Investigation
Competition Commission prohibits exchange of information between importers and suppliers of luxury cosmetics
On October 31, 2011, the Competition Commission prohibited several undertakings active in the luxury cosmetics sector from exchanging information on prices, turnovers, advertising expenses and sales terms1. The Competition Commission held that the information exchange between the undertakings involved (all of which were members of the Geneva based Association of Manufacturers, Importers and Suppliers of Cosmetic and Perfumery Products ("ASCOPA")) infringed the Competition Act, because the exchanged information allowed the participants to adjust their market behaviour to one another. However, the Competition Commission considered that the information exchange could not be regarded as a hard-core cartel within the meaning of the Competition Act and, therefore, did not impose a sanction on the undertakings involved. The decision also provides guidance on Competition Commission's practice in relation to information exchange.
The investigation, which was launched after the exchange information was reported by a member of the ASCOPA to the Secretariat of the Competition Commission, was directed against Swiss subsidiaries and distributors of leading manufacturers of luxury cosmetic products, including Chanel, Clarins, Coty, Estée Lauder, L'Oréal Produits de Luxe, Parfums Christian Dior, P&G Prestige Products, Richemont and YSL Beauté. For years, these undertakings had been exchanging, within the ASCOPA, information on gross sell-in prices charged to their respective retailers, sales figures and turnovers, marketing channels and advertisement expenses and general sales conditions. The exchanges on gross sell-in prices and marketing expenses occurred on a semi-annual basis, whilst those on sales figures and turnovers occurred, with a different level of detail, on a monthly, quarterly and annual basis.
The Competition Commission found that the information on gross sell-in prices allowed the members of the ASCOPA to adapt the level of their own gross price to the one of their competitors and, by doing so, to restrict the competition on the net sell-in prices (that is, the prices after discounts). The Commission further found that, with respect to turnovers, the exchanged data were so detailed that each participant was in a position to calculate the volume of products supplied by the other participants and, as a result, to control the evolution of its own market share compared to the one of its competitors. As far as marketing expenses were concerned, the Competition Commission considered that they were sufficiently detailed to provide information on the budget allocated by each participant to promote its specific lines of products, allowing the other participants to compare such budget with the turnover achieved by the relevant undertaking. The members of the ASCOPA could then integrate these data in their costs analyses when assessing the opportunity of launching a new product; they were also in a position to adjust their pricing policy in order to respond to the strategy of the other members. The Competition Commission considered that this information exchange goes beyond a normal "benchmarking" activity, defined by the Competition Commission as an activity where the relevant undertaking is searching market information on its own, without any possibility to control the relevance of the information found based on the data provided by competitors. According to the Commission, by exchanging such information, the members of the ASCOPA were able to adjust their market behaviour relative to one another. This adjustment led to significant restrictions of competition on the markets for luxury flagrance, make-up and body-care products, which could not be deemed as justified on grounds of economic efficiency. Therefore, the Commission held that such information exchange amounted to an unlawful agreement within the meaning of Articles 5(1) and 5(2) of the Competition Act.
The Competition Commission did not fine the undertakings involved, considering that their conduct did not fall within the category of behaviours for which fines may be imposed under Swiss competition law. In particular, the Commission found that the information exchange on gross sell-in prices could not be deemed as a price-fixing agreement within the meaning of Article 5(3) of the Competition Act, since the exchanged information only allowed to compare certain reference products against each other and the investigation did not show that the undertakings had agreed on the gross prices of certain products. Nevertheless, the undertakings will be liable to a fine in the future should it appear that they do not comply with the prohibition imposed on them by the Competition Commission.
Competition Commission imposes fines for collusive tendering in construction sector
On December 16, 2011, the Competition Commission fined seventeen undertakings active in the field of road building and civil engineering in the Canton of Aargau a total amount of approximately CHF4 million for entering into price-fixing and customer allocation agreements. This sanction comes as the result of an investigation launched in June 2009 by means of a dawn-raid on the basis of suspicions of collusive tendering. The investigation confirmed the indications that, during the period between 2006 and 2009, the undertakings concerned participated in hundreds of illicit agreements to fix tender prices and allocate customers and projects. The Competition Commission fixed the fines on the basis of the turnover of the undertakings involved in the restriction, considering also the type, duration and gravity of the infringement. Seven undertakings qualified for the leniency program; one undertaking qualified for full immunity.
Under Swiss law, the Competition Commission has the power to fine undertakings up to 10% of their turnover in Switzerland for the past three years. However, the Competition Commission operates a leniency program, which applies to restrictive agreements that are prohibited and 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 authority to start a regular investigation. In addition, the applicant for full immunity must maintain complete, continuous and prompt co-operation with the investigating authority and cease participation in the prohibited activity. Nonetheless, full immunity is not available to undertakings which have coerced other undertakings to participate in the cartel activity or have instigated the cartel activity. Alternatively, 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 co-operates with an investigation and ends its involvement in the prohibited agreement at the time evidence is provided.
The Competition Commission considers as a priority combating tender (bidding) cartels, which constitute a particularly harmful infringement of the Competition Act. The Commission has initiated co-operations with local authorities in charge of tender procedures, in order to increase awareness about compliance with competition law.
Competition Commission fines Nikon CHF 12.5 million for restricting parallel imports
On December 15, 2011, the Competition Commission announced that it has imposed a fine of CHF 12.5 million on the Swiss subsidiary of Japanese camera company Nikon for restricting parallel imports of the products "Nikon Imaging". Following a complaint, the Competition Commission had detected signs and gathered evidences of Nikon restricting parallel imports into Switzerland. The Commission launched a regular investigation on March 24, 2010 by dawn raiding the offices of Nikon. It concluded that Nikon illegally foreclosed the Swiss market by inserting clauses into foreign distribution contracts restricting exports to Switzerland and, conversely, by inserting similar clauses into Swiss distribution contracts to restrict supply abroad. In addition, evidence was found that Nikon exerted pressures over "parallel distributors". The investigation revealed that, between spring 2008 and autumn 2009, Nikon's conduct resulted in higher prices for the consumers, Commission said.
The export and import prohibitions imposed on the distributors of the products "Nikon Imaging" and the actions taken in order to hinder "parallel distributors" from importing such products into Switzerland did not eliminate competition but, nevertheless, appreciably restricted competition on the relevant product markets. The Competition Commission thus fined Nikon CHF 12.5 million for the ban on parallel import based on the turnover that Nikon achieved in Switzerland, and taking into account the duration and the gravity of the infringement.
Merger Control
Competition Commission clears Bridgepoint/Infront merger
On December 14, 2011, the Competition Commission approved the proposed acquisition of Infront Sports and Media AG by Bridgepoint Capital Group Limited. The preliminary investigation did not reveal any indication that the proposed concentration could create or strengthen a dominant position in Switzerland. The merger was cleared after a first-stage assessment, without conditions or commitments.
Bridgepoint is an international private equity group, based in the UK, which focuses on the take-over of middle-size companies. Infront is a global sports media and marketing group, based in Zug, Switzerland, which holds a portfolio of media and marketing rights for different types of sports.
The Competition Commission found that the proposed transaction would give rise to an overlap only in the sector of the organization and promotion of motorcycle racing championships. Indeed, both Bridgepoint and Infront are active in the motorsport sector: Bridgepoint controls Dorna, a Spanish company which, among other racing championships, organises and promotes the Moto GP championship, whilst Infront holds the right to organise and manage the Superbike championship. As to the definition of the product markets (in particular with respect to advertisers and TV broadcasters), the Competition Commission referred to the "CVC/SLEC" decision of the European Commission dated March 20, 20062. However, the definition of the product markets was eventually left open, since the transaction did not raise any competition concerns.
Footnotes
1. The text of the decision (in German) is available at: http://www.weko.admin.ch/index.html?lang=fr.
2. COMP/M.4066.
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