Partial revision of the Swiss Cartel Act


In today's final vote, the Swiss Parliament voted in favour of the partial revision of the Cartel Act. The most important changes in the partial revision are: Effects-based analysis for agreements affecting competition (art. 5 CartA) and abuse of market dominance/relative market power (art. 7 CartA): In both cases, the law now explicitly requires an effects-based analysis. Furthermore, the concept of directly sanctionable price agreements is defined more narrowly. Lower intervention threshold in merger control proceedings: There will be a shift from the qualified market dominance test to the stricter Significant Impediment to Effective Competition (SIEC) test, which is also used in the EU. Strengthening of civil antitrust law: Affected consumers and the public sector now also have standing to sue. Furthermore, the limitation period is suspended from the opening of the COMCO investigation until the final decision. The partially revised Cartel Act will come into force on 1 January 2027 at the earliest, as various ordinances need to be amended. 1) Amendments to Art. 5 CartA – Agreements affecting competition The question of assessing the significance of a restriction of competition within art. 5 para. 3 and 4 CartA was highly debated. Under the partially revised Cartel Act, the Competition Commission (COMCO) must now also assess the significance of a restriction of competition on a case-by-case basis in the case of legal presumptions. This means that it must consider both qualitative elements (empirical evidence) and quantitative elements (specific circumstances in the relevant market). This overturns the previous ruling of the Federal Supreme Court in the Gaba case and strengthens case-by-case evaluation. Furthermore, the previously very broadly defined concept of "directly sanctionable horizontal price agreements" is now defined more narrowly (new Art. 5 para. 3 let. a CartA). In the future, this concept will only include agreements on direct or indirect minimum, fixed or maximum prices on the demand side. The deciding factor for the assessment in each case is whether the final price is fixed. Gross price agreements are therefore no longer directly sanctionable if there is competition on rebates. It is now explicitly stated that working groups (in German: “Arbeitsgemeinschaft/ARGE”) do not constitute agreements affecting competition if they enable or strengthen effective competition. ➡️ The amendments to art. 5 CartA are to be welcomed, as they focus on agreements that are actually harmful. However, the amendment to the law should not be misunderstood as a free pass. The Cartel Act remains strict. Agreements on prices, quantities, territories and market allocation should be avoided. Careful analysis is necessary in cases of uncertainty. 2) Amendments to Art. 7 CartA – Abuse of market dominance/relative market power In the event of an allegation of abuse against a market - dominant or undertaking with relative market power, the abusiveness must be examined on a case-by-case basis as part of an overall assessment based on empirical evidence and the specific market circumstances. ➡️ With this amendment to the law, the legislator confirms the change of direction taken by the Federal Supreme Court in the Vifor Pharma/HCI Solutions case. Accordingly, an *"effects-based* approach" applies, whereby it must be examined in each individual case whether a particular behavior is actually able to have adverse effects on competition. 3) Merger control: Introduction of the SIEC test Previously, COMCO could only prohibit a planned concentration of undertakings or impose conditions and requirements if (i) a dominant market position was established or strengthened, (ii) which could eliminate effective competition. The criterion of elimination of competition was a high hurdle for a prohibition. With the introduction of the SIEC test, a merger can now be prohibited or subject to conditions if it significantly impedes effective competition. This means that in future, neither a dominant market position nor the risk of elimination of competition will have to be proven. In addition, with the consent of the parties, COMCO may extend the review periods by one month for Phase 1 and by two months for Phase 2. ➡️ Undertakings should bear in mind that concentrations will be subject to stricter scrutiny in the future. Sensitive concentrations should be notified before 2027. 4) Aim to strengthen civil antitrust law One of the stated goals of the partial revision was to strengthen civil antitrust law. In addition to affected undertakings, affected consumers and the public sector now also have standing to sue.** Furthermore, the limitation period is suspended from the opening of a COMCO investigation until a final decision is made. ➡️ Even with these changes, a sharp increase in civil antitrust proceedings is not to be expected. From an undertaking's perspective, however, these changes may be relevant, for example, when considering whether to file a leniency application. Contacts Stefanie Karlen Tel. +41 58 200 35 49 Fax +41 58 200 35 11 stefanie.karlen@kellerhals-carrard.ch Dr. Daniel Emch Tel. +41 58 200 35 49 Fax +41 58 200 35 11 daniel.emch@kellerhals-carrard.ch

In today's final vote, the Swiss Parliament voted in favour of the partial revision of the Cartel Act.

The most important changes in the partial revision are:

Effects-based analysis for agreements affecting competition (art. 5 CartA) and abuse of market dominance/relative market power (art. 7 CartA): In both cases, the law now explicitly requires an effects-based analysis. Furthermore, the concept of directly sanctionable price agreements is defined more narrowly.

Lower intervention threshold in merger control proceedings: There will be a shift from the qualified market dominance test to the stricter Significant Impediment to Effective Competition (SIEC) test, which is also used in the EU.

Strengthening of civil antitrust law: Affected consumers and the public sector now also have standing to sue. Furthermore, the limitation period is suspended from the opening of the COMCO investigation until the final decision.

The partially revised Cartel Act will come into force on 1 January 2027 at the earliest, as various ordinances need to be amended.

1) Amendments to Art. 5 CartA – Agreements affecting competition

The question of assessing the significance of a restriction of competition within art. 5 para. 3 and 4 CartA was highly debated. Under the partially revised Cartel Act, the Competition Commission (COMCO) must now also assess the significance of a restriction of competition on a case-by-case basis in the case of legal presumptions. This means that it must consider both qualitative elements (empirical evidence) and quantitative elements (specific circumstances in the relevant market). This overturns the previous ruling of the Federal Supreme Court in the Gaba case and strengthens case-by-case evaluation.

Furthermore, the previously very broadly defined concept of "directly sanctionable horizontal price agreements" is now defined more narrowly (new Art. 5 para. 3 let. a CartA). In the future, this concept will only include agreements on direct or indirect minimum, fixed or maximum prices on the demand side. The deciding factor for the assessment in each case is whether the final price is fixed. Gross price agreements are therefore no longer directly sanctionable if there is competition on rebates.

It is now explicitly stated that working groups (in German: “Arbeitsgemeinschaft/ARGE”) do not constitute agreements affecting competition if they enable or strengthen effective competition.

➡️ The amendments to art. 5 CartA are to be welcomed, as they focus on agreements that are actually harmful. However, the amendment to the law should not be misunderstood as a free pass. The Cartel Act remains strict. Agreements on prices, quantities, territories and market allocation should be avoided. Careful analysis is necessary in cases of uncertainty.

2) Amendments to Art. 7 CartA – Abuse of market dominance/relative market power

In the event of an allegation of abuse against a market - dominant or undertaking with relative market power, the abusiveness must be examined on a case-by-case basis as part of an overall assessment based on empirical evidence and the specific market circumstances.

➡️ With this amendment to the law, the legislator confirms the change of direction taken by the Federal Supreme Court in the Vifor Pharma/HCI Solutions case. Accordingly, an "effects-based approach" applies, whereby it must be examined in each individual case whether a particular behavior is actually able to have adverse effects on competition.

3) Merger control: Introduction of the SIEC test

Previously, COMCO could only prohibit a planned concentration of undertakings or impose conditions and requirements if (i) a dominant market position was established or strengthened, (ii) which could eliminate effective competition. The criterion of elimination of competition was a high hurdle for a prohibition. With the introduction of the SIEC test, a merger can now be prohibited or subject to conditions if it significantly impedes effective competition. This means that in future, neither a dominant market position nor the risk of elimination of competition will have to be proven.

In addition, with the consent of the parties, COMCO may extend the review periods by one month for Phase 1 and by two months for Phase 2.

➡️ Undertakings should bear in mind that concentrations will be subject to stricter scrutiny in the future. Sensitive concentrations should be notified before 2027.

4) Aim to strengthen civil antitrust law

One of the stated goals of the partial revision was to strengthen civil antitrust law. In addition to affected undertakings, affected consumers and the public sector now also have standing to sue. Furthermore, the limitation period is suspended from the opening of a COMCO investigation until a final decision is made.

➡️ Even with these changes, a sharp increase in civil antitrust proceedings is not to be expected. From an undertaking's perspective, however, these changes may be relevant, for example, when considering whether to file a leniency application.

Contacts

Stefanie Karlen

Tel. +41 58 200 35 49

Fax +41 58 200 35 11

stefanie.karlen@kellerhals-carrard.ch

Dr. Daniel Emch