Antitrust pitfalls for distribution agreements with effects in Switzerland

The Swiss Federal Act on Cartels (ACart) provides that agreements that affect competition in Switzerland are unlawful if: (a) their effect on competition is significant; and (b) they cannot be justified on grounds of economic efficiency. For certain horizontal hard-core restraints (price/volume fixing, customer allocation; so–called “5/3 restrictions”) and certain vertical restrictions (resale price maintenance, absolute territorial protection; so–called “5/4 restrictions”) the ACart contains a presumption that they eliminate competition and that the parties involved in such conduct can be directly sanctioned if the finding of its illegality cannot be rebutted. The lawmaker has, therefore, taken a differentiated approach – not to establish straightforward per se illegality, but rather that a modified rule of reason analysis should take place.

Effects-based analysis?

Under well established earlier case law, the analysis of potential 5/3 and 4 restrictions included as a first step whether such restraints do indeed eliminate competition.

If the Swiss antitrust authority – the Competition Commission (ComCo) – must acknowledge that competition, even if only residual competition, prevails due to third parties not participating in the conduct (“external competition”) or that the parties participating in the conduct still compete with each other irrespective of their mutual agreement (“internal competition”) the legal presumption that competition is eliminated would have to be considered as rebutted.

Nonetheless, under such circumstances the ComCo can still conclude the potentially critical conduct to be unlawful if it: (a) significantly affects competition; and b) cannot be justified on grounds of economic efficiency; and impose direct fines against the parties involved in such conduct.

Klaus Neff is a partner and head of Vischer’s antitrust and merger control team; Wu Fan is a counsel on Vischer’s China Desk