What jurisdictional thresholds trigger a review or application of the law? Is filing mandatory?
Again, in light of the fact that there is no generally applicable Swiss act that prohibits or requires a specific screening or approval of foreign investments in Switzerland on the basis of national interest (regardless of the industry sector), there are no generally applicable thresholds that trigger a review. The relevant Swiss acts - whose applicability does not necessarily depend on national interest grounds - do contain specific thresholds and triggering requirements.
The Lex Koller
Any acquisition (or actions that qualify as an ‘acquisition’ within the broad meaning of the Lex Koller) of residential real estate assets in Switzerland is subject to the Lex Koller if the acquiring person qualifies as a ‘person abroad’ according to the Lex Koller (see question 4). The filing of an application for authorisation is mandatory. Failure to file an application and to obtain an authorisation for the acquisition may, among other things, lead to the acquisition being declared null and void.
Each individual or legal entity must notify FINMA prior to acquiring or selling a direct or indirect ‘qualified participation’ in a bank organised under Swiss law. This notification duty also applies if a foreigner increases or reduces its ‘qualified participation’ and thereby attains, falls below or exceeds 20, 33 or 50 per cent of the capital or voting rights in the bank. The bank itself is also required to notify FINMA of any changes triggering the notification duty of the shareholders once it becomes aware of such a change.
In the case of a foreign-controlled bank, prior to any change of a foreign holder of a ‘qualified participation’ (see question 3), the bank must apply with FINMA for a special licence. In its application, the bank must demonstrate all the facts based on which FINMA may assess whether the conditions for the special permit are fulfilled.
The Competition Law
The test applied to mergers (see question 6 for a definition of mergers) under the Competition Law is based on turnover (but not on national interest grounds). The thresholds to be met are that, for the last business year prior to the merger, the enterprises concerned must have reported an aggregate turnover of at least 2 billion Swiss francs worldwide or an aggregate turnover in Switzerland of at least 500 million Swiss francs, and at least two of the enterprises involved in the transaction must have reported individual turnovers in Switzerland of at least 100 million Swiss francs. In the case of banks, the turnover is calculated on gross income, and in the case of insurance companies, the gross annual insurance premium is relevant.
In addition, once the ComCo has established that a specific enterprise holds a dominant market position, each merger transaction involving that enterprise in the market in which it holds a dominant market position (or an adjacent market or in a market upstream or downstream thereof) is subject to the notification requirement.
If one of the above thresholds is met, merger filings are mandatory.National interest clearance
What is the procedure for obtaining national interest clearance of transactions and other investments? Are there any filing fees?
As mentioned above, there is no general national interest clearance of transactions or other investments that is generally required in Switzerland regardless of the concerned industry sector; hence, no standard notification procedure is applicable.
The Lex Koller
The application must be filed with the competent cantonal approval authority in the canton where the real estate asset is located. Predominantly, an application must contain any relevant information with respect to the acquisition and the underlying real estate asset. Since the cantons are entrusted with the responsibility and power to apply and ensure compliance with the Lex Koller, the required format and content of Lex Koller filings as well as the amount of the charged fees depend on the local practice of the competent canton. If no application was filed, for transactions that must be registered in the land registry (asset deals), the competent land registry must refuse to register the transfer of ownership and must grant the buyer a (short) deadline to obtain clearance. Otherwise, the authorities typically intervene (by requesting certain information to start investigations) whenever they become aware of the transaction (which can also be post-closing).
Each individual or legal entity must notify FINMA prior to acquiring or selling a direct or indirect ‘qualified participation’ in a bank organised under the laws of Switzerland. Further, in the case of a foreign-controlled bank, prior to any change of a foreign holder of a qualified participation, the bank must apply to FINMA for a special licence (see also question 8).
Which party is responsible for securing approval?
The Lex Koller
The acquiring person abroad under the Lex Koller is responsible for securing the approval of the acquisition by the competent authority.
The individual or legal entity acquiring or selling a direct or indirect qualified participation in a bank organised under the laws of Switzerland must notify FINMA prior to such acquisition or sale. The bank itself is also required to notify FINMA of any changes triggering the notification duty of the shareholders once it becomes aware of such a change. In the case of a foreign-controlled bank, prior to any change of a foreign holder of a qualified participation, the bank must apply to FINMA for a special licence (see question 3).Review process
How long does the review process take? What factors determine the timelines for clearance? Are there any exemptions, or any expedited or ‘fast-track’ options?
The duration of the review process depends on the specific industry (see below for further information). What is true, in principle, for all filings with Swiss authorities is that all information needed for a specific filing is submitted to the competent authority when the actual filing is first made. Thereby, the review process is speeded up as the clock for any applicable review period typically starts running only when the filing is complete.
The Lex Koller
With respect to the Lex Koller, the duration of the review process varies from canton to canton and largely depends on the complexity of the subject matter of the acquisition, the composition, organisation and the workload of the competent cantonal approval authority in charge of the decision. The availability of ‘fast-track’ options must also be checked separately for every canton as well the willingness to obtain waivers from the federal appeal authorities to shorten the impact on the timeline of the transaction.
The timing of the approvals or statements by FINMA, in principle, largely depends on the workload of FINMA. The process for a special banking licence in the case of a foreign-controlled bank may take three months. If, however, the country of domicile or residence of the foreigner is not a member state of the WTO, the process may take much longer. In such a case, FINMA will have to assess whether the respective country grants the right of reciprocity.
If the acquirer is not a foreigner, there is no formal approval or licence required and, thus, a statement from FINMA is available within a shorter time frame.
The Competition Law
The ComCo is required to notify the involved enterprises within one month after the date of receipt of the complete notification as to whether it intends to initiate an investigation. If, within such period, no notification is made by the ComCo, the merger can be completed. In practice, it is possible to shorten the one-month period in less complex filings if, prior to the filing of the formal notification, a draft filing is submitted to the ComCo for review, thereby enabling the ComCo to communicate its position before the lapse of the one month period.
Must the review be completed before the parties can close the transaction? What are the penalties or other consequences if the parties implement the transaction before clearance is obtained?
As a general rule, the review must be completed before the parties can close the transaction, unless the applicable act provides otherwise.
The Lex Koller
The review of an acquisition under the Lex Koller must be completed before the parties can consummate the transaction; an acquisition without the necessary authorisation becomes null and void. Further, actions to reinstate and enforce the legal status, or actions aiming at the dissolution of a legal entity by authorities may be brought against the parties of the acquisition (see question 15). In addition, financial penalties and imprisonment are possible.
While the acquisition of a qualified participation in a bank by a Swiss individual or entity triggers, in theory, only notification obligations, a foreign-controlled bank must apply to FINMA for a special licence (see question 3) in the case of any change of a foreign holder of qualified participation. If the respective special licence is not obtained prior to the closing of the transaction, the potential penalties and consequences for non-compliance can be severe; if, for example, the required notification to FINMA is intentionally not made, the person who should have filed can be punished with a monetary fine of up to 500,000 Swiss francs. Further, under the Financial Market Supervision Act, FINMA has various enforcement rights available to it that may consist, among other things, of opening an investigation, the confiscation of any profit that a supervised person or entity or a responsible person in a management position has made through a serious violation of the supervisory provisions, the revocation of the licence of a supervised person or entity, or the withdrawal of its recognition or cancellation of its registration if it no longer fulfils the requirements for its activity or seriously violates the supervisory provisions. If FINMA has reasonable grounds for suspecting an offence, it may file criminal complaints with the Legal Service of the Federal Department of Finance.
The Competition Law
As a general rule, the consummation of a merger is prohibited until the lapse of the review period (see question 11). Such provisional ban does not apply if, prior to the lapse of such one-month period, the ComCo notifies the enterprises that it regards the concentration as compliant with the Competition Law. Enterprises may face a fine of up to 1 million Swiss francs if they do not comply with the provisional ban. Further, such non-complying enterprise may be required to take measures to reinstate effective competition (eg, by unwinding the transaction or by ceasing to exercise effective control).Involvement of authorities
Can formal or informal guidance from the authorities be obtained prior to a filing being made? Do the authorities expect pre-filing dialogue or meetings?
Swiss authorities are typically responsive to requests for informal guidance, in particular in those cases where the supervised or regulated enterprise has an existing relationship with the competent authority already. Formal guidance on which one can rely is in most cases unavailable. Though there is no specific requirement to have pre-filing dialogues or meetings, in more complex transactions in particular early information is appreciated by the competent authorities.
When are government relations, public affairs, lobbying or other specialists made use of to support the review of a transaction by the authorities? Are there any other lawful informal procedures to facilitate or expedite clearance?
Usually, neither government relations nor public affairs or lobbying specialists are made use of. Lobbying is, however, not prohibited under Swiss law. The key element is that the applications with the competent authorities are accurate and complete when filed and that attorneys in charge of the filing have a good working relationship with the respective authorities.
What post-closing or retroactive powers do the authorities have to review, challenge or unwind a transaction that was not otherwise subject to pre-merger review?
If the specific Swiss acts (such as the Federal Banking Act, the Telecommunications Act, the Cartel Act, etc, see question 3) applicable to a transaction do not require a review of a particular transaction, there is no general Swiss act that would permit the review of such transaction based on national interest grounds.