Defending Swiss Companies in Antitrust Cases
Any company that fails to implement proper safeguards may become the subject of an antitrust investigation. In Switzerland, such probes are undertaken by the COMCO, and firms would be well-advised to assess their antitrust risks before they become necessary.
Dr Sébastien Gobat of Troller Hitz Troller shares his experiences with us in this article, diving deeper into the process involved in litigating cartel proceedings and other antitrust matters.
What are the key challenges when litigating on antitrust cases?
A cartel proceeding typically begins with a ‘dawn raid’ by the Swiss Competition Commission (COMCO) on companies that may potentially participate in an unlawful agreement or are allegedly abusing their dominant position. It is therefore necessary to be particularly reactive and, ideally, already assist the companies concerned in their premises during the dawn raid. The next step is to quickly understand what is at stake in the case. This means understanding the economic functioning of the relevant market in industrial sectors that are sometimes completely new to me – but this is also what makes my job so exciting. The relatively long duration of the proceedings – several years if all remedies are exhausted – and the relatively complex legal issues raised by these cases represent further challenges.
What are the most common violations of competition law in Switzerland?
The most common antitrust violations fall into two categories: 1) agreements that significantly restrict or eliminate competition on a specific market for goods or services and 2) abusive conduct of dominant undertakings.
In the first category, it is common to find illicit price-fixing agreements, whether on a horizontal level (i.e. between competitors) or on a vertical level (i.e. between a manufacturer and its distributors or between a wholesaler and retailers). It is also common to find agreements in the context of public bidding (‘bid rigging’). For instance, companies may agree not to participate in a certain bidding procedure, or define a rotation system for their participation in such procedures, or agree on the prices and conditions to be offered.
In the second category (abusive conduct of dominant undertakings), it is not uncommon to find dominant undertakings that try to consolidate their dominant position by refusing to supply customers, discriminating between trading partners in relation to prices or other conditions of trade or trying to impose unfair prices.
A cartel proceeding typically begins with a ‘dawn raid’ by the Swiss Competition Commission (COMCO) on companies that may potentially participate in an unlawful agreement or are allegedly abusing their dominant position.
Which sectors are more prone to falling foul of competition law?
The COMCO places particular emphasis on key sectors, especially those that affect the infrastructure and basic services of the Swiss economy. It is therefore common for proceedings to be opened in the sectors of construction (especially the road construction sector), finance, telecommunications and health. However, more specific sectors – such as the French book market recently – may also be investigated by the COMCO.
If a company falls foul of antitrust or competition law, what steps should they take?
If a company finds – as a result of an internal audit, for instance – that it is participating in an agreement that is likely to be considered unlawful under antitrust law, it is worth considering whether it should initiate a so-called leniency programme by reporting the unlawful conduct to the COMCO. A leniency programme may lead to the avoidance of a financial sanction or to a substantial reduction thereof. Such a measure will be relevant if no proceedings have yet been initiated by the COMCO or if an investigation procedure has just started.
If an investigation has already been initiated and it is too late to participate in a leniency programme or if the position of the COMCO is contested, the company will have to defend its position, in particular by making use of its procedural rights. In such a case, the lawyer’s role will also be to assess the legal risks and to reach, if necessary, an amicable agreement with the COMCO in order to settle the case and limit the costs of the procedure.
From a preventive perspective, what can be done to ensure companies do not infringe on the current regulation?
Companies potentially exposed to antitrust risks should implement a compliance and prevention programme. The starting point of any compliance and prevention programme is the identification of the existing antitrust risks (risk analysis). The risks can be identified either by the company’s internal compliance department or by an external lawyer.
It is also important to conduct regular training courses at an early stage with the company’s staff in order to develop a corporate culture sensitive to antitrust risks. Particular emphasis should be placed on the employees who regularly meet with competitors or who have any role in the company’s pricing policy.
Finally, the programme should be monitored at regular intervals and corrective measures taken if necessary.
Companies potentially exposed to antitrust risks should implement a compliance and prevention programme.
How has the extension of the control of abusive conduct to companies with relative market power impacted the nature of investigations and disputes in Swiss competition law?
The new regulation on companies with relative market power that came into force on 1 January 2022 has led to some notifications to the COMCO. The impact of this new regulation is not yet clear and it is too early to assess its effectiveness. However, from a practitioner’s point of view, it appears that many companies that may be victims of abuse by suppliers with relative market power are reluctant to complain to the COMCO, as this could jeopardise business relationships that may have existed for many years with their suppliers and are essential for the companies concerned.
In this respect, it can be noted that the COMCO has just opened an investigation against the French publishing group Madrigall. In this context, it will examine whether Madrigall is unlawfully limiting the possibility for Swiss book retailers to buy books in France at better conditions. This investigation may likely result in a first leading decision on the new provisions on relative market power.
How are you able to assist your clients with mergers that are investigated by the competition commission on the grounds that the merger creates or strengthens a dominant position?
In such a situation, my task will be to assist the companies to obtain merger clearance from the COMCO. In concrete terms, this means preparing a merger notification and accompanying the companies concerned through the notification procedure, representing them before the COMCO. Ideally, when the timing of the merger allows it, it is common practice to submit a pre-notification to the COMCO so that the latter can assess whether the draft notification is complete. This allows the COMCO to anticipate the formal notification and to collect the necessary data in good time to assess the case. As our office is located in Berne – like the COMCO – this proximity is an advantage for the interaction with this authority.
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Dr Sébastien Gobat, Partner
Troller Hitz Troller
Münstergasse 38, CH-3011 Berne, Switzerland
Tel: +41 31 328 36 36
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Dr Sébastien Gobat is a partner at Troller Hitz Troller in Berne, Switzerland. He is specialised in antitrust, unfair competition and the various areas of intellectual property law. He also has proven expertise in distribution law (agency, license and franchising agreements) and insolvency law. He regularly advises companies in the field of antitrust law and represents them before the Swiss Competition Commission (COMCO) in the context of investigations or merger notifications.
Troller Hitz Troller is a renowned Swiss law firm. Established in 1941 with offices in Berne and Lucerne, it offers services in the fields of intellectual property (trademark, patent, design and copyright law), antitrust and unfair competition law, as well as contract and business law.
