On September 17, 2021, the Swiss Government decided that two important legislative changes for companies will enter into force on January 1, 2022:
Introduction of Relative Market Power
As of January 1, 2022, the prohibition of abusive conduct under antitrust law will no longer apply only to companies holding a dominant position, but also to companies with relative market power. A company is considered to have relative market power if another company does not have sufficient and reasonable alternative options and therefore is dependent on the former company.
This constitutes a significant expansion of the antitrust concept of abusive conduct and will affect both Swiss and foreign companies with operations in Switzerland. Under the new law, dependent companies in principle need to be treated equally and no worse than non-dependent companies with regard to prices, discounts as well as other terms and conditions.
Buyers in Switzerland will moreover be entitled, vis-à-vis companies holding a dominant position and companies with relative market power, to purchase goods and services from outside of Switzerland at the prices and conditions prevailing there.
Ban on Geoblocking
In addition, as of January 1, 2022, the following will constitute unfair trading practices in online and distance commerce:
<ul>
<li>discriminating against Swiss customers with regard to prices or payment terms,</li>
<li>restricting access for Swiss customers to online platforms, or</li>
<li>re-directing Swiss customers to another version of an online platform without their consent.</li>
</ul>

Introduction of Relative Market Power

<h4>Price Recommendations before the Supreme Court</h4>
The Swiss Federal Supreme Court ruled in its judgment of February 4, 2021 (published on April 21, 2021), that Pfizer would be fined an amount yet to be determined for making price recommendations to pharmacies and self-dispensing doctors in violation of Swiss competition law.
The Swiss Competition Commission (COMCO) had conducted investigations against three manufacturers of erectile dysfunction drugs, Bayer (Levitra), Eli Lilly (Cialis) and Pfizer (Viagra). It had fined these companies a total of CHF 5.7 million in a decision dated November 2, 2009. All three companies subsequently challenged COMCO&#8217;s decision before the Swiss Federal Administrative Court, where they prevailed. The Department of Economic Affairs, Education and Research filed appeals with the Supreme Court.
The parallel proceedings concerning Bayer and Eli Lilly are still pending before the Supreme Court.
<h4>Price Recommendations as a Concerted Practice</h4>
In connection with the sale of Viagra, Pfizer sent its retailers – i.e., pharmacies and self-dispensing doctors – price recommendations via an electronic system. The price recommendations were expressly non-binding. The electronic system was designed in such a way that the current price recommended by Pfizer automatically appeared in the retailers&#8217; cash register system when they scanned the barcode of a product. This system is used by pharmacies for all medicines for efficiency reasons due to their large range of products.
The Supreme Court held, with reference to European competition law, that under these circumstances Pfizer was able to assume that the retailers were always aware of the recommended price and would refrain from setting their own prices in view of the additional effort required to calculate them. With regard to the retailers, the Supreme Court held that they had accepted the price recommendation and, for their part, assumed that the other retailers had the same price information. In addition, some of the retailers had asked Pfizer to provide price recommendations. The Supreme Court qualified the non-binding price recommendation as a concertation between Pfizer and the retailers.
The Supreme Court further examined whether the price recommendations had been complied with by the retailers. It mentioned that compliance by 50% of the retailers was often considered as sufficient for there to be a concerted practice. In the present case, 89.3% of the pharmacies and 81.7% of the doctors had set their prices according to Pfizer&#8217;s price recommendation. Since this system had lasted for several years, the Supreme Court held that the concertation had been causal for the retailers&#8217; prices. The fact that numerous pharmacies had granted discounts on the recommended prices in their cash register systems was found by the Supreme Court to be irrelevant.
<h4>Price Recommendations as Resale Price Maintenance</h4>
According to the Supreme Court, due to the high degree of compliance by retailers, the concerted practice between Pfizer and its retailers had the same effect as prescribed fixed prices. Under Swiss competition law, vertical fixed-price agreements (resale price maintenance agreements) are among the most harmful vertical restraints and are sanctioned with a fine.
<h4>A Strict Approach</h4>
Under European competition law, price recommendations are only unlawful if a manufacturer exerts pressure on its retailers or offers them special incentives to comply with the price recommendation. The Supreme Court did not consider these elements to be necessary. As a result, Swiss competition law in the area of price recommendations is stricter than European competition law, in contrast to previous practice. Moreover, the Supreme Court contradicted its own leading Gaba decision, where it had stated that in the area of hardcore vertical agreements, the Swiss legislator intended to create a «materially identical regulation» in line with European competition law.
The only mitigating element mentioned by the Supreme Court was that price recommendations in catalogs, as they are for example common in the automotive industry, are not assessed with the same degree of severity because there «the manufacturer does not repeatedly communicate its price to the retailer and transmit it via the cash register system».
<h4>Consequences for Companies</h4>
The Supreme Court&#8217;s Pfizer judgment has a number of far-reaching consequences for companies operating in Switzerland:
<ul>
<li>Non-binding price recommendations vis-à-vis retailers are to be examined particularly carefully from a competition law perspective.</li>
<li>Even price recommendations described as «non-binding» can be sanctioned as unlawful resale price maintenance if they are complied with by the majority of retailers; it is not necessary that the manufacturer exerts pressure or offers incentives to its retailers.</li>
<li>Static price recommendations (e.g. in catalogs) are more likely to be considered unproblematic; regularly updated price recommendations are more likely to be considered problematic.</li>
<li>Despite their efficiencies, the Supreme Court held price recommendations that appear automatically in retailers&#8217; cash register systems (e.g. via barcode scanning) to be illegal. This far-reaching judgment is expected to cause substantial practical problems for undertakings.</li>
</ul>

RZ_Preview_Judge on Hammer_JR_01

Strict Approach to Price Recommendations in Swiss Competition Law

Targeting Sports Rights
According to a press release and a press kit published by the Swiss Competition Commission (COMCO) on October 20, 2020, in the Ice Hockey on Pay TV investigation, UPC has been fined approximately CHF 30 million for refusing to allow Swisscom to broadcast live ice hockey content.
Four years earlier, in a mirror image constellation, COMCO had fined Swisscom around CHF 72 million in its Sports on Pay TV investigation. According to COMCO, Swisscom had refused to allow competitors (including UPC predecessor Cablecom) to broadcast live football and live ice hockey content on reasonable terms. Swisscom subsequently filed a complaint against UPC with COMCO.
The two decisions against Swisscom and UPC are not yet final and binding.
«Ice Hockey on Pay TV» at a Glance
In summer 2016, UPC acquired exclusive rights to broadcast Swiss league ice hockey on pay TV (ice hockey content) for five consecutive seasons. As a program producer, UPC was able to make this content available to viewers via its own TV platform as well as via third-party TV platforms. Swisscom asked UPC to provide ice hockey content so that it could offer such content to its TV platform customers. According to COMCO, UPC refused to make an offer until summer 2020.
COMCO investigated whether UPC had abused its dominant position. According to COMCO, from the point of view of TV platform operators, there was a separate market for the provision of broadcasting rights regarding Swiss ice hockey league competitions on pay TV. As UPC had acquired the exclusive rights for the transmission of such ice hockey content, it was considered to have a dominant position on this market.
UPC was further held to have abused its dominant position by refusing to deal with Swisscom because TV platforms were assumed to be unable to replace ice hockey content by any other content.
Narrow Product Market Definition
The aim of market definition is to find out which goods are substitutable with the products and services under investigation and therefore may have a disciplining effect on their suppliers. It is the view of a reasonable average consumer that is relevant.
According to COMCO, UPC was held dominant on the national market for the provision of broadcasting rights regarding Swiss ice hockey league competitions on pay TV. COMCO defined the market narrowly as it had already done in its Sports on Pay TV decision. In that case, COMCO reached the conclusion that Swiss league ice hockey content was not substitutable with content such as feature films, TV series or other sports content, including foreign ice hockey content. In EU competition law, with regard to the licensing of broadcasting rights for TV content, it is common to distinguish between the categories of film, sports and other content. Further sub-categories are often discussed, but in the field of sports this is done only in connection with football broadcasting rights and with reference to the unique position football enjoys as the most popular sport in Europe.<a href="#_ftn1" name="_ftnref1">[1]</a>
It is not clear whether COMCO&#8217;s market definition was based on the view of the average consumer – or that of a smaller group of die-hard ice hockey fans. It is obvious, however, that a narrow market definition is more likely to lead to a dominant position, which, in turn, leads to more companies being subject to the strict abuse of dominance (monopolization) rules. In the context of a related consultation procedure, the COMCO Secretariat held: «As a result of market dominance, the economic and contractual freedom of UPC is [&#8230;] restricted. In particular, dominant companies are not allowed – subject to justification – to refuse to deal with [&#8230;] or discriminate against their trading partners.<a href="#_ftn2" name="_ftnref2">»[2]</a>
Lower Threshold for Abuse
According to the Swiss Federal Supreme Court and European court practice, an abusive refusal to deal requires that the resource in question (in this case: ice hockey content) be objectively necessary, i.e. indispensable, for the person requesting it.<a href="#_ftn3" name="_ftnref3">[3]</a> In constant practice, COMCO has also embraced this criterion by demanding that an input be objectively necessary for effective competition to be maintained on a downstream or neighboring market.<a href="#_ftn4" name="_ftnref4">[4]</a>
Recent Swiss antitrust practice has lowered the requirements for a finding of infringement – and thus increased the burden on (possibly) dominant companies. In this vein, the Federal Administrative Court held in its 2018 DCC ruling that only certain types of refusal to deal required that the input be indispensable.<a href="#_ftn5" name="_ftnref5">[5]</a> It argued that there were constellations of refusal to deal which could be abusive even though the input in question was not indispensable. The court could not rely on the practice of the highest courts in Switzerland or the European Union to support its reasoning because they have both constantly considered the indispensability criterion to be an integral part of the abuse analysis. It remains to be seen whether the DCC ruling will prevail before the Swiss Federal Supreme Court.
Recent COMCO practice similarly shows an increased willingness to consider refusals to deal to be abusive. As part of its reasoning in its Ice Hockey on Pay TV decision, COMCO held that the lack of access to ice hockey content represented a «disadvantage» for Swisscom which it could not compensate for itself. If it were now good law that a refusal to deal only requires a «disadvantage» for the requesting party, the intervention threshold would have been lowered significantly. It was undoubtedly disadvantageous for Swisscom not to be able to offer ice hockey content. It is an entirely different question whether – and COMCO has not shown that – this content was also indispensable for Swisscom to be able to compete effectively.
Risk of Fines
The abuse analysis in the case law discussed above was based on a narrow market definition. Nevertheless, companies will be disappointed if they expect that fines will also be calculated on the basis of the (lower) turnover relating to these narrowly defined markets. In its Ice Hockey on Pay TV decision, COMCO calculated the fine for UPC on the basis of UPC&#8217;s (higher) sales figures on the downstream TV platform market, i.e. a market in which UPC was neither dominant nor accused of abusive behavior.
Fines may only be imposed if the inadmissibility of the conduct was foreseeable. The Swiss Federal Supreme Court held in its Swisscom ADSL ruling (2019) that inadmissibility under EU competition law was a directly relevant factor for the assessment of foreseeability under Swiss antitrust law.<a href="#_ftn6" name="_ftnref6">[6]</a> Considering furthermore the prominent role that EU competition law played in the Federal Administrative Court&#8217;s recent approach to refusal to deal, it seems appropriate to conclude that EU competition law always has to be taken into account when assessing the state of Swiss law on abuse of dominance.
Conclusions for Companies
The new approach to refusal to deal in Swiss antitrust case law is relevant to companies in several respects:
<ul>
<li>Narrow market definition: Product and service markets are increasingly narrowly defined. Companies active in the manufacture of a (niche) product may now, contrary to expectations, be considered dominant. If this is the case, they are subject to stricter rules of conduct, including with regard to the choice of their business partners.</li>
<li>Strict approach to refusals to deal: Refusals to deal by dominant companies may be qualified as abusive even if the goods in demand are not indispensable. It may even be sufficient that the refusal to deal represents a mere disadvantage to the disappointed buyer. Potentially dominant companies should consider such risks when choosing their contractual partners.</li>
<li>Relevance of EU competition law: Every assessment of Swiss law on abuse of dominance needs to consider developments in European competition law. The Swiss competition authorities regularly draw inspiration from EU competition law and presuppose knowledge thereof.</li>
</ul>
<a href="#_ftnref1" name="_ftn1">[1]</a> EU Commission, M.4519, 18/01/2007, Lagardère/Sportfive, para. 9 f. («football&#8217;s pre-eminence as the singularly most popular sport across most Member States and beyond»); EU Commission, M. 6369, 21/12/2011, HBO/Ziggo/HBO Nederland, para. 18, 20; EU Commission, M.7194, 24/02/2015, Liberty Global/Corelio/W&amp;W/De Vijver Media, para. 52; EU Commission, M.9064, 12/11/2019, Telia Company/Bonnier Broadcasting Holding, para. 117.
<a href="#_ftnref2" name="_ftn2">[2]</a> COMCO Secretariat, RPW 2017/2, 275 s., Ice Hockey on Pay TV Consultation, para. 13 (translation by the authors).
<a href="#_ftnref3" name="_ftn3">[3]</a> BGE 139 II 319, Etivaz, para. 7; BGE 129 II 497, EEF, para. 6.5.1; ECJ, C-170/13, 16/07/2015, Huawei/ZTE, para. 49; ECJ, 29/04/2004, C-418/01, IMS Health, para. 38; ECJ, C-7/97, 26/11/1998, Bronner, para. 41; ECJ, C-241/91 and C-241/91, 06/04/1995, Magill, para. 53; ECJ, 6 and 7/73, 06/03/1974, Commercial Solvents, para. 25; EGC, T-851/14, 13/12/2018, Slovak Telekom, para. 98 f.; EGC, T-301/04, 09/09/2009, Clearstream, para. 147; EGC, T-201/04, 17/09/2007, Microsoft, para. 332.
<a href="#_ftnref4" name="_ftn4">[4]</a> COMCO, RPW 2011/1, 96 ff., DCC, para. 308; COMCO, 32-0243, Sport on Pay TV, para. 615; COMCO, RPW 2017/3, 410 ff., Ice Hockey on Pay TV (interim measures), para. 50.
<a href="#_ftnref5" name="_ftn5">[5]</a> FAC, judgment B-831/2011 of 18/12/2018, DCC, para. 976 ff.
<a href="#_ftnref6" name="_ftn6">[6]</a> SFSC, judgment 2C_985/2015 of 09/12/2019, Swisscom ADSL, para. 8.3.4.

Homburger Bulletin Swiss Competition Law

New Developments in Swiss Competition Law on Refusal to Deal

Competition

Corporate / M&A

IP / IT

Swiss Post

On December 20, 2021, Die Schweizerische Post AG (Swiss Post) announced the sale of Swiss Post Solutions (SPS) to AS Equity Partners. Swiss Post Solutions is a leading provider of business process outsourcing solutions and innovative document management services. The change in ownership will allow SPS to continue its growth story, which has in recent years focused on customers in Europe, Asia and the USA. By contrast, Swiss Post wants to focus on services relating to its core business – always with the goal of developing the public service for Switzerland from its own resources. Swiss Post is selling SPS at an enterprise value of CHF 375 m. Closing of the transaction is subject to the fulfilment of certain regulatory conditions and scheduled to take place in the upcoming months.
The Homburger team was led by partner Daniel Hasler and included lead associate Anna Peter and junior associate Benjamin Camavdic (all Corporate / M&amp;A), partner Luca Dal Molin and associate Gabriel Kasper (both IP / IT), partner Richard Stäuber and associate Ramin Silvan Gohari (both Competition) as well as partner Stefan Oesterhelt (Tax).

Homburger advised Swiss Post on the sale of Swiss Post Solutions (SPS)

Employment and Executive Compensation

Glattfelder

On July 22, 2021, Glatfelter Corporation (NYSE: GLT), a global supplier of engineered materials, announced that it has entered into a definitive agreement to acquire the Jacob Holm Group, a manufacturer of spunlace nonwoven fabrics headquartered in Basel, Switzerland, for an enterprise value of USD 308 m.
Homburger advised Glatfelter on the Swiss legal aspects of the transaction. The Homburger team was led by partners Daniel Hasler and Daniel Häusermann and included lead associate Angela Oppliger (Corporate / M&amp;A), associates Patrick Schmidt (Corporate / M&amp;A), Gabriel Kasper (IP / IT), Andrea Heiniger (Employment and Executive Compensation), Yves Bianchi and Ramin Silvan Gohari (both Competition), as well as junior associates Tanja Niederer and Magdalena Stock.

Homburger advises Glatfelter Corporation in its acquisition of Jacob Holm Group

Capital Markets

Data Protection

Financing and Investment Products

Telemos_bw

Founded in 1862, Mammut is a Swiss-headquartered company that provides high-quality products and experiences for outdoor enthusiasts around the world. Telemos Capital was attracted to Mammut given its leading premium brand positioning in the growing global outdoor market. Mammut manages to combine high technical expertise, functionality and performance with appealing contemporary design. The company&#8217;s product offering includes hardware, shoes and clothing, all sold both directly and via their trusted partners worldwide. Mammut operates in around 40 countries and employs more than 800 people.
Telemos Capital plans to help to drive Mammut forward in the further development of its products, services, and channels, including digital. It will support Mammut’s management in building on the firm’s strong Swiss heritage and premium brand to further accelerate its strong market positioning through profitable growth across existing and new international markets.
Subject to obtaining all necessary regulatory approvals, the closing of the acquisition of the Mammut Sports Group is expected by mid-2021.
Homburger acts as lead counsel to Telemos Capital. The Homburger team is led by partner David Oser (Corporate / M&amp;A) and comprises partners Reto Heuberger (Tax), Daniel Haeberli (Capital Markets, Financing and Investment Products), Richard Stäuber (Competition) and associates Moritz Riesener (Corporate / M&amp;A), Patrick Schmidt (Corporate / M&amp;A), Romain Fakhoury (Corporate / M&amp;A), Matthias Müller (Corporate / M&amp;A), Daniel Bötticher (Corporate / M&amp;A), Gabriel Kasper (Data Protection), Marc Vogelsang (Tax), Simone Gloor (Capital Markets, Financing and Investment Products) and Ramin Silvan Gohari (Competition).

Ramin Silvan
Gohari

Homburger advised Swiss Post on the sale of Swiss Post Solutions (SPS)

Homburger advises Glatfelter Corporation in its acquisition of Jacob Holm Group

Homburger advises Telemos Capital on its acquisition of leading Swiss outdoor brand Mammut from Swiss holding company Conzzeta

Introduction of Relative Market Power

Strict Approach to Price Recommendations in Swiss Competition Law

New Developments in Swiss Competition Law on Refusal to Deal

Is It Still Recommendable to Recommend Resale Prices?

Switzerland: Law & Practice Cartels 2021

Kommentar zu Art. 112, 113, 116-118 IPRG

Join the Team

Ramin Silvan Gohari

Career

Languages

Bar Registration

Teams

Ramin SilvanGohari

Homburger advised Swiss Post on the sale of Swiss Post Solutions (SPS)

Homburger advises Glatfelter Corporation in its acquisition of Jacob Holm Group

Homburger advises Telemos Capital on its acquisition of leading Swiss outdoor brand Mammut from Swiss holding company Conzzeta

Introduction of Relative Market Power

Strict Approach to Price Recommendations in Swiss Competition Law

New Developments in Swiss Competition Law on Refusal to Deal

Is It Still Recommendable to Recommend Resale Prices?

Switzerland: Law & Practice Cartels 2021

Kommentar zu Art. 112, 113, 116-118 IPRG

Join the Team

Ramin Silvan Gohari

Career

Languages

Bar Registration

Teams

Ramin Silvan
Gohari