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Under what circumstances is a transaction caught by the legislation? A transaction is caught by the legislation if it constitutes a concentration (ie, an acquisition of control or a merger between previously independent undertakings).
‘Control’ is the ability to exercise decisive influence on the activities of the other undertaking through the acquisition of participation rights or any other means. The means by which control can be acquired include, either separately or in combination:
- ownership or the right to use all or part of the assets of the undertaking; and
- rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
Acquisitions of minority or other interests are caught only if they lead to control. Such control may be de facto (eg, because of low attendance at shareholders’ meetings in listed companies) or be based on contractual or other veto rights that enable the holder to block strategic decisions.
The concepts of ‘concentration’, ‘acquisition of control’ and ‘merger’ are the same as those under the EU Merger Control Regulation (139/2004).
Do thresholds apply to determine when a transaction is caught by the legislation? There are two thresholds: a turnover threshold and a dominance threshold.
Under the turnover threshold, a concentration must be notified to the secretariat if, in the business year before signing, each of at least two of the undertakings concerned generated Sfr100 million turnover in Switzerland and all of the undertakings concerned combined generated a combined turnover of Sfr2 billion worldwide or Sfr500 million in Switzerland. The concept of ‘undertakings concerned’, as well as the rules governing the turnover calculation, are essentially the same as those under the EU Merger Control Regulation (139/2004). Foreign currencies are to be converted into Swiss francs at the annual average rate published by the Swiss National Bank.
Transactions that do not meet the turnover thresholds must be notified if:
- one of the undertakings concerned has been held to be dominant in a market in Switzerland in in a final and non-appealable decision under the Act on Cartels; and
- the concentration concerns that market, an adjacent market or an upstream or downstream market.
Such decision must have been issued by the Competition Commission (ComCo). Arguably, a civil court judgment does not trigger the dominance threshold. A considerable part of the notifications made to the secretariat are filed based on the dominance threshold (particularly in the media and telecoms sectors). In one case, ComCo and the parties to a transaction agreed a remedy that included a duty to notify transactions for a limited period of time after closing.
While on its own, the fact that an undertaking is dominant does not trigger a filing duty when there is no formal and enforceable dominance ComCo decision, ComCo and the secretariat have indicated that they have the power to investigate a non-reportable transaction based on the abuse of dominance provisions (based on the Continental Candoctrine). However, to date, ComCo and the secretariat have not used this possibility. In addition, it is highly questionable whether ComCo and its secretariat have in fact the power to investigate non-reportable concentrations.
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