Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?
The Comco, consisting of 13 members, takes decisions, remedial actions and sanctions against undertakings abusing their dominant positions. Specific chambers of the Comco are empowered to render partial decisions on the closure of investigations, the approval of amicable settlements including other measures, in particular fines and costs, for some of the undertakings involved in an investigation while it is continued for the other undertakings. The Secretariat of the Comco is empowered to conduct investigations and, together with a member of the Comco, to issue any necessary procedural ruling. The Secretariat submits draft decisions to the Comco and implements the latter’s decisions. By the end of 2017, the total headcount of the Secretariat amounted to 72 employees (60.9 full-time equivalent).
The Secretariat has broad investigative powers, in particular, it may order searches (ie, dawn raids) and seize documents and electronic data, or hear third parties as witnesses, and require the parties to an investigation to give evidence. Upon specific request for information, the undertakings under investigation are obliged to provide the competition authorities with all the information required for their investigations and produce the necessary documents, however, in due consideration of the nemo tenetur principle, namely the right against self-incrimination (see Federal Administrative Court, LPC 2015/3 - Preispolitik Swisscom ADSL, p. 561).
The Secretariat published a note on selected instruments of investigation in January 2016. Therein, it laid out its best practice particularly with regard to inspections and the seizure of documents and electronic data. The Secretariat further published a note on amicable settlements in February 2018, which contains, inter alia, a draft wording for amicable settlements. Further notes exist, for example, with regard to the treatment of business secrets and the administration of deadlines in investigations.
Sanctions and remedies
What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?
A dominant company condemned for unlawful (abusive) conduct risks fines up to 10 per cent of the turnover that it cumulatively achieved in Switzerland in the preceding three financial years. The amount of the fine is dependent on the duration and severity of the unlawful behaviour, and is calculated also by taking into account the likely profit that resulted from the unlawful behaviour. The Cartel Act Sanctions Ordinance lays down the method of calculation of the fines in detail.
The largest fine ever issued for an abuse of a dominant position, 333 million Swiss francs imposed on Swisscom, the incumbent Swiss telecommunications operator, was cancelled by the appellate courts (see Federal Supreme Court, LPC 2011/3 - Terminierungspreise im Mobilfunk - Sanktion, p. 440; see question 22). Swisscom received another fine of 220 million Swiss francs in 2009 for an unlawful price squeeze in the ADSL market (Comco, LPC 2010/1 - Preispolitik Swisscom ADSL, p. 116). The Federal Administrative Court upheld Comco’s finding on the merits, however, it reduced the fine to about 186 million Swiss francs (Federal Administrative Court, LPC 2015/3 - Preispolitik Swisscom ADSL, p. 561). Moreover, with decision of 21 September 2015, Comco imposed a fine on Swisscom in the WAN-Anbindung case of about 7.9 million Swiss francs (LPC 2016/1 - Swisscom WAN-Anbindung, p. 128) and with decision of 9 May 2016, the Comco imposed a fine of about 72 million Swiss francs on Swisscom with regard to an abusive conduct against competing TV platform operators in the live sports broadcasting markets (Comco, LPC 2016/4 - Sport im Pay-TV, p. 920).
Another important state-owned company, Swiss Post (the incumbent Swiss provider of postal services), recently also received a significant fine in the amount of about 22.6 million Swiss francs. In its decision dated 18 December 2017, the Comco found that Swiss Post abused its dominant position on markets for letter post (commercial customers), in particular by committing price discrimination (see question 14). The decision is currently under appeal before the Federal Administrative Court.
The fine on Publigroupe of 2.5 million Swiss francs for refusal to deal and discriminatory practices was confirmed by the appellate courts (see Federal Administrative Court, LPC 2010/2 - Publigroupe, p. 329 and Federal Supreme Court, LPC 2013/1 - Publigroupe, p. 114).
In the Publigroupe case, the Federal Administrative Court, referring to article 7 of the European Convention of Human Rights, distinguished between practices falling within the list of article 7, paragraph 2 of the Cartel Act and those covered by the general clause of article 7, paragraph 1 of the Cartel Act: only the former are liable to be sanctioned with a fine, because the general clause does not offer sufficient legal certainty to undertakings. However, in the later decision with regard to Swisscom’s unlawful price squeeze in the ADSL market, the Federal Administrative Court changed its position and based the fine in the amount of 186 million Swiss francs solely on the general clause of article 7, paragraph 1 of the Cartel Act, basically arguing that Swisscom must have known that a price squeeze constitutes an abusive conduct (Federal Administrative Court, LPC 2015/3 - Preispolitik Swisscom ADSL, p. 561). The judgment of the Federal Administrative Court is currently under appeal and it remains to be seen which one of the two Federal Administrative Court’s views will be shared by the Federal Supreme Court.
Besides the possibility to impose fines, the Comco has a wide range of decision-making and remedial powers. It can issue injunctions to terminate a conduct or to change and modify specific business practices (for instance, to grant access or to modify rebate schemes or discriminatory pricing practices).
As compared to some other jurisdictions, the Cartel Act does not provide for sanctions that may be imposed on individuals acting on behalf of an undertaking that abused its dominant position. Individuals, however, may be fined in a few other cases, particularly in the case of a violation of a binding decision of the Comco (article 54 of the Cartel Act) or if the individual itself qualifies as an undertaking in the sense of the Cartel Act.
Can the competition enforcers impose sanctions directly or must they petition a court or other authority?
Sanctions can be imposed by the Comco autonomously, without having to petition any court. In that regard, the Federal Administrative Court and the Federal Supreme Court come only into play where a sanction decision of the Comco is challenged by the undertaking concerned (see question 33).
What is the recent enforcement record in your jurisdiction?
There are usually only a few investigations opened and final decisions rendered each year with regard to abusive conduct of dominant undertakings, if any. The enforcement record is certainly lower compared to opened investigations and rendered decisions with regard to anticompetitive agreements. However, notwithstanding these numbers, very high fines have been imposed on undertakings that have been held responsible for abusive conduct (see questions 19 and 27).
In recent times, enforcement in Switzerland seems to rather focus on digital-related issues. For example, on 13 November 2018, the COMCO opened an investigation against several major Swiss financial institutions. The investigation has the purpose of clarifying whether they reached an agreement to boycott mobile payment solutions of international providers (such as Apple Pay or Google Pay) in order to protect TWINT, the Swiss mobile payment solution. A preliminary investigation against Apple, which concerns Apple Pay as well, was concluded by the Secretariat of the Comco in December 2018: Apple Pay at POS terminals can interfere with payments made using TWINT. Following the intervention of the Secretariat of the Comco, Apple committed to offer a pro-competitive technical solution.
Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?
The contracts entered into by dominant undertakings that constitute an abuse of a dominant position may be declared null and void, in whole or in part, with retroactive effect (ex tunc; see also article 13 of the Cartel Act and the decision of the Federal Supreme Court, 12 June 2008, 134 III 438). The issue of the nullity remains, however, controversial, and there is no specific case law with regard to contracts concluded by dominant undertakings.
To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?
Civil courts are expressly empowered to apply the Cartel Act. In particular, any person hindered by an unlawful restraint of competition from entering or competing in a market is entitled to request before civil courts the elimination of or desistance from the hindrance, damages and satisfaction in accordance with the Swiss Code of Obligations, or the surrender of unlawfully earned profits (article 12 of the Cartel Act). Hindrances of competition include, in particular, the refusal to deal and discriminatory measures.
The Cartel Act empowers civil courts (at the plaintiff’s request) to rule that any contracts are null and void in whole or in part, or that the person responsible for hindering competition must conclude contracts with the person so hindered on terms that are in line with the market or the industry standard (article 13 of the Cartel Act).
The Federal Supreme Court upheld an order of a lower civil court to a cooperative society managing a cheese maturing cellar to accept a company as a member and to grant, therefore, access to the maturing cellar (Federal Supreme Court, LPC 2015/4 - Etivaz, p. 896).
In another case, the Cantonal Court of Vaud ordered a European sport federation to invite an athlete to one of its competitions. A recommendation issued by the sport federation, a Swiss domiciled association, not to invite athletes who could harm the events because of their past doping offences was considered as infringing rules on abuse of a dominant position (article 7 of the Cartel Act) and injuring athletes’ personality rights (Cantonal Court of Vaud, 24 June 2011, published in CaS 2011, 282).
Civil courts also have the possibility to order interim measures (articles 261 to 260 of the Swiss Civil Procedure Code). Moreover, provided that there is a sufficient public interest, undertakings may also obtain interim measures through the Comco, or the Comco can order such measures on its own (see eg, landmark decision of the Federal Supreme Court, LPC 2004/2 - Sellita Watch Co SA / ETA SA, p. 640). In order to have interim measures granted, it is, inter alia, required that the alleged anticompetitive conduct causes a disadvantage that cannot be easily remedied.
With an interim decision of 12 July 2017 (Comco, LPC 2017/3 - Eishockey im Pay-TV, p. 410), the Comco has confirmed that, likewise, a steep hurdle must be overcome and refused to grant Swisscom, the incumbent Swiss telecommunications operator, interim measures in the Commission’s investigation against UPC, a subsidiary of Liberty Global plc, on the suspicion of the abuse of a dominant position in the field of ice hockey broadcasting. Despite identified indications of anticompetitive conduct in the sense that UPC indeed could unjustifiably withhold ice hockey broadcast rights from competing TV platform providers, the Comco could not ascertain that this leads to a sustainable and irreversible change in the market structure at the level of the TV platforms and that, if the TV platforms were to be adversely affected, they would be likely to be able to win back lost customers with good offers and good services despite a possibly illegal refusal until the end of the investigation.
Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?
Yes, such claims for damages exist and are adjudicated by the civil courts (see also question 31). Under Swiss law, the quantum of damages generally equals the difference between the actual financial situation of the party aggrieved by the abusive conduct and the hypothetical situation in which that party would have been without the abusive conduct. Because it is often not possible to prove the quantum of damages in exact figures, courts are sometimes also satisfied with plausible assumptions (Commercial Court Aargau, LPC 2003/2 Allgemeines Bestattungsinstitut, p. 451). Article 42, paragraph 2 of the Swiss Code of Obligations explicitly states that courts shall estimate the quantum of damages at their discretion, in the light of the normal course of events and the steps taken by the aggrieved party, where the exact quantum of loss or damages cannot be established.
To what court may authority decisions finding an abuse be appealed?
Decisions of the Comco holding undertakings responsible for unlawful abusive conduct and, to a limited extent, also the Comco’s interim procedural decisions, can be challenged before the Federal Administrative Court. An appeal can be lodged on the following grounds: wrongful application of the Cartel Act; the facts established by the Comco were incomplete or wrong; or the Comco’s decision was unreasonable. Hence, the appeal before the Federal Administrative Court is a ‘full merits’ appeal on both the findings of fact and law.
The judgments of the Federal Administrative Court may be challenged before the Federal Supreme Court. In proceedings before the Federal Supreme Court, judicial review is limited to legal claims, in other words, the flawed application of the Cartel Act or a violation of fundamental rights set forth in the Swiss Federal Constitution, the European Convention of Human Rights or other international treaties. The claim that a decision was unreasonable is fully excluded and claims with regard to the finding of facts are basically limited to cases of arbitrariness.
The judgments of upper cantonal civil courts rendered in civil actions may also be ultimately challenged before the Federal Supreme Court, however with the same restrictions as in cases of appeals against judgments of the Federal Administrative Court.