Swiss Competition Commission adapts the Communication on Vertical Restraints

After the Federal Supreme Court’s landmark decision in the Gaba (Elmex) case, the Swiss Competition Commission (COMCO) has made adjustments to the communication on the treatment of vertical agreements. Additionally, COMCO has for the first time published explanatory notes to assist with the interpretation of the communication on vertical restraints.

Background

The trigger for adapting the Communication was the publication of the Federal Supreme Court’s Gaba (Elmex) judgement at the end of April 2017.
In the surprisingly strict decision the Federal Supreme Court had stated, that both hard-core horizontal agreements (price, quantity and territorial agreements) and hard-core vertical agreements (resale price maintenance and absolute territorial protection) have to be regarded as per se significant. It is enough for such agreements to have the potential to affect competition; COMCO is no longer required to demonstrate evidence of significant and real effects or to show that the agreement has been effectively put into practice.
This new practice applies regardless of quantitative criteria, such as market shares of the companies involved. A company involved in such an agreement can then only escape a sanction if it manages to justify its behaviour on grounds of economic efficiency (which is very difficult according to COMCO’s past practice).

Adaptations made by COMCO

The adaptations to the communication affect individual points only, and their primary purpose is to bring the communication in line with the interventionistic Gaba decision.
However, the communication on vertical restraints makes clear, that in non-hardcore cases that are not caught by one of the presumptions, it is not just the qualitative criteria that have to be assessed but the quantitative ones as well. Therefore, in non-hard-core cases, the authority has to prove significant effects on the relevant market.
Furthermore, the most important characteristics of vertical price agreements and vertical agreements on absolute territorial protection are summed up in the explanatory notes. In addition, the explanatory notes include a summary of the rules governing online commerce
The explanatory notes do also state that the EU’s Guidelines on Vertical Restraints apply in an analogous way to Swiss law.

Comment

Although the adaptions made by the COMCO affect individual points only, the newly adopted explanatory notes, which summarize the practice of recent years, are likely to be of considerable importance for companies and competition lawyers in the future.
However, several open questions remain unanswered. For example, the EU Guidelines on Vertical Restraints contain numerous references to franchise systems, whereas the explanatory notes on vertical restraints do not mention this type of vertical agreement at all.
Also, no answer has been provided to the question as to whether in the case of so-called „hard-core agreements“ Swiss law would allow for the existence of a safe harbour in the sense of a de minimis rule.
Unfortunately, the Federal Supreme Court has held that the rules contained in the EU Technology Transfer Block Exemption Regulation are not relevant for the treatment of such agreements under Swiss competition law. So, as far as Swiss law is concerned, doubt still persists as to the extent companies should be guided by EU practice. Nevertheless, the statement in the new explanatory notes that the EU’s Guidelines on Vertical Restraints apply analogously is to be welcomed.
 
This blog post was first published on Thomson Reuters‘ Practical Law website. It is reproduced from Practical Law with the permission of the publishers. For further information visit http://www.practicallaw.com or call +44 (0)20 7542 6664.

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