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Initiating an investigation
Who can initiate an investigation of potential cartel conduct?
Anyone can give information of potential competition law infringements to the Secretariat of the Competition Commission (ComCo), which will then conduct a preliminary investigation. The Secretariat can also commence such a procedure on its own initiative. The aim of this pre-stage procedure is to ascertain whether there are sufficient indications that an unlawful restriction of competition exists (Article 26 of the Cartel Act). If this is the case, the Secretariat opens a formal investigation in consultation with a member of the presidency of ComCo (Article 27). The Secretariat will give notice of the opening of an investigation by way of official publication (Article 28).
If an investigation is initiated by complainants or third parties, what rights (if any) do they have?
Third parties have no procedural rights during preliminary investigations. The law also limits the procedural rights of the undertakings which is the subject of the preliminary investigation. In line with this, the Cartel Act explicitly states that there is no right to inspect the files (Article 26(3)). The reason for this is that preliminary investigations are not considered formal proceedings. Nevertheless, the Secretariat must respect basic constitutional principles, such as equal treatment of the involved parties.
Once a formal investigation is opened, the Federal Act on Administrative Procedure applies, giving third parties procedural rights. However, third parties can only participate in the investigation as a formal party with procedural rights if they suffer a significant economic disadvantage as a result of the alleged restraint of competition (cf Case C1054/2012 of the Federal Supreme Court).
What obligations does a company have on learning that an investigation has commenced?
On request only, the company must provide the competition authorities with all information required for their investigations and produce the necessary documents. Nevertheless, the company has a right to refuse to provide information which is governed by Articles 16 and 17 of the Act on Administrative Procedure.
What obligations does a company have if it believes that an investigation is likely?
The law does not set forth any specific obligations for companies in such cases.
What are the potential consequences of failing to act or delaying action?
Any undertaking that does not fulfil (either in part or in full) its obligation to provide information or produce documents may be charged with a penalty of up to Sfr100,000 (Article 52 of the Cartel Act).
Formal stages of investigation
What are the formal stages of and approximate timeframe for investigations?
As a first stage, the Secretariat of ComCo usually opens a preliminary investigation. Depending on its outcome, a formal investigation may thereafter be opened. Once the investigation is formally opened, the Secretariat will conduct investigative measures, such as sending information requests (questionnaires) to parties and third parties. It can also ask the parties to make formal statements, search premises and seize evidence. The Secretariat will then issue a draft decision on which the parties can comment. ComCo will issue a final decision based on the draft decision of the Secretariat and the file (Article 30 of the Cartel Act).
There is no clear timeframe for investigations; the duration depends on the circumstances of each case and the workload of the Secretariat. ComCo determines the order of priority in which investigations are dealt with (Article 27(2)). In practice, the preliminary investigation may take longer than a year. Formal investigations typically take several years until a final decision is issued.
What investigative powers do the authorities have?
The Secretariat of ComCo is empowered to:
- order production of documents and information;
- carry out witness hearings;
- conduct dawn raids;
- ask for judicial assistance;
- conduct inspections;
- order hearings;
- ask for expert reports; and
- confiscate evidence.
What is the geographic reach of public enforcement actions?
Public enforcement actions are limited to Switzerland. Nevertheless, ComCo also conducts proceedings against foreign companies. If public enforcement actions are necessary, ComCo will ask for judicial assistance. In this context, there is an agreement between the European Union and Switzerland concerning cooperation on the application of their competition laws. The agreement entered into force on December 1 2014 and allows the authorities to coordinate enforcement activities in the European Union and Switzerland and to exchange confidential information.
When is court approval required to invoke these powers?
Investigative measures do not need court approval. However, searches and seizures are ordered by a member of the presiding body of ComCo in response to a motion from the Secretariat (Article 42(2) of the Cartel Act). Further, subjects of dawn raids can ask for documents to be sealed. They are then accessible by the Secretariat only once the Swiss Federal Criminal Court has decided to unseal them.
Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?
Yes, the Secretariat may search business and personal premises. The search team will be accompanied by a public official of the canton.
The Secretariat will not wait for legal advisers to arrive. It will immediately begin the search, but will set seized documents aside so that legal advisers can subsequently go through them and ask for certain documents to be sealed.
What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?
Undertakings that are subject to a dawn raid have a duty to tolerate the search, but no duty to actively cooperate. This means that they are not allowed to impede the search. As part of this duty to tolerate, doors to rooms must be opened and access to computers must be granted. Failure to fulfil this duty may qualify as the criminal offence of hindrance of official acts (Article 286 of the Swiss Criminal Code). Further, obstruction can be considered as an aggravating circumstance when determining penalties for a cartel.
Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?
In-house legal advice is not protected by the law of privilege. Only attorney work product produced by outside counsel falls under this privilege.
Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?
The Secretariat of ComCo can use only the investigatory measures provided for by law. In line with this, it cannot tap phones, for example. Further, there is the possibility to appeal against any unlawful investigation actions.
What is the process for objecting to an authority’s exercise of its claimed powers?
The authority's exercise of power can be appealed in general before the Swiss Federal Administrative Court.
Publicity and confidentiality
What information about investigations will be made publicly available and at which stage(s) of the process?
Investigations are published by way of official publications (if pursued after the preliminary investigations of the Secretariat of ComCo). The notice of the Secretariat will state the purpose of and the parties to the investigation. It further contains an invitation to third parties to come forward within 30 days if they wish to participate in the investigation (Article 28 of the Cartel Act). Further, decisions on investigations are published, but with confidential information removed.
Is any information automatically confidential and is confidentiality available on request?
No, information is not considered automatically confidential. Parties must indicate which information is confidential (ie, business secrets). At the information-gathering stage, ComCo points out that business secrets contained in documents must be marked as such. In line with this, ComCo must treat business secrets as confidential. This obligation is valid for ComCo publications as well as in procedures where third parties have access to files and could ascertain business secrets.
Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?
Yes; in particular, ComCo cooperates with the European Commission in competition matters. In line with this, there is an agreement between Switzerland and the European Union to coordinate enforcement activities and exchange confidential information.
Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?
ComCo may ask for waivers, although these are often unnecessary under the new agreement with the European Union. The most important exception to this is the necessity of waivers in cases where information obtained through leniency applications is to be exchanged.
As there is no obligation to cooperate in an investigation, there should be no consequences for declining to grant a waiver to the authority. However, if a party does not provide a waiver, the authority may not give a reduction for cooperation if a penalty is imposed on a cartel.
How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?
In response to a motion from the Secretariat, ComCo will decide on the appropriate measures to close an investigation (Article 30 of the Cartel Act). The Secretariat may propose an amicable settlement to the involved parties in order to eliminate a restraint of competition.
What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?
Before starting settlement negotiations, the Secretariat and the involved parties normally conclude a framework agreement for this purpose. The aim of the agreement is to allow discussions without the risk that this could be used against a party in case no settlement is reached. If an amicable settlement can be reached, it must then be approved by ComCo (Article 29 of the Cartel Act).
If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?
The Secretariat will issue a draft decision for ComCo on which the parties can comment. ComCo will issue a final decision based on the draft decision and the file (Article 30 of the Cartel Act).
Which party must prove its case? What is the relevant standard of proof?
In proceedings before ComCo, the so-called ‘inquisitorial principle’ applies. This means that the Secretariat must fully prove an infringement of competition law. With particular regard to penalties, the burden of proof is high. Nevertheless, it is recognised that it may be difficult to provide full evidence in cartel cases. Therefore, the standard of proof may be reduced to a limited extent. However, merely a significant degree of probability may be insufficient in this regard.
In civil claims, the claimant must present the relevant facts and prove them. Merely a significant degree of probability may be sufficient in this context.
Is there a hearing? If so, what is the process for submitting evidence and testimony?
ComCo may order hearings, although it has no statutory obligation to do so. In practice, ComCo orders hearings in order to ensure compliance with the fundamental right of the parties to be heard. This is particularly true in proceedings where parties are subject to potential penalties. Further, evidence can be submitted in written statements. ComCo can also order individuals to testify. In civil proceedings, the parties have a right to be heard.
What are the accused’s procedural rights?
During the investigation, the Secretariat must allow the accused to exercise its right to be heard, which includes (for example) the right to:
- access the file;
- comment on the results of the investigation;
- receive a substantiated decision; and
- participate in the investigation.
The law further states that the parties involved in the investigation may comment on the Secretariat's proposed motion to ComCo for its decision in writing (Article 30(2) of the Cartel Act).
What is the appeal process?
A ComCo decision can be appealed before the Federal Administrative Court. The appeal must be filed within 30 days of notification of the ruling. The decision of the Federal Administrative Court can then be appealed to the Federal Supreme Court.
To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?
The Federal Administrative Court reviews whether:
- a violation of federal law has occurred, including the exceeding or abuse of discretionary powers;
- the legally relevant facts of the case have been incorrectly or incompletely determined; and
- the ruling is inadequate (Article 49 of the Act on Administrative Procedure).
In line with this, the court can amend the legal assessment as well as the penalties. The appeal before the Federal Supreme Court is generally limited to questions of law.
Penalties for companies
What are the potential penalties for companies involved in a cartel?
An undertaking that is involved in a cartel or that misuses its dominant position can be charged with a fine of up to 10% of the turnover that it achieved in Switzerland in the preceding three financial years (Article 49a of the Cartel Act).
Are there guidelines in place for penalties? If not, how are penalties normally calculated?
Yes. Article 49a of the Cartel Act states that the amount depends on the duration and severity of the unlawful behaviour and due account will be taken of the likely profit that resulted from the unlawful behaviour. Further, the Federal Ordinance on Sanctions Imposed for Unlawful Restraints of Competition (Cartel Act Sanctions Ordinance) contains detailed provisions on the calculation of penalties.
Do the authorities take into account any penalties imposed in other jurisdictions?
As there is no international treaty in this regard, the principle of ne bis in idem (double jeopardy) does not apply in general. However, the Competition Commission (ComCo) may take penalties imposed in other jurisdictions into account, as it must determine penalties based on the principle of proportionality (Article 2(2) of the Cartel Act Sanctions Ordinance).
How can a company mitigate its exposure to fines?
If an investigation has been opened, the company should not refuse to cooperate with the authorities or obstruct the investigations in any other manner. Doing so will be considered as aggravating circumstances, which usually lead to increased penalties (Article 5(1) of the Cartel Act Sanctions Ordinance).
Penalties for individuals
What are the potential penalties for individuals involved in a cartel?
Under special circumstances, individuals may qualify as entities (Article 2(1bis) of the Cartel Act). In such cases, the entity that they represent can be penalised. Apart from this, there are no direct penalties for individuals involved in an original violation of Swiss competition law.
However, an individual may be penalised with a fine of up to Sfr100,000 for wilful violation of an amicable settlement or a final ruling of ComCo or the appellate body (Article 54). A person may also be fined up to Sfr20,000 for wilfully:
- not complying with a ruling of ComCo concerning the obligation to provide information (Article 40);
- not complying with merger notification duties; or
- violating rulings relating to concentrations of undertakings (Article 55).
Do the authorities take into account any penalties imposed in other jurisdictions?
Yes. Penalties imposed in other jurisdictions are taken into account.
Is a company permitted to pay a penalty imposed on its employee?
No. As a general rule, the convicted person must pay the penalty.
Is a company permitted to continue to employ an employee involved in cartel conduct?
Yes. There is no obligation to terminate an employment relationship because of unlawful competition conduct.
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