Partial Revision of the Cartel Act


On November 24, 2021, the Swiss Federal Council published a preliminary draft for the revision of the Swiss Cartel Act: The effects control of hardcore anticompetitive agreements is to be re-introduced. The notification obligation in merger control proceedings will be partially limited and the threshold for intervention will be lowered. In addition, the preliminary draft is set to strengthen the civil enforcement of competition law and to modify the cartel administrative procedure. A public consultation on the preliminary draft will be held until March 11, 2022. Entry into force is expected in 2023 at the earliest.

Swiss Federal Council Publishes Preliminary Draft


On November 24, 2021, the Federal Council approved a preliminary draft for the partial revision of the Cartel Act (Draft-CartA) and opened public consultation. This marks a new attempt to revise the Cartel Act (CartA) following the failed revision of 2012. The planned revision contains four central points, which are presented below.

I. Re-introduction of the effects control for hardcore anticompetitive agreements

With the Swiss Federal Supreme Court’s judgment in the Gaba case (BGE 143 II 297 of June 28, 2016), the long-standing practice of the Competition Commission (ComCo) on anticompetitive agreements pursuant to Article 5 CartA was changed respectively tightened. According to this judgment, agreements under Article 5(3) and (4) CartA (hardcore horizontal and vertical agreements) do in principle fulfill the significance test. Therefore, since this decision it has generally no longer been necessary to examine whether such agreements actually affect competition, i.e. whether they have been implemented and what their effects on competition are.

As a reaction to the Gaba judgment, the parliamentary motion Français requested the Swiss Federal Council in December 2018 to amend Article 5 CartA and to stipulate that both qualitative and quantitative criteria must be taken into account when determining whether an agreement is unlawful. Article 5(1bis) Draft-CartA provides for the effects control called for by the motion Français: In addition to qualitative criteria, quantitative criteria must also be taken into account when assessing the significance of hardcore anticompetitive agreements.

The per se significance of certain agreements introduced by the Gaba judgment has led to legal uncertainty for companies, for example in the case of cooperation agreements or joint ventures. A clarification of Article 5 CartA, according to which qualitative and quantitative criteria are to be taken into account, would prevent such agreements from being considered as in principle fulfilling the significance test and thus – subject to the efficiency justification, which in practice is difficult to prove – potentially sanctionable conduct. The implementation of the parliamentary motion Français thus gives companies more leeway for competitively desirable behavior, but raises fears on the part of the Federal Council of declining competitive pressure and rising prices.

II. Merger Control

A. Limitation of the Notification Obligation

According to the Draft-CartA, the notification requirement is to be waived in the event of international mergers that are assessed by the European Commission, if all relevant geographic markets include Switzerland and at least the European Economic Area (EEA) (Article 9(1bis) Draft-CartA).

The companies concerned are thereby exempted from having to notify the merger in parallel to the European Commission and ComCo in cases where only markets covering at least Switzerland and the EEA are involved. This is likely to bring some relief in terms of resources. However, the savings should not be overestimated: Already today, notification in Switzerland in such cases is regularly based on the filing with the EU Commission. In addition, it can be expected that the definition of the relevant geographic market may give rise to discussions and that a merger would still have to be notified to ComCo in case of doubt.

B. Reduction of the Intervention Threshold in Mergers

1. Baseline

With the Draft-CartA, a new attempt is being made to introduce the so-called SIEC test (significant impediment to effective competition). Since the introduction of this test in European Union competition law in 2004, there has been discussion in Switzerland about harmonizing the legislation.

Under current law, the qualified market dominance test (dominance plus) applies. This means that ComCo can only prohibit a merger or approve it subject to remedies if the merger creates or strengthens a dominant position as a result of which effective competition can be eliminated (Article 10(2) KG).

2. Intervention Criteria of the SIEC Test

With the introduction of the SIEC test, ComCo can intervene in mergers if they (i) significantly impede effective competition and (ii) do not lead to efficiency gains for consumers demonstrated by the companies concerned and that would compensate for the disadvantages of the significant impediment to competition (Article 10(2) Draft-CartA). In contrast to the dominance test, the SIEC test allows for an intervention in particular in the case of unilateral (non-coordinated) effects below the threshold for single market dominance. Unilateral effects arise when a merger in an oligopoly market does not create dominance but reduces the competitive pressure exerted in the market. Conceptually, the SIEC test is intended to prevent welfare losses (e.g. price increases for differentiated products) in cases of mergers between close competitors in oligopolistic markets.

3. Efficiency Defense

According to the Draft-CartA and similar to EU merger control law, any efficiency gains to be considered in the efficiency defense must benefit consumers. However, a dynamic understanding of consumer welfare, i.e. one that is to be optimized in the long term, is adopted (Article 10(2)(b) Draft-CartA). The Swiss legislature has so far refrained from pursuing distributive goals in favor of consumers with competition law (see Article 5(2) CartA, which does not require consumer participation, as opposed to Article 101(3) TFEU). Alternatively, a total welfare standard could be introduced, which would allow for a somewhat more comprehensive consideration of efficiency gains – or even of sustainability benefits.

4. Lower Intervention Thresholds

According to the Draft-CartA, the referral thresholds in merger control remain unchanged. Consequently, the number of notifications will not increase with the introduction of the SIEC test. In contrast, lower intervention threshold and hence more examination procedures (Phase II) can be expected:

First, the requirement of possibility of elimination of competition no longer applies, which is likely to make some mergers more difficult. Second, intervention is also possible in the case of unilateral effects below the threshold of (individual) market dominance (so-called gap cases). Whether this will actually lead to more interventions remains to be seen. First of all, the WEKO has interpreted the concept of collective dominance under current law broadly. Moreover, it remains to be seen what requirements will be imposed in practice to prove that effective competition is significantly impeded. A look at the practice in EU competition law shows this: Following increasingly interventionist application of the SIEC test by the European Commission, recent case law has put the brakes on this practice and imposes higher requirements for intervention (see judgment of the European General Court T-399/16 in CK Telecoms UK Investments v. European Commission of May 28, 2020, appeal pending before the ECJ).

5. Impact on Companies

Following the introduction of the SIEC test, economic analyses would likely be used more frequently, in particular, to determine competitive proximity as a factor in unilateral effects analysis. This is likely to increase the complexity of Phase II proceedings and have a cost-driving effect. The Draft-CartA provides for an extension of the review periods in merger control proceedings with the consent of the reporting companies, indicating that longer proceedings may be expected in the future.

However, it is largely in the hands of ComCo how extensively it will apply the SIEC test and what information requirements it will develop in practice. The flexibility of the test in this respect is reflected, for example, in the fact that the effort required for merger control proceedings before the European Commission has steadily increased (e.g., comprehensive information requests and lengthy pre-notification procedures), whereas in Germany the additional information effort has so far been rather moderate following the introduction of the SIEC test. If the SIEC test was introduced in Switzerland, a certain degree of legal uncertainty for companies can be expected in an initial phase due to the lack of established decisional practice.

III. Changes in the Civil Enforcement of Competition Law

Another central objective of the partial revision of the CartA is the strengthening of civil enforcement of competition law, which has so far only been of minor importance in Switzerland. The most significant changes in this respect are presented below.

A. Extension of the Consumer’s Right of Action

Currently, according to the prevailing view, due to the wording of Article 12 CartA, end customers and thus in particular consumers are not entitled to assert civil claims in the event of an unlawful restriction of competition. This may lead to a liability gap: A company that restricts competition may be able to defend itself against claims for damages from other companies by arguing that the latter have not suffered any damage because they were able to pass on the price which was overpaid due to the unlawful restriction of competition to the downstream market level – ultimately to consumers (passing-on defense). For their part, these end customers cannot assert claims for damages for lack of a right of action.

The Federal Council proposes to extend the possibility of civil action, which is currently limited to competitors, to all those affected in their economic interests by restrictions of competition (Article 12 Draft-CartA). As a result, end customers (including, e.g., public contracting authorities) will also be able to assert their rights in civil proceedings in the future.

Companies must prepare for the possibility that there might be more competition civil claims. It remains to be seen how many consumers will ultimately file a lawsuit, especially if low amounts are in dispute. In this regard, the main variable will be whether claims might increasingly be asserted collectively, e.g. by consumer protection organizations.

B. Suspension of the Statute of Limitations during Administrative Proceedings

Claims arising from unlawful restraints of competition are subject to the relative limitation period of 3 years under tort law pursuant to Article 60 of the Swiss Code of Obligations (CO). In the future, the statute of limitations for claims arising from unlawful restraints of competition is therefore to be suspended from the opening of an investigation by ComCo until the final decision is rendered (Article 12a(1) Draft-CartA). Pursuant to Article 134(2) CO, the statute of limitations would subsequently begin or continue to run. This is intended to alleviate the problem that injured parties in civil proceedings are forced to submit their civil action at an early stage.

In essence, this amendment corresponds to the legal situation in the EU (see Article 10(4) of the Antitrust Damages Directive 2014/104/EU).

C. Civil Compensatory Payments will Reduce Administrative Sanctions

Article 49a is supplemented in the Draft-CartA by a new paragraph 5 about the consideration of damages payments in the assessment of sanctions. This relates to cases in which a company sanctioned by ComCo in administrative proceedings voluntarily (i.e. without being obliged to do so by a civil court) pays damages, reparations or disgorges profits at a later date. In this case, the company can request ComCo or the appeal instance to reduce the administrative sanctions appropriately by filing a request for revision.

As a result, any civil compensatory payments subsequently and voluntarily made by the companies involved to aggrieved parties will be taken into account when assessing administrative sanctions. Companies may thus have an incentive to settle with aggrieved parties in civil proceedings at an early stage. This is also in line with the recent decisional practice of ComCo, which takes into account voluntary payments made as part of a settlement with the injured party when assessing sanctions (Construction Services Graubünden).

IV. Changes in Administrative Procedural Law

A. Notification Proceedings

Pursuant to Article 49a(3)(a) CartA, a company may notify ComCo in advance of planned conduct that could be qualified as an unlawful restriction of competition. Under the current law, the reported conduct may not be sanctioned unless ComCo opens proceedings against the company within five months. The purpose of the procedure is to enable companies to obtain an assessment from ComCo within a reasonable period of time as to whether a practice could be subject to sanctions.

This procedure is now to be transferred to Article 49a(4) Draft-CartA and to be adapted in two aspects. First, the period within which the ComCo must take action is to be reduced to two months. Second, in the future, only the opening of a formal investigation pursuant to Article 27 CartA and not, as is currently the case, the opening of a simple preliminary investigation pursuant to Article 26 CartA will cause the risk of sanctions to reemerge.

From the company’s point of view, the question arises whether these adjustments are sufficient to materially increase the attractiveness of these proceedings. For companies, the most important factor is the overall time period within which the proceedings can be concluded, e.g. by means of a safe harbor provision. For companies, it is also not very attractive if the risk of sanctions remerges when an investigation is opened. A company will therefore have to consider whether to make extensive investments in a project if it must expect to risk sanctions again for several years as a result of the opening of an investigation.

B. Introduction of Time Limits and Reimbursement of Representation Costs

The motion tabled by Fournier tasks the Swiss Federal Council, first, with simplifying and accelerating court proceedings under competition law. Second, it calls for the parties’ representation costs in administrative competition proceedings to be reimbursed:

The Draft-CartA provides for the introduction of time limits in investigation procedures according to the principle of comply or explain (Article 44a Draft-CartA). The respective time limits are 30 months for ComCo, 18 months for the Federal Administrative Court and 12 months for the Federal Supreme Court. This means that it should no longer take more than 5 years from the opening of an investigation until a legally binding decision of the court of last instance.

The effect of the statutory time limits is likely to remain limited in practice. Even without formal time limits in the CartA, the principle of accelerated procedure already applies today.

Next, it is proposed to introduce reimbursement of representation costs in first instance cartel administrative proceedings (Article 53b Draft-CartA). If an investigation is – in whole or in part – discontinued, the parties’ representation costs can be reimbursed. Article 53b Draft-CartA is a lex specialis to Article 64 Swiss Civil Procedure Code (CPC), according to which, as a rule, no reimbursement of representation costs is owed in first instance administrative proceedings.

In practice, administrative competition proceedings before ComCo are often laborious and complex. The planned reimbursement of representation will in practice lead to considerable relief for companies that are affected by an investigation that is discontinued or if ComCo’s decision is revoked.

Next steps

The formal consultation period will last until March 11, 2022. Subsequently, the Federal Council is expected to publish the draft law with its dispatch. The revised CartA is not expected to enter into force until 2023 at the earliest.

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