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Belser Altorfer & Partner Zurich

In Switzerland, for each retail transaction paid for with a credit card, merchants have to pay a fee of up to 3% of the transaction's value to the credit card firm involved. This condition is covered unter the terms of the contract between retailers and the credit card firms. Retailers are also expressly hindered from passing on any savings to customers paying cash. Merchants who do not comply with this contractual provision may be terminated.

This contractual arrangement has recently come under fire from the Swiss Federal Competition Commission (FCC). The FCC argues that provisions barring retailers from passing on savings to cash customers may constitute an illegal restraint of competition. As a result, it is investigating the credit card firms' alleged anti-competitive practice from two separate angles. First, the FCC is analyzing whether the firms' practice constitutes an illegal abuse of market power as they impose unbalanced contracts on retailers. And secondly, it is studying how and if this practice unduly limits the merchants' independent price setting ability. Nevertheless, as the credit card firms face antitrust scrutiny, they may assert that retailers are under no obligation to accept their contracts. Furthermore, they may point out that credit card payments are cheaper overall than cash payments and that discounts to cash customers would thus seem hard to justify economically.

Regardless of the conclusions the FCC draws from its findings, it cannot immediately impose any administrative sanctions. It can merely declare that the credit card firms violated the revised Swiss Antitrust Act. If the firms concerned repeat their alleged anti-competitive practice in the future, only then does the Act provide room for sanctions. This is one of the Act's original, albeit somewhat disturbing features.

Retailers intending to seek damages from credit card firms (ie for anti-competitive termination of contract) face a burden of proof that is generally rather difficult to meet. The may find it advantageous to await the FCC's verdict on the facts and the law, and then base their civil suit on the FCC's findings.

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