Investigations
FCC imposes fines for collusive tendering in electrical equipment sector
On 6 July 2009, the Competition Commission (FCC) fined eight undertakings CHF 1.24 million for collusive tendering in relation to private and public tenders for electrical equipment in construction projects.
On 31 January 2008, the FCC launched an enquiry into suspected anti-competitive practices in the electrical equipment industry of the region of Bern by dawn raiding the offices of the principal market participants. Following a complaint, the FCC had indeed detected signs of market sharing in the way tenders (including tender prices) for electrical equipment in private and public construction projects were submitted, as well as a sort of rotation of awards for electrical equipment works. The FCC concluded that the undertakings concerned had participated in hard-core restrictions and, thus, that they were liable to a fine. The FCC fixed the fines in reference to the type, duration and gravity of the infraction. The fact that all the undertakings concerned discontinued their practice immediately after the launch of the enquiry and applied for leniency treatment operated in mitigation. The FCC also took into consideration the fact that the undertakings accepted to reach an amicable settlement with the FCC.
The FCC has power to fine undertakings up to 10% of their turnover in Switzerland for the past three years. However, pursuant to Article 49a(2) of the Competition Act (ACart), the FCC operates a leniency programme, which applies to restrictive agreements that are subject to fines because they contain hard-core clauses that eliminate competition. Full immunity from fines is available for the first undertaking that reports its involvement in a qualified hard-core cartel and delivers information enabling the Secretariat to start a regular investigation, provided that among others such undertaking has not instigated the cartel activity. A reduction in fines by up to 50% is available, at any time in the procedure, to an undertaking that does not qualify for full immunity, if and to the extent the applicant cooperates with the investigation and ends its involvement in the prohibited agreement at the time evidence is provided.
This decision is notable in that it is the first time that the FCC imposes fines for collusive tendering. The FCC also confirmed a principle already developed in a case dated 2007 that reaching an amicable settlement does not rule out fines in respect of the infringement that took place before the conclusion of the amicable settlement.
FCC opens investigation in relation to credit card Domestic Multilateral Interchange Fees
On 16 July 2009, the FCC initiated an investigation into the Domestic Multilateral Interchange Fees (DMIF) applicable to the four-party credit card payment systems (Visa and Mastercard systems). The DMIF are interchange fees fixed by companies issuing credit cards (issuers) and companies that affiliate retailers to the credit card payment systems (acquirers). In a four-party system, the interchange fee is paid by the acquirer to the issuer on each transaction paid by credit cards.
This is the second time that the FCC launches an enquiry into the DMIF interchange fee. At the end of a first investigation initiated in late 2003, the FCC found that the DMIF for the Visa and Mastercard credit card systems were negotiated multilaterally by the issuers and the acquirers in Switzerland, which amounted to an illegal agreement on prices prohibited under the ACart. However, instead of prohibiting the multilateral agreements, the FCC considered that the DMIF agreements were justified on the grounds of economic efficiency subject to a certain number of commitments by the Swiss issuers and acquirers (namely, reduction of the DMIF by 15%, abrogation of a clause prohibiting the retailers from passing credit cards usage costs onto the customers, information of the retailers of the DMIF applicable to particular economic sectors). The FCC's approval of the amicable settlement on 5 December 2005 was limited to four years. The FCC has thus now to re-assess the effects of the settlement on the market for the issuing and acquiring of credit card systems.
FCC opens investigation against the Swatch group in the market for movement blanks
On 14 September 2009, the FCC opened an investigation against ETA Manufacture Horlogère Suisse SA, a company of the Swatch group specialized in the production of movement blanks. In late 2008, ETA had notified its customers of price increases and changes in payment terms for movement blanks for 2009. Following this notification, several complaints were filed with the Secretariat of the FCC. The FCC's investigation has to show whether ETA's actions might constitute an abuse of a dominant position in the market for movement blanks, and in particular whether ETA is discriminating without objective reasons against third party watch manufacturers in relation to prices for movement blanks.
Merger Control
FCC approves Tamedia/Edipresse merger
On 17 September 2009, the FCC approved the proposed concentration between Tamedia and Edipresse after a second stage assessment. The concentration was cleared without conditions and commitments under the failing firm doctrine.
Tamedia is Switzerland fourth-largest media firm and publishes more than 20 regional and local newspapers, including the Zurich "Tages-Anzeiger" and the free daily "20 Minutes". It also runs radios and television stations as well as online services. Edipresse Switzerland is based in Lausanne. It publishes the daily "Le Temps" as well as other newspapers, including "Le Matin Bleu", a scaled-down version of the daily "Le Matin".
On 2 June 2009, Edipresse and Tamedia announced that they were planning to merge their Swiss business by 2013. In early 2010, Tamedia will acquire a 49.9% shareholding in PPSR, which represents most of Edipresse activities in Switzerland. During a second stage, Tamedia will acquire an additional 0.2% of PPSR at the beginning of 2011, followed by the remaining 49.9% in early 2013. The price for acquiring the first two shareholdings is 226 million Swiss Francs, whereas the balance for the third transaction will depend on the development of Edipresse's Swiss business. Part of the price for the final tranche will be paid in shares, thereby making Edipresse one of Tamedia's major shareholders. In French-speaking Switzerland, the two companies also envisage merging the free (French-language) daily "20 Minutes" and the free daily "Le Matin Bleu" as soon as possible. Edipresse's international operations, its Bilan magazine and luxury marketing division will not be affected by the deal.
Under Swiss competition law qualifying concentrations must be notified to the FCC, which then has one month in which to decide whether to initiate an investigation into them. During this initial stage, the concentration is suspended, unless, upon application, the FCC decides otherwise. The FCC's decision to investigate a concentration leads to a "second stage assessment" of four months' duration. At the outset of this assessment the FCC decides whether or not the concentration can be consummated, pending the FCC's determination on it. The substantive test for clearance is the test of market dominance.
In the decision to refer the Tamedia/Edipresse concentration to a second-stage assessment, the FCC indicated its concern that the concentration might create or strengthen a dominant position in the markets for pendular readers in French-speaking Switzerland, considering the intent of the parties to merge the free French-language dailies "Le Matin Bleu" and "20 Minutes", as well as in the market for early distribution of newspapers in the Romandie.
The FCC found, in substance, that the merger did not pose a threat to the relevant markets. The FCC held in particular that there was no room in the long run for two free dailies in the market for advertising in French-speaking Switzerland. Tamedia and Edipresse have incurred losses of million Swiss francs since they have launched their free French-language dailies. The investigation showed that, in the absence of the merger, "Le Matin Bleu" would inevitably have exited the market and, as a result, the market share of Edipresse would in any event have accrued to Tamedia. The investigation also showed that there was no less anti-competitive alternative transaction. This was demonstrated, inter alia, by the fact that no other publisher expressed interest in acquiring "Le Matin Bleu" in the current circumstances.
Under the Swiss merger regulation, the concept of a concentration is defined in such a manner as to cover operations only if they bring about a lasting change in the control of the undertakings concerned. One of the lines of enquiry was thus whether an operation leading to joint control for a starting-up period but, according to legally binding agreements, is intended to be converted to sole control by one of the shareholders, may be considered to be an acquisition of sole control only. In the past, based on the European Commission practice, the FCC accepted that such a start-up period could last up to three years. In its decision to refer the Tamedia/Edipresse concentration to a second-stage assessment, the Secretariat of the FCC indicated that such a period seems to be too long to exclude that the joint control scenario has an impact on the structure of the market. According to the Secretariat, the period should therefore, as a matter of principle, not exceed one year.
Tavernier Tschanz – October 2009
For more information, please contact Silvio Venturi (venturi@taverniertschanz.com) or Pascal G. Favre (favre@taverniertschanz.com), tel. +41 (0) 22 704 37 00.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
