competition Commission advises on merger filing obligation based on dominant market positionSwitzerland | 30 May 2019
Under the Cartel Act, a merger filing is generally required when the relevant turnover thresholds pursuant to Article 9(1) of the act are met. However, in addition to these thresholds, the act provides for a filing obligation based on a dominant market position. As a result of legal uncertainty, a leading media group recently asked the Secretariat of the Competition Commission whether its intended acquisition of a small media agency would trigger a merger filing obligation even if the turnover thresholds were clearly not met.
The Federal Administrative Court (FAC) recently confirmed that the Swiss Competition Commission's decision to publish the contents of a preliminary investigation's final report must comply with the Federal Act on Data Protection and the Cartel Act. In the case at hand, the FAC held that the public interest in publishing largely prevailed over the private interest of an undertaking in maintaining its good reputation.
In a recent bid-rigging investigation, the Federal Administrative Court held that assessing the procedural role of a witness or company representative must be based on the circumstances at the time of the interrogation. The court found that interrogation of a witness is permissible only if it concerns purely factual information that could have no direct incriminating effect on the complainant with regard to a possible violation of competition law.
Secretariat of Swiss Competition Commission advises on changes in shareholder structure of joint ventureSwitzerland | 14 February 2019
The Secretariat of the Swiss Competition Commission recently issued advice in respect of Article 23(2) of the Cartel Act to two shareholders in a jointly controlled joint venture. The advice clarifies that joint control is given when the parent companies must agree on all important matters relating to the joint venture. Where several parent companies have unequal stakes in a company, minority shareholders must have a right to veto decisions that are essential to the strategic commercial behaviour of the joint venture.
Energy & Natural Resources
Capital cost rates for electricity supply, renewable energy production and high-pressure natural gas networksSwitzerland | 05 April 2021
The Federal Electricity Supply Act regulates the fee structure to be applied by electricity suppliers when delivering electricity to end consumers. The federal government adjusts this fee structure annually based on a pre-defined calculation method. An important element of this calculation method is the capital cost rates. The Federal Department of the Environment, Transport, Energy and Communications recently signalled that the method for calculating these capital cost rates is under review.
As of 1 January 2021, companies domiciled in Switzerland that are active in the extraction of raw materials must disclose payments to state authorities or government officials of Sfr100,000 or more per financial year. The new transparency provisions aim to foster responsible behaviour and create a uniform framework by aligning the Swiss provisions with existing standards under EU and US legislation. The new regulations will apply for the first time for the financial year 2022.
Federal authorities have concluded that further efforts are needed for the Swiss financial sector to play its part in achieving Switzerland's climate targets, despite numerous financial institutions now holding stakes in companies that are developing clean energies and e-mobility. As such, there is a developing trend of financial institutions and products coming to the regulatory forefront in terms of energy sustainability.
The revision of the Electricity Supply Act is in full swing. The purpose of this revision is to adapt the act to an electricity market that has changed considerably since its introduction. The aim is to close existing loopholes in the law and to examine new regulations based on the changing conditions in the electricity industry. One thing seems certain: the revision of the Electricity Supply Act is far from complete.
The Swiss Competition Commission recently fined two local energy suppliers for abuse of a dominant position in the natural gas market. The suppliers' refusal to grant third parties access to their pipeline grids was qualified as an unlawful refusal to deal. This decision has already had an impact, as electricity suppliers have begun to enter the natural gas market.
The Swiss Competition Commission (ComCo) recently reviewed whether Energie Wasser Luzern Holding AG and Erdgas Zentralschweiz AG had a dominant position in the natural gas market and whether their refusal to grant grid access qualified as an unlawful refusal to deal. The undertakings ultimately concluded a consensual settlement with ComCo which – combined with the future Gas Supply Act – will likely improve competition in the gas supply market.
A consultation on the revised Electricity Supply Act has shown that a majority of people support a full market opening, but that more incentives for investment in domestic renewable energies and planning security are desired. The amendments envisaged by the Federal Council will enable Switzerland to increase electricity production from renewable energies, better integrate such electricity into the electricity market and strengthen its supply security.
This article provides a non-exhaustive analysis of the legal situation regarding trading with natural resources in Switzerland, with a primary focus on new regulations and reference to foreign financial institutions. At the beginning of 2020, a new regulation came into force which also affected trading with natural resources. In general, trading in physical commodities does not require a licence, whereas trading in securities or derivatives on a commercial basis is subject to licensing requirements.
The government recently confirmed its proposal to fully liberalise the Swiss electricity market. This liberalisation will be accompanied by measures which strengthen domestic renewable energies and improve supply security. It is now up to the Federal Department of the Environment, Transport, Energy and Communications to submit a discussion paper to the government setting out the key parameters for such liberalisation and additional adjustments to be made to the Electricity Supply Act.
The CO2 Agreement between Switzerland and the European Union aims to link the Swiss and EU emissions trading systems (ETSs) to allow energy-intensive industries which currently participate in only the Swiss ETS to access the more dynamic EU emissions market. As under the current regime, the CO2 tax on fuels will be reimbursed to plant operators participating in the Swiss ETS at their request; however, a new exception applies to so-called 'fossil-fuel thermal power plants'.
Switzerland is home to a globally unique life sciences cluster. In a country where 33% of export goods are chemical-pharmaceutical products, it is unsurprising that patents play an important role. However, a strong patent system also needs strong enforcement means. This article provides a brief overview of the Swiss patent litigation system and highlights some trends in life sciences patent litigation.
In principle, Swiss law does not allow audio and video recordings to be made without the consent of the persons concerned. Consequently, such materials are generally of no avail in criminal proceedings. However, in two recent decisions the Federal Supreme Court dealt with certain exceptions to this rule and confirmed a clear-cut distinction as to when such recordings should be admitted.
The Supreme Court has held that an association of elderly women lacks standing to request the Swiss courts to review Switzerland's approach to meeting the Paris Agreement targets to mitigate the effects of climate change. The court's decision was seemingly motivated by the broad means available to individuals and groups to engage in the political process in Switzerland. The decision casts doubt on the future of climate change litigation which questions the approach taken by the Swiss government.
The Federal Supreme Court recently decided the fate of a contract between a bank client and his Swiss banks, which had refused to release gold from the client's bank deposit in kind. This decision prompted the court to outline the requirements for the general applicability of clausula rebus sic stantibus and its specific use in cases where a foreign mandatory law issued after a banking contract's conclusion affects the relationship between Swiss banks and their foreign clients.
The Supreme Court recently issued a judgment concerning 'likes' and 'shares' of defamatory posts on Facebook. The Supreme Court held that liking and sharing posts can potentially amount to punishable defamation. However, persons accused of defamation have the right to prove that such statements were true or that they could have believed in good faith that they were true, which may excuse such actions under the Criminal Code.
As a recent European Court of Justice opinion is likely to be adopted by Swiss legal doctrine and precedent, parties domiciled in Switzerland may be targeted by avoidance claims in another signatory state of the Lugano Convention based on a contract to which they were not a party but that was merely concluded between the debtor and a creditor.
Under the Civil Procedure Code, the Swiss courts usually take evidence only after the parties have fully pleaded all particulars. The taking of evidence is often preceded by multiple exchanges of written submissions; however, in certain cases, it may be unreasonable to wait until the proceedings have fully developed to take certain evidence. For such cases, Swiss law allows parties to request the so-called 'precautionary taking of evidence'. The Zurich Commercial Court recently issued a decision on one such request.
According to a new Federal Supreme Court decision, securing an advantageous place of jurisdiction in Switzerland (so-called 'forum running') in an international dispute is of sufficient interest for an action seeking a negative declaratory judgment. This new precedent enables parties domiciled in Switzerland to anticipate foreign proceedings initiated by a counterparty by filing an action for a negative declaratory judgment to drag the case before a court in Switzerland.
The Federal Supreme Court recently ruled on at which point the statute of limitation starts to run and what its duration should be. It found that the statute of limitation applicable to the claim for restitution was 10 years and that it started to run on the receipt of each payment by the agent. The issue of statutory interest remained undecided, but now appears much less controversial
The Federal Supreme Court recently clarified that the criminal liability of enterprises is not a strict liability, but rather requires proof of a criminal offence in each case. The decision defines the limits of criminal law applicable to enterprises, particularly in respect of money laundering, and clarifies that the genuine or cumulative criminal liability of enterprises is not a strict liability for organisational deficiencies.
The Federal Supreme Court has ruled that fines and other penalties of a criminal nature are not tax deductible for legal entities, as they are not deemed to be business-related expenses. Tax deductibility is granted only insofar as penalties aim at disgorging illegally obtained profits. For income tax purposes, it is essential to distinguish fines of a penal nature from those which aim to disgorge illegally obtained profits. However, the court provided no specific guidance on how to distinguish one from the other.
In a recent case, Land Rover terminated a service contract with an authorised garage. The garage filed for preliminary relief with the Zurich Commercial Court, requesting that the court oblige Land Rover to continue the service contract after termination. The court rejected the request, concluding that Land Rover did not have a dominant position at the after-sale level.
The Zurich Commercial Court recently decided that the term 'obligation' according to the Code of Obligations not only includes specific contractual obligations, but may also apply to obligations on other legal bases, provided that they result from a legal transaction which the agent has concluded in its own name but in the interest and for the account of the principal.
The Supreme Court recently clarified open issues regarding the independence and impartiality of judges, specifically of a part-time judge who was a partner in a law firm. The court clarified important issues and continued its trend of raising standards of independence for judges. The decision is welcome since it outlines the importance of the right to an impartial and independent judge and enhances trust in the judicial system.
The Debt Enforcement and Bankruptcy Law enables a creditor to apply for an order to freeze a debtor's assets on the basis of a final enforceable title. The Supreme Court recently ruled that a foreign award without prior exequatur proceedings can constitute a final enforceable judgment, and thus under certain conditions justify a freezing order. This decision extends creditors' access to freezing orders, but does not give them free rein.
Design infringement proceedings always carry the risk of losing the rights in a design because of a successful nullity counterclaim by the counterparty. A recent decision shows that also prior design applications by third parties, which had not been made available to the public when the party's own design was filed for application, must be considered in this regard.
The Federal Supreme Court has ruled on the appeal of Swatch Ltd, a leading Swiss watch and jewellery manufacturer, against a decision of the Berne Commercial Court to hold valid a trademark co-existence agreement between Swatch and TKS Ltd. The Supreme Court partially approved Swatch's appeal, revoked the commercial court's decision and remanded the matter to the commercial court for reappraisal.
The Federal Administrative Court recently ruled on an appeal by the Munich Breweries Association against a decision of the Federal Institute of Intellectual Property (FIIP) refusing to grant trademark protection for the term 'Oktoberfest-Bier' with respect to beer in Class 32. The FIIP had held that the sign was not distinctive and needed to be kept freely available under Article 2(a) of the Trademark Act.
The Supreme Court recently issued an interesting decision, in which it dismissed a motion to set aside an award rendered by the Court of Arbitration for Sport (CAS). This decision highlights the rule pursuant to which the CAS has "full power to review the facts and the law [and] may issue a new decision which replaces the decision challenged or annul the decision and refer the case back to the previous instance".
The Swiss Supreme Court has overturned a Court of Arbitration for Sport (CAS) award regarding the contribution for legal costs due to a breach of X's right to be heard. This was because the CAS had requested the parties to file written comments on legal costs but failed to set a precise deadline for the parties to file such observations, and then issued its award without giving them the opportunity to be heard in this respect.
In Switzerland, the term 'retrocession' generally refers to certain forms of fee-sharing arrangement between financial intermediaries. Promoters of financial products frequently enter into agreements with other financial intermediaries whereby the fund promoter pays a retrocession to the fund distributor. The Supreme Court has now addressed the question of whether retrocession is subject to a restitution duty.
In a recent decision the Federal Administrative Court partly rejected an appeal from a taxi company. The taxi service company was fined Sfr10,000 by the Competition Commission in 2008 for not having provided information requested by the authorities. The appeal court held that the penalty was legally justified in principle, but reduced the amount to Sfr5,000.
In a recent case the Supreme Court had to decide whether a family foundation based in Vaduz, Liechtenstein, could be considered as a valid legal entity from a Swiss law perspective for the purposes of filing a claim before a Swiss court, despite the fact that the foundation's purpose was solely to provide an income to family members. The court's liberal approach has strengthened Switzerland's openness to trusts.
The Supreme Court recently ruled on the interpretation of the term 'public solicitation' with regard to collective investment schemes in or from Switzerland. The decision will have a significant impact on private placement rules which are applicable to the public offering of foreign investment funds and structured products in Switzerland. It is likely that the Swiss private placement rules will undergo further developments in the near future.
The Zurich Commercial Court recently rejected interim measures sought by an authorised repairer of motor vehicles. The authorised repairer had requested the continuation of the existing service partner agreement on the grounds that the agreement had been terminated contrary to Section 17 of the Competition Commission Motor Vehicle Notice without cause and without substantiation.
A recent Federal Supreme Court decision emphasised the point that controlling shareholders should carefully assess all of the relevant circumstances – in particular, the relationships between the distressed company and its controlling shareholder and the likelihood of a bankruptcy in the near future – before providing additional funds to a distressed company in the form of a shareholder loan.
Pledges on movable goods are a traditional form of security that is well suited to debtors that have no access to other forms of security. The most salient feature of the Swiss law on pledges is a provision that no pledge is validly constituted if the pledgor retains possession over the pledged assets. However, a recent Federal Supreme Court decision has raised practical difficulties relating to the pledge under Swiss law.
The Supreme Court has overturned a ruling which classified Texas hold'em - a popular form of poker - as a game of skill. As such, the court held that games of Texas hold'em could take place only on licensed premises. The main beneficiaries of the court's decision are licensed casinos and, indirectly, the public coffers, which are swelled by the taxation of profitable casinos.
General terms and conditions are widely used within the Swiss banking and insurance industries. Until recently, judicial control of such terms and conditions was relatively limited. However, in several recent cases the Federal Supreme Court and the Geneva cantonal courts have ruled out certain terms and conditions on the grounds that they constitute 'unusual' provisions.
The Supreme Court recently denied the competence of the Court of Arbitration for Sport to rule on a case in which a professional ice hockey player refused to undergo a doping test. The decision is unusual in that it sets aside an arbitral award on the basis of the lack of competence of an arbitral tribunal.
Two recent Supreme Court decisions highlight important procedural issues related to the administration of evidence and the right to be heard. As a rule, the party willing to provide new evidence to the Court of Arbitration for Sport proceedings must inform the the court panel of its intentions as soon as possible. If the evidence is yet to become readily available, parties can apply to suspend the proceedings.
The Federal Supreme Court recently rendered a significant ruling on the issue of cost allocation in proceedings initiated by shareholders in the context of a merger which may have repercussions on comparable proceedings. As a result of this decision, purchasers that buy shares shortly before a reorganization in order to gain additional compensation risk bearing the costs risk for claims under Article 105.
Following a landmark Supreme Court decision in 2008 in connection with the insolvency of Swissair and its parent company SAirGroup, avoidance actions have become a broadly discussed issue in Swiss doctrine. Subsequently, a considerable number of decisions have been published relating to such actions. This update summarizes the effects of these new decisions and outlines the litigation aspects of avoidance actions.
It is not unusual for government entities to commercialize products and provide specific services, or allow licensees to do so, while using the entities’ names as brands. In two recent cases the courts reached different conclusions regarding the trademarks used for such brands.