<h4>Background: Popular ballot initiative and parliamentary counter-proposal</h4>
In December 2017, the popular ballot initiative «Stop to the high price island – in favor of fair prices» (Fair Price Initiative) was submitted. It would introduce the concept of relative market power into Swiss competition law. The initiative aims at enabling Swiss companies to procure goods and services abroad at local prices and conditions in a non-discriminatory way.
The Federal Council rejected the initiative, but submitted an indirect counter-proposal to parliament. Parliament amended the Federal Council&#8217;s counter-proposal in a way that it effectively implements the initiative. Hence, a withdrawal of the initiative was announced. The parliamentary counter-proposal will therefore, subject to a referendum and the formal final vote in parliament, directly become law. It is expected that the new law may enter into force later this year.
<h4>New regulation of market power</h4>
The new law provides for two novelties: First, the existing rules on abuse of dominance under Swiss competition law will be extended to companies with relative market power. Second, a new type of abuse of dominance will be introduced. Under this new offense, restrictions to purchase goods and services abroad at local prices and conditions will be prohibited.
Introduction of relative market power
Under the new law, companies with relative market power will be subject to the same rules as dominant companies. The prohibition of abusive behavior pursuant to article 7 of the Cartel Act (CartA) will also apply to companies with relative market power.
Relative market power exists when a company is economically dependent from another company. Such dependence requires that a company does not have sufficient and reasonable possibilities to switch to other companies. There may be a lack of reasonable alternatives, for example, if the party has made specific investments, in case of exclusive agreements, must-in-stock products, original spare parts or software updates. In contrast to dominance, which exists erga omnes, relative market power is assessed vis-à-vis an individual counterparty and in relation to a specific product or service.
Companies with relative market power will be subject to the same rules on abusive behavior vis-à-vis dependent companies as dominant companies. Therefore, dependent companies must in principle be treated equally and not worse than non-dependent companies with regard to prices, discounts and other terms and conditions. However, the concept of relative market power does not create a general obligation to grant most favored conditions to dependent companies.
The legal consequence of the abuse of relative market power is a prohibition of the conduct in question and, potentially, a claim for damages. Unlike an abuse of dominance, the behavior cannot be sanctioned with fines.
Right to purchase abroad at local prices and conditions
In addition, a new type of abuse is introduced (article 7(2)(g) CartA). It creates a right for Swiss companies to purchase abroad at local prices and conditions.
Companies with relative market power (and dominant companies) are prohibited from restricting the ability of customers to purchase goods or services offered in Switzerland and abroad at local prices and conditions. This obliges companies with relative market power to supply dependent companies at the (more favorable) conditions they offer abroad (obligation to supply and obligation not to discriminate).
<h4>Enforcement of the new regulation</h4>
Civil vs. administrative enforcement
Relative market power exists vis-à-vis an individual counterparty. Such bilateral claims are likely to be enforced primarily by means of civil action against the company with relative market power. The Competition Commission is expected to limit its activities to create case law.
National vs. international enforcement
In domestic cases, a civil claim can be filed against the company with relative market power at its registered office in Switzerland. Alternatively, a complaint can be filed with the Competition Commission.
In order to enforce the right to purchase abroad, the Swiss company has to take legal action against a foreign company and demand the supply of goods or services at the local prices and conditions. In case of antitrust violations, a foreign company may be sued at the location in Switzerland where the infringing conduct had its effects. The Swiss court will apply Swiss competition law. A lawsuit filed abroad at the defendant&#8217;s domicile will hardly succeed because a foreign court is unlikely to apply Swiss competition law to procurements made there.
<h4>Prohibition of geo-blocking</h4>
To ensure non-discriminatory purchases in e-commerce, a new provision on geo-blocking will be introduced in the Act against Unfair Competition (article 3a UCA). Under the new law, it will be unlawful to discriminate Swiss customers in e- and distance commerce with regard to prices or payment terms, to restrict their access to an online portal or to redirect them without their approval.
<h4>Far-reaching consequences for companies</h4>
The new rules entail numerous challenges for companies.
The number of companies subject to the prohibition of abusive behavior will significantly increase. Practical difficulties are likely to arise in particular with regard to the question as to whether a company has relative market power.
Companies must assess specifically for any contractual relationship whether they have relative market power, i.e. whether their counterparties are dependent on them. Unlike dominance, the existence of relative market power is not determined by the characteristics of the company concerned itself, but by the individual dependency of its counterparties. This dependency may not be evident to the company concerned. The assessment of relative market power must be carried out in each individual case.
A company with relative market power must adapt its behavior to the regime of abuse under article 7 CartA. It must review and, if necessary, adapt its business relationships with dependent companies. In particular, dependent companies will need to be treated equally in terms of prices, discounts and further terms and conditions. Furthermore, the termination of agreements or the conclusion of exclusivity arrangements may need to be justified by legitimate business reasons.
Once the new law has entered into force, decisional practice and case law will need to develop. Criteria for assessing economic dependence will have to be specified for various groups of cases. It is currently open how long this will take. Until then, there will remain legal uncertainty.
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Homburger Bulletin Fair Price Initiative

Fair Price Initiative Implemented by Parliament

<h4>Main characteristics and status of legislation</h4>
The parliament currently debates the Fair Price Initiative and a counter-proposal to the initiative by the Swiss government, the Swiss Federal Council. In its decision of December 2, 2020, the Council of States, as the second chamber of parliament deliberating upon the initiative and counter-proposal, deviated from the National Council&#8217;s version of the counter-proposal. Hence, parliament has not yet agreed on a final counter-proposal to the initiative. Nevertheless, the National Council and the Council of States agree that the concept of relative market power shall be introduced.
The popular ballot initiative submitted in December 2017 intends to subject companies with relative market power to the rules on abuse of dominance under competition law. In addition, it grants dependent companies the right to purchase goods and services from companies with relative market power in foreign countries at local prices and conditions.
The Federal Council opposed the initiative with an indirect counter-proposal that adopted its core demands. However, the concept of relative market power was limited to cases of foreclosure of the Swiss market. For this purpose, a new, specific form of abuse of dominance for the purchase of goods and services abroad was introduced.
The National Council amended the Federal Council&#8217;s counter-proposal in such a way that it effectively implements the initiative. With its decision of December 2, 2020, the Council of States in principle follows the National Council, but deviates from the latter in certain aspects. In particular, the Council of States has deleted the right to purchase goods and services abroad at local prices and conditions.
However, the extension of the prohibition on abuse of dominance under competition law to companies with relative market power has remained undisputed in both chambers of parliament. In view of this consensus, it has to be expected that the prohibition of abuse of dominance will in the future be extended to companies with relative market power.
<h4>Consequences for companies</h4>
The upcoming introduction of relative market power will have far-reaching consequences for companies operating in Switzerland:
<ul>
<li>The number of companies subject to the prohibition on abuse of dominance will significantly increase.</li>
<li>Companies must assess individually for their contractual relationships whether they have relative market power, i.e. whether their contract partners are dependent upon them. Unlike the review of market dominance the existence of relative market power is not determined by the characteristics of the company concerned, but by the individual dependency of its contract partners. This dependency may not be evident to the company concerned, and the assessment whether it has relative market power hence may be challenging.</li>
<li>In case of relative market power, companies need to review, and may need to adapt, their behavior towards dependent contract partners and amend respective agreements. In particular, dependent companies will need to be treated equally in terms of prices, discounts and further terms and conditions. Furthermore, the termination of agreements or the agreement of exclusivities may need to be justified by legitimate business reasons.</li>
</ul>
<h4>What&#8217;s next?</h4>
It is now up to the National Council to discuss the counter-proposal again in the next parliamentary session in spring 2021, and to settle the differences with the Council of States. It is hence currently not conceivable at what time the new law will enter into force.

Fair Price Initiative in Parliament

Competition

Corporate / M&A

Employment and Executive Compensation

IP / IT

Oerlikon

On December 16, 2022, OC Oerlikon Corporation AG, Pfäffikon (SIX: OERL), a global innovation powerhouse for surface engineering, polymer processing and additive manufacturing, announced that it has signed a definitive agreement to acquire Riri, a leading provider of coated metal accessories for the luxury fashion industry.
The transaction marks a milestone in Oerlikon’s growth strategy and diversifies Surface Solutions’ offerings and market access. The transaction is expected to close in the first quarter 2023, subject to regulatory approvals and standard closing conditions.
Homburger acts as transaction counsel to Oerlikon. The Homburger team advising Oerlikon is led by Daniel Hasler and comprises Karin Mattle, Francesco Bernasconi, Mike Lerchmüller, Julien Di Sabato (all Corporate / M&amp;A), Pietro Meineri (Litigation), Philippe Baumann (IP / IT), Dieter Grünblatt and Peter Müller (both Tax), Richard Stäuber and Daniel Lütolf (both Competition), and Giulia Menegon and Giovanni Dazio (both Employment and Executive Compensation).

Homburger advised OC Oerlikon on the acquisition of Riri 

Regulatory

phoenix pharma

On October 18, 2022, PHOENIX Pharma Switzerland, a subsidiary of the family-owned PHOENIX group, and Voigt Holding announced that they agreed to establish a 50/50-joint venture to combine their pharmaceutical distribution services and pre-wholesale activities. The closing of the joint venture is subject to the approval by the Swiss Competition Commission.
Homburger advises PHOENIX Pharma Switzerland on the transaction. The Homburger team is led by partner Frank Gerhard (Corporate / M&amp;A) and comprises counsel Andreas Burger (Competition, Regulatory) as well as associates Marc Schamaun, Patrick Schmidt (both Corporate / M&amp;A), Allegra Arnold, Daniel Lütolf (both Competition, Regulatory), Angela Casey, Nicole Hilpert (both Employment and Executive Compensation), and junior associate Nicolas Wetzel (Corporate / M&amp;A).

Homburger advises PHOENIX Pharma Switzerland on its joint venture with Voigt Group

Ahlstrohm

On June 22, 2022, Ahlström Capital, a Finnish family-owned investment company, announced the merger of Swiss-based company Enics AG with GPV International A/S, owned by Schouw &amp; Co., to create a European electronics giant.
On completion of the transaction, the two existing companies are expected to be organized under a newly-established holding company. The indicative enterprise value of the combined company is DKK 4.2 bn.
Homburger acted as Swiss legal counsel to Ahlström Capital. The Homburger team included partner Andreas Müller, associate Léonard Aeschlimann and junior associate Lucas Forrer (all Corporate/M&amp;A), partner Balz Gross and associate Anissa Kern (both Employment and Executive Compensation), partner Richard Stäuber and associate Daniel Lütolf (both Competition and Regulatory) as well as associate Raphaël Fellay (Tax).

Daniel
Lütolf

Homburger advised OC Oerlikon on the acquisition of Riri

Homburger advises PHOENIX Pharma Switzerland on its joint venture with Voigt Group

Homburger advised Ahlström Capital on the merger of Enics with GPV

Fair Price Initiative Implemented by Parliament

Fair Price Initiative in Parliament

Das Kollisionsrecht der internationalen Unternehmensübernahme

Regulation of Foreign Investment in Switzerland

Von Auskunftspflichten bis zu Zusammenschlüssen im Ausland

Join the Team

Daniel Lütolf

Career

Languages

Bar Registration

Teams

DanielLütolf

Homburger advised OC Oerlikon on the acquisition of Riri

Homburger advises PHOENIX Pharma Switzerland on its joint venture with Voigt Group

Homburger advised Ahlström Capital on the merger of Enics with GPV

Fair Price Initiative Implemented by Parliament

Fair Price Initiative in Parliament

Das Kollisionsrecht der internationalen Unternehmensübernahme

Regulation of Foreign Investment in Switzerland

Von Auskunftspflichten bis zu Zusammenschlüssen im Ausland

Join the Team

Daniel Lütolf

Career

Languages

Bar Registration

Teams

Daniel
Lütolf