Five years have passed since the last major amendment of the Swiss Federal Act on Cartels (ACart), which upgraded the Swiss competition authority’s competences significantly. Since 1 April, 2004, the Swiss competition authority can for the first time issue direct fines in case of major competition law infringements (specific hard-core cartels and vertical agreements, as well as for all abuses of a dominant position). The amended law also gives the competition authority the competence to conduct dawn raids and it foresees an up-to-date leniency programme.
While the amended law has been in application for more than five years, only a limited number of decisions on fines have been issued. The first decisions unexpectedly concerned alleged abusive behaviors by dominant companies and the latest two decisions concerned a case of vertical restrictions (resale price maintenance) and a horizontal cartel.
In-depth evaluation of the current law
As foreseen in the law itself, the Swiss government initiated a review process of the ACart in order to assess its effectiveness and to evaluate the possible need for amendments. Following an extensive evaluation and review process of the new law, the review body published at the beginning of 2009 a study calling for far-reaching amendments to the ACart.
Generally, the study confirms that the instruments which have been introduced in 2004 have proven to be effective and should remain in force. However, the study calls in particular for changes to the structure of the Swiss competition authority, improved international cooperation, a less restrictive approach towards vertical agreements, increased international co-operation and an enhanced merger control framework (new merger control thresholds, which could be lower than today, and a new substantive test, possibly in line with the EC merger control test).
Based on the evaluation report, the Swiss government has now requested the administrative department in charge of competition policy to prepare a proposal for amendments of the ACart, which shall be presented in spring 2010. Currently various discussions with stakeholders and interest groups are ongoing and it cannot be excluded that the reform could tackle fundamental issues of the law.
Competition law procedures and the right to a fair trial: need for reform?
In particular with regard to the question of the reorganisation of the competition authority, the legislator will have to have a closer look at the consequences of the authority’s recently acquired power to issue substantive fines. Switzerland, as a signatory state of the European Convention on Human Rights (ECHR), has to adhere to the procedural standards of Articles 6 and 7 of the ECHR.With regard to criminal sanctions, this includes e.g. the necessity that an “independent and impartial tribunal” decides on such sanctions.
The Swiss competition authority is ready and willing to issue substantial and high fines. It has issued a fine of CHF333 million (approx. EUR200 million) against the incumbent Swiss telecom provider for an alleged abuse with regard to excessive pricing. Given the significance of the amount, the fines issued by the Swiss competition authority have to be considered criminal sanctions in light of the jurisprudence of the European Court of Human Rights (ECtHR). However, the competition authority’s investigation body (the Secretariat) and its decision body (the Competition Commission) are not separated and independent. This raises the question whether the Swiss competition law procedure should in the future ensure that already the first decision on such fines is taken by an “independent and impartial tribunal.” Currently, the Swiss Federal Administrative Court has at least two pending cases in which this problem will have to be scrutinised. It cannot be excluded that this issue will also be litigated in front of the highest Swiss court, the Federal Supreme Court, as well as the ECtHR in Strasbourg. This debate in Switzerland follows similar debates in other European countries as well as with regard to the decision practice of the European Commission. However, the European Commission is not directly bound by the ECHR, given the fact that the EC is not a signatory state.
The evaluation report and the subsequent discussions have identified this problem as one of the possible issues to be tackled with regard to the authority’s future organisation. In light of this discussion, it is currently being considered whether the competition authority’s investigatory body should be completely separated from its decision body. Independent of this, the evaluation report has also raised the question whether the decision body will generally need to be structured in a more independent manner than today. Today, the decision body, the Competition Commission, is not a full-time professional authority, but consists of independent experts as well as stakeholders of industry associations, trade unions, etc. The discussion in the coming months will show whether there is a willingness to amend this institutional set-up that has been used in Switzerland over many decades.