2023-10-07 21:30:00
Weakening of antitrust law could cause prices in Switzerland to rise
If a change sought by citizens goes through, it will be significantly more difficult for the Competition Commission to prove and punish agreements between companies.
If antitrust law is changed, it would be more difficult for restaurateurs to buy their equipment cheaper abroad.
Foto: Getty Images/Mint Images RF
Consumer advocates are alarmed. Parliament is currently deliberating on a change to the antitrust law sought by civil rights. If it is accepted, competition in Switzerland would be significantly weakened. “Certain agreements between companies that are now banned would then be possible again,” says André Bähler, head of politics and economics at the Foundation for Consumer Protection.
This also has an impact on consumers. If companies can set more prices among themselves again or divide up market areas, competition will decrease and companies can charge higher prices.
For Bähler, this is a worrying development: “The rising rents and higher premiums for health insurance companies are already causing many people to have difficulties.” This change in antitrust law would be a clear step backwards for consumers.
Switzerland was considered a paradise for cartels
For a long time there was no effective law regulating cartels in Switzerland. In the 1980s, the country was still considered a paradise for all kinds of agreements. One example is the beer cartel, which lasted until 1991.
Only since 1995 has it been legally stipulated that competition agreements between companies are not permitted. Since then, however, there has been no major reform. A certain need for modernization in this area is therefore politically undisputed.
“In the future, the Competition Commission would have to prove the specific economic effects of an agreement on a market in each individual case.”
However, the following point of the change in the law that is now being discussed is controversial: In the event of violations of the antitrust law, the Competition Commission is responsible. If it wants to investigate any agreements between companies, it will have to “take into account qualitative as well as quantitative criteria” in the future, as the draft law states.
This would have a major impact on the Commission’s current practice. “In the future, the Competition Commission would have to prove the specific economic effects of an agreement on a market in each individual case,” says price monitor Stefan Meierhans. This would significantly complicate and lengthen the procedures, making it more difficult for the Commission to take action against agreements between companies.
Such evidence has not yet been necessary for the Competition Commission. Since a ruling by the Federal Court in 2016, it has been sufficient if it can show that agreements between companies took place or were even intended. The so-called Gaba ruling concerned parallel imports of Elmex toothpaste from Austria. The Federal Court stated that, with a few exceptions, such harsh competition agreements are generally to be classified as significant and are prohibited.
The Swiss market would be isolated
This ruling could now be practically repealed with the change in the law. The BMW case shows what that could mean: a few years ago, the Competition Commission initiated proceedings against the car manufacturer. At that time, he had banned his dealers in Europe from selling new cars to customers from Switzerland. They had to buy their cars in Switzerland at significantly higher prices.
In the proceedings, the car manufacturer argued that the effects of this agreement were not significant and that consumers could ultimately switch to other car brands. At that time, BMW was unsuccessful with this argument.
If the Competition Commission now has to show in detail in each case that this will cause economic damage, such contracts between companies could be permitted again, as opponents of the change in the law fear. “If one company gets away with this argument, others could do the same. Ultimately, the Swiss market would be isolated to the detriment of consumers,” says André Bähler.
Corporate lobbyists accuse the Competition Commission of fomenting uncertainty
The companies are divided in their attitude towards the revision of antitrust law. The Gastro Suisse innkeepers’ association is defending itself against renewed market foreclosure. “In the catering industry there are some cases of companies that were unable to buy devices or their equipment abroad, but had to buy them at higher prices in Switzerland,” says President Casimir Platzer. It cannot be the case that entrepreneurs are restricted in their procurement to such an extent.
Gastro Suisse President Casimir Platzer defends himself against the change in the law: It cannot be the case that companies are restricted in their procurement in this way.
Foto: Beat Mathys
The change, however, is supported by the construction industry and the umbrella organization Economiesuisse. They are particularly bothered by the current practice of the Competition Commission.
This causes uncertainty among companies, writes the Swiss Association of Master Builders. “Today it is irrelevant for a conviction whether a company took part in an agreement or whether damage actually resulted from it.” According to the association, purchasing groups, collaborations in local tourism or training would be condemned across the board.
“A company should only be sanctioned if it has implemented a competition agreement and actual negative effects on effective competition have been proven,” says Erich Herzog, Head of Competition and Regulatory Affairs at Economiesuisse.
He defends himself against the accusation that an adjustment to the law would lead to more agreements between companies and thus to higher prices for consumers. “The opposite is the case. This will strengthen antitrust law as a whole,” he says.
The Federal Council, the State Secretariat for Economic Affairs and five former presidents of the Competition Commission see this completely differently. They all reject the change. “Experience shows that lower competitive pressure tends to lead to higher prices,” writes the State Secretariat. In addition, if the change in the law were accepted, it would be easier for Swiss and foreign companies to seal off the Swiss market. If parallel imports are no longer possible, this would also lead to higher prices in Switzerland.
Next up is the Economic Commission of the Council of States. In mid-October, she will debate the details of implementation.
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