We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
01 April 2021
In March 2021 Parliament approved a counterproposal to the Fair Price Initiative, thereby revising the Cartel Act (CartA) 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 revision of the CartA extends the prohibitions previously applicable only to dominant companies (eg, the abusive refusal to supply goods or the abusive discrimination between trading partners in relation to prices, pursuant to Paragraph 7 of the CartA) to companies with 'relative market power'. A company is considered to have relative market power if other companies depend on it with respect to the supply of or demand for a product or service in such a way that there is no sufficient and reasonable possibility to switch to other companies.
In contrast to the traditional determination of market dominance (Article 4(2) of the CartA), it is irrelevant whether the allegedly relatively dominant company can behave independently of other market participants to a significant extent. Whether a company has relative market power must always be determined in relation to a specific bilateral business relationship.
In addition to the concept of relative market power, a further type of abusive practice has been added to Article 7(2) of the CartA, prohibiting companies with relative market power and dominant companies from restricting customers from purchasing goods or services offered in Switzerland and abroad at local prices and conditions.
The Competition Commission (ComCo) will likely assess whether a contractual partner is dependent on the basis of the following German practices:
Article 3a of the revised Act against Unfair Competition (UCA) introduces, in line with EU law, the prohibition of discrimination in distance commerce (ie, 'geo-blocking'). Under the new law, it will be deemed unfair competition if an online retailer:
However, Article 3a(2) of the UCA contains various exemptions (eg, for financial services, public transport or gambling) and the regulation establishes no obligation to deliver to Switzerland. The goods that may be available at a lower price must eventually be picked up abroad.
Since the new prohibition is part of the UCA, the civil courts and not ComCo will be responsible for the enforcement.
The introduction of the concept of relative market power in Article 7 of the CartA will extend the rules on the prohibition of abusive behaviour to many domestic and international companies. ComCo has already announced that it intends to create leading cases for the various case groups and sectors as soon as possible. It remains to be seen to what extent civil claims will simultaneously be filed.
Companies must check individually whether a particular contractual partner is dependent on them. This is particularly relevant prior to the conclusion of the business relationship. Under the new law, it is likely that small and medium-sized enterprises will also be increasingly confronted with Article 7 of the CartA by their contractual partners.
Direct penalties for an abuse of relative market power (ie, for a first offence) are not envisaged. However, in the event of a violation against a final decision prohibiting a certain abusive behaviour of a company with relative market power, such company may be fined up to 10% of the turnover achieved in Switzerland in the preceding three financial years. In addition, there is also a threat of civil damage claims.
Regarding the prohibition of geo-blocking, companies must ensure that Swiss customers are not charged with higher prices. Infringements of this provision may result in civil proceedings.
For more information please contact Marcel Meinhardt or Luzius Sidler at Lenz & Staehelin by telephone (+41 58 450 80 00) or email (firstname.lastname@example.org or email@example.com). The Lenz & Staehelin website can be accessed at www.lenzstaehelin.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.