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The Swiss parliament enacted an amendment to the Federal Act on Cartels on June 20 2003. The deadline has passed for a referendum against the amendment so it will most likely enter into force on April 1 2004.

Undertakings in Switzerland should review their agreements and practices to prepare for the new law. Severe direct sanctions can be imposed for the following violations, which are considered to be particularly serious:

  • participation in horizontal cartels (that is, cartels between competitors): price fixing, restrictions on the quantities of goods or services produced, bought or supplied or market sharing;
  • participation in vertical cartels (that is, cartels between undertakings of different market levels): price fixing and market sharing; and
  • abuse of a dominant position.

Sanctions can be up to 10% of the turnover achieved in Switzerland in the previous three financial years. They may be imposed for up to five years after the unlawful practice has stopped. But sanctions will not be imposed if the Swiss Federal Competition Commission (FCC) is notified or the unlawful practices stop in the year after the amendment enters into force. Furthermore, it is possible to notify the FCC of a potentially unlawful agreement or practice before it has been put into practice. If the FCC says that the proposed agreement or practice is lawful, or if it fails to respond within five months of the notification, direct sanctions will be avoided.

The FCC may start an investigation within five months of being notified and then decide that the agreement or practice is unlawful. In that situation the undertaking may avoid sanctions by not carrying out the proposed agreement or practice that might later on be considered unlawful or by giving up the agreement or practice once the FCC has started an investigation.

The amendment also proposes a bonus programme. This is drafted along the lines of the leniency programme in EU cartel law. Under this programme the FCC may reduce sanctions or refrain from imposing them altogether if the undertaking participating in the cartel actively helps the FCC to discover the cartel or cooperates with the FCC in its investigations.

Details about the bonus programme, the rules for the determination of sanctions and the above-mentioned notification procedure can be found in the draft for a new ordinance, which was recently published together with an explanatory commentary.

The amendment to the Cartel Act also provides clearer rules for the conduct of investigations. Pursuant to an order of a member of the FCC's presiding body, the competition authorities will be entitled to order searches and seize documents. It can be expected that the FCC will conduct dawn raids in cases of suspected unlawful restraints of competition. Media attention is guaranteed for the first dawn raid and for the first imposition of the new direct sanctions.

By Dr Martin Ammann

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