Switzerland: Swiss Competition Report - Reporting Period: October 04 - December 04

On November 22 2004, the FCC issued a draft de minimis notice, which is subject to a consultation period until January 31 2005. The purpose of the proposed notice is to identify the agreements between small and/or medium-sized undertakings which have a limited impact on competition and consequently do not fall within the prohibition on restrictive agreements. The draft notice distinguishes between small and medium-sized undertakings. Agreements between small undertakings are justified except if they amount to hardcore cartels and if they are entered into by a majority of competitors. Agreements between medium-sized undertakings are justified under the following circumstances: (i) the agreement aims at improving competitiveness by rationalizing the economic process; (ii) the agreement does not amount to a hardcore cartel; (iii) the agreement does not restrict competition, which is presumed when the aggregated market shares are below 10% in relation to horizontal agreements and below 15% in relation to vertical agreements.

The editors Tamedia and Edipresse separately exploit a real estate Internet platform and issue the most important daily newspapers in the regions of Zurich and Vaud/Geneva respectively. Homegate is the best established real estate Internet platform in the Zurich area. Further to an in-depth investigation, the FCC concluded that the acquisition of Homegate would not create a dominant position on the regional market of on-line real estate advertising. The FCC considered the existence of external competition and the dynamic nature of the market. The FCC also stated the existence of a dominant position by Edipresse on the market of advertising published in the press media; however, it considered that the dominant position would not be strengthened by the acquisition of Homegate, which is active mainly on the on-line market.

The former telephony monopolist Swisscom plans to acquire minority shares in Cinetrade and in the long run to acquire control of the latter. The Cinetrade group is active in pay TV (Teleclub), movie theatres (KITAG) and home video (PlazaVista). Through this acquisition Swisscom intends to enter the movie and sport rights markets and complement its traditional activities - telephony and Internet - with television. The FCC considers that the planned merger might create or strengthen Swisscom's dominant position on its traditional markets as well as on the markets of pay TV, movie and sport rights (premium contents).

Seven Swiss electricity companies intend to concentrate the exploitation of their electricity-carrying network under a common company "Swissgrid". The in-depth investigation launched in December 2004 must clarify whether the concentration creates or strengthens a dominant position on the market of transportation of high-tension electricity in certain regions of Switzerland.

In December 2000, suppliers lodged a complaint for abuse of dominant position against Coop, the second largest retail distributor in Switzerland. As part of its general terms and conditions Coop imposed a discount scheme on its suppliers in consideration for the additional services it provided by means of its distribution channel. Notwithstanding a high level of concentration (Migros and Coop together hold a market share of 60%), the FCC considered that the Swiss retail trade market is dynamic and competitive. As regards the upstream market supply, the FCC held that some suppliers might be in a dependence relationship with Coop; however, Coop's commitment to refund the discount to the suppliers that do not get any additional service from Coop is likely to remove any anti-competitive concern.

By decision of November 8 2004, the FCC approved the commitment of ETA, a subsidiary of the Swatch Group, to continue the supply of ebauches. The FCC found that ETA holds a dominant position in the market for ebauches produced in Switzerland. ETA's decision to phase out the supply of ebauches in a very short period of time would have forced many competitors to cease their business activity due to the lack of alternative suppliers. ETA's behaviour was considered to be an unlawful refusal to supply and to fall within the scope of anti-competitive practices. The commitment of ETA to carry on the supply of ebauches until 2008 allows the development of alternative productions and is likely to ensure a competitive situation in the future.

In November 2003, the FCC launched an investigation against Swisscom Directories, a Swisscom group company, for abuse of dominant position. Swisscom Directories supplies updated data to directories and related services. It also exploits its own electronic directory (ETV) so that it competes with the other directory services providers. The FCC considered that Swisscom Directories holds a dominant position on the market of the supply of updated electronic data. On November 22 2004, the FCC concluded that the creation of competing alternative directories was possible and therefore did not need to ascertain the existence of an abuse.

By decision of December 6 2004, the FCC concluded that the exclusive distribution agreements between Feldschlösschen and restaurant owners with a term longer than 5 years are not unlawful under competition law provided that: (i) they are linked to a loan, to a leasing or to any other financial commitment of Feldschlösschen; (ii) after five years restaurant owners are entitled to terminate the agreement at any time against payment of the outstanding debt.

In the same proceedings, the FCC concluded that the agreement between Feldschlösschen and Coca-Cola Beverages AG - in which Feldschlösschen encourages sales of Coca-Cola products -, does not violate competition law. There remain other beer distribution channels available to Coca-Cola competitors aside from Feldschlösschen. Furthermore, as the agreement does not contain an exclusivity provision, the effects of the agreement within Feldschlösschen distribution channel are low.

The supply agreements for concrete and cement awarded further to a public tender (construction of national highways) provide for high prices. On November 22 2004, the FCC launched an investigation to examine whether the bidders adopted behaviour which restricted competition during the bidding process (restrictive agreements or abuse of dominant position).

Corner Banca requested that the FCC pronounce interim measures against Telekurs Multipay SA to prevent an abuse of dominant position, which was refused. Corner Banca appealed to the Appeal Commission. The Appeal Commission denied the right of Corner Banca to appeal on the ground that the refusal of the FCC did not constitute a formal decision which was subject to appeal. Only a decision of the FCC taken within an investigation is subject to appeal, not a communication issued informally before the possible launch of an investigation. Furthermore, in case of the refusal of the FCC to launch an investigation, the claimant can only file a complaint against the FCC to the supervisory authority. By a decision of July 13 2004, recently published by the FCC¹, the Supreme Court confirmed the ruling of the Appeal Commission.