Dr Sebastien Gout of Troller Hitz Troller shares with us his experiences, delving deeper into the process of litigating antitrust cases.
What are the main challenges in defending antitrust cases?
A cartel proceeding usually begins with a COMCO ‘dawn raid’ on companies that could be involved in an illegal agreement or who are allegedly abusing the dominant position. It is important to be reactive and assist the companies in question at their locations during dawn raids. Next, you need to quickly grasp the facts of the case. Understanding the economic function of the relevant market in different industrial sectors is the next step. This is what makes my job so interesting. Additional challenges are the lengthy duration of these proceedings, which can last several years if all remedies have been exhausted, and the complex legal issues that these cases raise.
What are the most serious violations of Swiss competition law?
Two types of antitrust violations are most prevalent: agreements that restrict or eliminate competition in a particular market for goods and services, and 2) abusive conduct by dominant undertakings.
Illicit price-fixing agreements are common in the first category. It is common to find illicit price-fixing agreements between competitors or at a vertical level (e.g., between a manufacturer and its distributors) Between a manufacturer’s distributors and a wholesaler or retailer. In the context of public bidding, it is common to come across agreements (or “bid rigging”). Companies may, for example, agree to not participate in a particular bidding process, or to establish a rotation system that allows them to take part in such procedures. Or, they might agree to the conditions and prices to be charged.
It is common to see dominant undertakings who try to consolidate their position through refusing to supply customers, discriminating among trading partners with regard to prices or other conditions, or imposing unfair prices.
A cartel proceeding usually begins with a COMCO raid by the Swiss Competition Commission (COMCO), on companies that could potentially be involved in an illegal agreement or who are allegedly abusing their dominant positions.
Which sectors are most likely to be harmed by competition law?
The COMCO focuses on key sectors, particularly those that impact the infrastructure and basic services of Swiss economy. It is not uncommon for proceedings to be opened in construction (particularly the road construction sector), finance and telecommunications, as well as health. The COMCO may however investigate other sectors, such as the French market for books recently.
What steps should a company take if it is found guilty of violating antitrust or competition laws?
A company may discover that it is participating or not in an antitrust agreement, as a result, for example, of an internal audit. It might be worth considering whether it should start a so-called leniency program by reporting the illegal conduct to the COMCO. A leniency program may result in a financial or substantial reduction of sanctions. If no proceedings have been initiated by COMCO yet or if an investigation has just begun, this leniency program may be applicable.
If an investigation is already underway and it is too late for a leniency program or if the COMCO’s position is contested, then the company will need to defend itself, notably by using its procedural rights. The lawyer will be responsible for assessing the legal risks and negotiating, if necessary with the COMCO, to settle the case and reduce the cost of the procedure.
What can companies do to avoid infringing on current regulations?
Antitrust risks could be a concern for companies that do not have a compliance program. Any compliance and prevention program should start with identifying the antitrust risks that exist (risk analysis). These risks can either be identified by the company’s internal compliance team or an external lawyer.
Regular training sessions with employees are important in order to create a culture that is sensitive to antitrust risk. Employees who meet regularly with competitors or have any influence on pricing policy should be given special attention.
Final word: The program should be reviewed at regular intervals, and corrective actions taken if necessary.
Antitrust risks could be a concern for companies that have not implemented a compliance and prevention program.
What has the impact of the expansion of the control over abusive conduct to companies having relative market power had on the nature of investigations into and disputes under Swiss competition law?
Some notifications have been sent to the COMCO by companies with relative market power, which came into effect on January 1, 2022. It is still unclear what this new regulation will do and how effective it will be. From a practitioner’s perspective, however, it seems that many companies who may be the victims of abuse by suppliers with relative power are reluctant or unable to complain to COMCO. This could jeopardize business relationships that have been established for years and could pose a threat to the businesses concerned.
The COMCO opened an investigation into Madrigall, a French publishing company. It will investigate whether Madrigall is illegally restricting the ability of Swiss book retailers to purchase books in France at more favorable conditions. This investigation could lead to a leading decision about the new relative market power provisions.
How can you help your clients deal with mergers that have been investigated by the competition commissioner on the ground that the merger creates, or strengthens, a dominant position.
My task in such a case is to help the companies obtain merger clearance from COMCO. This means that I will prepare a merger notification, accompany the companies through the notification process, and represent them before the COMCO. It is a good practice to submit a prenotification to COMCO when the timing of the merger permits it. This allows the latter to assess the completeness of the notification. This allows the COMCO anticipate formal notification and collects the required data in time to evaluate the case. This is a benefit for interaction with the authority because our office is in Berne, like the COMCO.
////////////////////
Dr Sebastien Gobat, Partner
Troller Hitz Troller
Munstergasse 38, CH-3011 Berne, Switzerland
Tel: +41 31 328 36 36
////////////////////
Dr SebastienGobat works as a partner at Troller Hitz Troller, Berne, Switzerland. He is an expert in antitrust and unfair competition, as well as the many areas of intellectual property law. He is also an expert in distribution law (agency license and franchising agreements), and insolvency law. He advises companies on antitrust law, and represents them before the Swiss Competition Commission in connection with investigations or merger notifications.
Troller Hitz Troller, a well-known Swiss law firm, is one of its clients. It was established in 1941 and has offices in Berne, Lucerne and Zurich. They offer services in the areas of intellectual property (trademarks, patent, design, and copyright law), antitrust, and unfair competition law, and contract and business law.