Revision of Vertical Notice and Guidelines
Amendment of Relative Market Power Fact Sheet
Following the revision of the EU Vertical Block Exemption Regulation (VBER), the Swiss Competition Commission (ComCo) proposed to amend its Vertical Notice and Guidelines. Although the amendments are based on the new EU rules, they still depart from them on key issues, resulting in a "Swiss finish". The Fact Sheet on Relative Market Power has also been amended with regard to the issue of complainants' anonymity.
Revision of Vertical Notice and Guidelines
After the European Union revised the VBER as of 1 June 2022, the ComCo published a draft of its new Vertical Notice and Guidelines to reflect the latest developments.
Broader options in exclusive and selective distribution
In line with the VBER, companies will have more options for structuring their distribution systems. For example, shared exclusive distribution with a territory or customer group exclusively allocated to up to five distributors, which are protected from active sales by other distributors, will be permissible.
The draft also enables the passing on of active sales bans to lower distribution levels within a distribution system. It will also be permitted to operate in parallel an exclusive distribution system in certain territories and a selective distribution system in other territories and to protect the selective distribution system from sales by exclusive or free distributors from other territories by means of a passive sales ban.
Changes regarding dual distribution
The draft is also aligned with the VBER with regard to a company distributing its products via its own distribution network and via independent distributors (known as "dual distribution"). In particular, the exchange of information between the dual distribution partners will only fall under the Vertical Notice if such exchange is both directly related to the implementation of the vertical agreement and necessary to improve the production or distribution of the contract goods or services by the parties. It is hoped that the final version of the Vertical Notice and Guidelines (unlike the draft) will specify the types of information that may be shared, as is the case in the VBER.
Changes in online sector
Regarding the online domain, the draft adopts the EU rules and states that vertical agreements in this area are not to benefit from the dual distribution privilege if the provider of the online intermediary services is a competitor on the relevant market for the sale of the intermediated goods or services.
Moreover, like the VBER, the draft declares certain restrictions on online sales or online advertising – which, among other things, de facto prohibit the distributor from using the internet for the sale of contract goods or services – to constitute a qualitatively severe restriction of competition.
In contrast, restrictions on the manner in which the contract goods or services are to be sold online as well as restrictions on the use of certain online sales channels (eg, online marketplaces) are in general considered unproblematic.
Finally, so-called "dual pricing systems" (ie, where distributor pays a different wholesale price for products sold online than for products sold offline) are now in general considered unproblematic, provided that the difference in price is reasonably proportionate to the differences in investments and costs in the respective channels.
Broad parity obligations are problematic
In line with previous practice, the draft expressly states that so-called "broad parity obligations", which oblige the buyer of online intermediation services (eg, hotel booking platforms) not to offer its products to end consumers on competing online intermediation services at more favourable conditions, are in principle problematic. So-called "narrow parity obligations", on the other hand, which prohibit undercutting only on the direct channels of the buyer (eg, the hotel itself), remain permissible. However, article 8a of the Federal Act against Unfair Competition (a civil law provision) will enter into force soon; according to this provision, parity clauses in general are to be prohibited.
No change for non-compete clauses?
The VBER clarified that vertical non-compete obligations concluded for a duration of five years but tacitly renewable beyond this period are in principle unproblematic, provided that there are adequate possibilities for termination or renegotiation. The ComCo has so far not adopted this change, which would have been welcomed in practice.
Stricter requirements for resale price maintenance
While the EU Commission provides guidance on various circumstances in which resale price maintenance may be permissible, the ComCo adheres to its own practice, which has recently been tightened.
For example, resale price recommendations may not only be problematic from a Swiss competition law perspective if they lead to fixed or minimum resale prices as a result of the exertion of pressure or the granting of incentives by one of the companies involved. According to the draft, the necessary coordination could also result from a particularly intensive communication of price recommendations.
Comment
While the draft is largely based on the EU revision, it sometimes deliberately deviates from it on key issues. Therefore, the existing "Swiss finish" in the rules regarding distribution will persist. This means that, in the future, distribution contracts with an impact on Switzerland will still have to be examined under the stricter Swiss competition law regime. It remains to be seen whether the envisaged Swiss regulation will come closer to the EU regulation as a result of the consultation process.
Amendment of Relative Market Power Fact Sheet
No anonymity for complainants from ComCo
In principle, complainants do not enjoy anonymity from the competition authorities. The competition authorities consider it necessary to know the identity of complainants to carry out antitrust reviews.
Consent required of complainant for disclosure to undertaking subject of complaint
The complaint itself and the identity of the complainant will only be disclosed to the undertaking subject of the complaint with the consent of the complainant. The ComCo's notification form provides for the complainant's explicit consent.
However, absolute anonymity may not be granted. Depending on the stage of the proceedings, it might become necessary to disclose the complaint as well as the identity of the complainant to the undertaking subject of the complaint in order to protect its rights of defence. A refusal to consent may lead to the proceedings not being opened or being discontinued.
Comment
The complainant must be aware of the fact that they have to compromise their anonymity in order to ensure effective proceedings against the undertaking subject of the complaint. For complainants, this clarification means that they must weigh up even more strongly their choice between asserting their rights and not endangering their business relationship.
For more information please contact Marcel Meinhardt or Luzius Sidler at Lenz & Staehelin by telephone (+41 58 450 80 00) or email ([email protected] or [email protected]). The Lenz & Staehelin website can be accessed at www.lenzstaehelin.com.