Motor vehicle distribution may be the only area of competition law that is more regulated in Switzerland than in the European Union. In the European Union, the general vertical framework applies to vertical agreements for the distribution of motor vehicles. Only vertical agreements for the distribution of spare parts and for the provision of repair and maintenance services are regulated in a sector-specific block exemption regulation. In contrast, Switzerland continues to apply sector-specific competition law rules for the distribution of new motor vehicles – specifically, the Motor Vehicle Notice and its related explanatory notes published by the Competition Commission. The sector-specific regulations and the different approach from the European Union might be perpetuated now that Parliament has decided to incorporate the Motor Vehicle Notice into law.

The Motor Vehicle Notice and its explanatory notes reflect the current view of the Competition Commission and serve as guidance for courts and undertakings. They apply to vertical agreements for the distribution of new motor vehicles and spare parts and to the provision of repair and maintenance services. The Motor Vehicle Notice contains a list of agreements that are considered to be qualitatively severe restrictions of competition in the motor vehicle sector. For instance, access by independent workshops to technical information and original spare parts for repair and maintenance work may in principle not be restricted by agreements between manufacturers and authorised dealers. Further, in contrast to the European Union, multi-brand sales may not be limited (ie, authorised dealers and repairers of a brand must have the possibility to carry several brands). Given the differences between the EU and Swiss regulations, distribution systems that are permitted in the European Union may be problematic under Swiss law.

In order to incorporate the Competition Commission's guidance into law, Parliament has now mandated the Federal Council to draft a competition law ordinance. The content of the ordinance is not yet clear, although it is likely to be based on the existing Motor Vehicle Notice and its explanatory notes.

Parliament's goal is to better protect consumers from practices that distort competition or foreclose territories, such as when manufacturers and their importers may hinder parallel trade. The supporters of the motion argued that the current Motor Vehicle Notice had been effectively enforced and claimed that that the Competition Commission did not pursue cases brought to its attention and that the civil courts refused to apply the notice

In contrast to the Motor Vehicle Notice and its explanatory notes, an ordinance is binding for authorities and civil courts, which might increase legal certainty. However, it should be noted that the Competition Commission will still have discretion to decide, on the basis of its own priorities, whether or not to open an investigation. Further, an ordinance is less flexible, as the Competition Commission cannot amend it – for example, in case there are developments in the markets or in EU competition law. Considering that the automotive industry is in a state of upheaval, this inflexibility could prove to be a significant disadvantage.

For more information please contact Marcel Meinhardt or Virginia Ondelli 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