Investigations
FCC imposes fines for price-fixing in doors components sector
On November 4, 2010, the Competition Commission (FCC) fined four undertakings CHF 7.6 million for agreements on prices between competitors in relation to the distribution of doors components (doorknobs, hinges, locks, etc.). The investigation has shown that the undertakings colluded in determining the moment and the amount of price increases. An investigation for the same facts is currently under way in the EU.
In 2007, after an undertaking had reported its involvement in a qualified hard-core cartel, the FCC launched a regular investigation, by dawn raiding the offices of the principal market participants. Later in the course of the investigation, information on a second (still hidden) cartel was brought to the attention of the FCC by a cartel participant. The undertaking that provided information which made it possible for the FCC to start the regular investigation qualified for full immunity from fines. A reduction in fines of 60% was granted to the undertaking that disclosed the second (still hidden) hard-core cartel.
Under Swiss competition law, the FCC has power to fine undertakings up to 10% of their turnover in Switzerland for the past three years. However, pursuant to Article 49a(2) of the Competition Act, the FCC operates a leniency programme, which applies to restrictive agreements that are subject to fines because they contain hard-core clauses that eliminate competition. Full immunity from fines is available for the first undertaking that reports its involvement in a qualified hard-core cartel and delivers information enabling the Secretariat to start a regular investigation, provided that among others such undertaking has not instigated the cartel activity. A reduction in fines by up to 50% is available, at any time in the procedure, to an undertaking that does not qualify for full immunity, if and to the extent the applicant cooperates with the investigation and ends its involvement in the prohibited agreement at the time evidence is provided. In addition, the fine for a particular infringement can be reduced by up to 80% if an undertaking discloses information or evidence relating to a second, still hidden, hard-core cartel ("bonus plus"). This reduction is without prejudice to any possible full exemption or partial reduction of fines of the newly disclosed cartel.
This decision is notable in that it is the first time that the FCC has reduced a fine to an undertaking having disclosed a second (still hidden) competition restraint.
FCC fines SIX Group for refusal to grant access to payment terminal systems
On December 14, 2010, the FCC announced that it has imposed a fine of about CHF 7 million on SIX Multipay AG, an affiliated company of Swiss financial market operator SIX Group. SIX Multiplay AG, which develops products for providers of card-based payments, was found to have abused its dominant position by having denied cash terminal manufacturers access to the so-called "Dynamic Currency Conversion (DCC) feature".
The DCC service, which was launched by SIX Multipay AG in 2005, allows holders of a foreign debit or credit card to have the price of a transaction converted to their local currency when making a payment in a foreign currency. It thus offers the opportunity to such holders to decide, directly with the terminal, if they wish to make their payment in Swiss francs or in their national currency. In the latter case, the cardholder knows both the conversion rate and the final amount that will be debited from his account. For the merchant, the DCC function is interesting in that it can participate in the proceeds of the conversion.
The procedure was initiated in 2006 following a complaint from a manufacturer of payment terminals. He had denounced the fact that its terminals were not compatible with the DCC function that was proposed by SIX Multipay AG (formerly Telekurs Multipay), insofar as the necessary interface information to that effect were denied. This refusal was regarded as illegal by the FCC, partly because SIX Multipay AG holds a dominant position in the market for acquiring contracts concluded with merchants for Visa and MasterCard credit cards and Maestro debit cards. As a result of SIX Multipay's refusal, merchants could not offer DCC service to their own clients, unless they accepted to have a SIX Card Solutions payment terminal. The barrier to competition ended in December 2006 when, during the preliminary investigation, SIX Multipay accepted to open up access to the necessary technical information needed by competing terminal manufacturers.
The FCC opens an investigation against BMW
On October 25, 2010, the FCC opened an investigation against the BMW Group for an alleged restriction of the sales of new BMW and MINI vehicles to clients in Switzerland. According to its press release, the FCC has been provided with information according to which the European supply entities of the BMW Group prohibit their distributors located in the EEA from selling BMW and MINI vehicles to clients residing in Switzerland. The purpose of the investigation is to verify the existence of a possible territorial allocation, which could be unlawful from a competition law perspective. The investigation has to show in particular whether the sales of new BMW and MINI vehicles from the EEA to Switzerland, respectively the direct imports made by Swiss clients, are excluded.
Merger Control
The Competition Commission clears the concentration between Sunrise and CVC Capital Partners
On October 14, 2010, the FCC announced that it has approved the proposed acquisition of Sunrise by CVC Capital Partners from TDC. The preliminary investigation did not reveal indications that the proposed concentration could create or strengthen a dominant position in Switzerland. The concentration was cleared after a first stage assessment, without conditions and commitments.
Sunrise is the largest privately held telecommunications provider in Switzerland. TDC is the leading provider of communications solutions in Denmark with a strong Nordic focus; TDC's activities outside the Nordic region primarily consist of Sunrise. CVC Capital Partners is one of the world's leading private equity and investment advisory firms.
Swisscom (which is a successor company to the former state-owned PTT), Sunrise and Orange (which is owned by France Telecom) are the three leading economic operators in the Swiss market for mobile telephony. The first stage assessment revealed that the acquisition of Sunrise by CVC Capital Partners would not modify the current market structure. Indeed, after completion of the concentration, the Swiss market for mobile telephony will remain characterized by the presence of three network operators. According to the FCC, this should ensure the maintaining of some dynamism and guarantee future innovations.
Under Swiss law, the substantial test to assess a concentration is very high compared to other jurisdictions, such as for example the EU. Pursuant to Article 10 of the Competition Act, the FCC may prohibit a concentration or authorise it subject to conditions and obligations if the investigation indicates that the concentration creates or strengthens a dominant position liable to eliminate effective competition and does not improve the conditions of competition in another market such that the harmful effects of the dominant position can be outweighed.
TDC, the holding company of Sunrise, had initially planned to sell Sunrise to France Telecom so as to enable the integration of Sunrise into Orange. On April 22, 2010, the FCC prohibited the proposed concentration between France Telecom's and TDC's respective subsidiaries in Switzerland, on the grounds that the merged entity would have created a collective dominance situation with Swisscom on the Swiss market for mobile telephony and that the network operator which is currently most active would have disappeared. Indeed, after the merger, only two operators with their own network would have existed in Switzerland. According to the FCC, its in-depth analysis showed that these two operators would have held a collective dominant position, likely to impede effective competition. Moreover, it was deemed unlikely that the potential new entrants would have exercised a credible countervailing power. Therefore, the FCC held that it would have been more advantageous for the merged entity and Swisscom to maintain high prices than to compete with one another to gain market shares. No commitments were found to address the FCC's concerns and the merger was therefore prohibited
Footnotes
1 Available in French at: http://www.news.admin.ch/message/index.html?lang=fr&msg-id=36781.
2 http://www.news.admin.ch/message/index.html?lang=fr&msg-id=35867 .
Tavernier Tschanz – January 2011
For more information, please contact Silvio Venturi (venturi@taverniertschanz.com) or Pascal G. Favre (favre@taverniertschanz.com), tel. +41 (0) 22 704 37 00
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
