Merger Control rules in Switzerland

The Competition Commission (COMCO) is the independent federal authority that, together with its Secretariat, protects competition and ensures its effectiveness by applying the instruments provided by the Cartel Act and the Internal Market Act. 

The tasks of the Competition Commission include combating harmful cartels, monitoring dominant companies for signs of anti-competitive conduct, enforcing merger control legislation and preventing the imposition of restraints of competition or of economic exchange within Switzerland by the state.

The COMCO is a militia authority and consists of 11-15 members elected by the Federal Council, i.e., professors of law and economics as well as representatives of the major business associations and consumer organisations. The COMCO meets every two to four weeks and makes important decisions, including fines. 

The COMCO has a full-time secretariat at its disposal. It conducts antitrust proceedings, prepares the decisions of the COMCO and is the point of contact for companies, private individuals and authorities in matters relating to competition law. It consists of four departments (divisions), a resources department and the specialised area of the internal market. Around 70 people work for the Secretariat, the majority of whom are lawyers and economists.

The COMCO only reviews concentrations of undertaking above a certain size. This is the case where the following cumulative two conditions are met in the financial year preceding:

• the undertakings concerned together reported a turnover of at least 2 billion Swiss francs, or a turnover in Switzerland of at least 500 million Swiss francs, and
• at least two of the undertakings concerned each reported a turnover in Switzerland of at least 100 million Swiss francs.

Planned concentrations of undertakings must be notified to the COMCO before their implementation.

Irrespective of such turnover, notification is mandatory if one of the undertakings concerned has in proceedings under the Swiss Cartel Act in a final and non-appealable decision been held to be dominant in a market in Switzerland, and if the concentration concerns either that market or an adjacent market or a market upstream or downstream thereof.

The Swiss merger control regime applies to:

• the merger of two or more previously independent undertakings;
• any transaction, in particular the acquisition of an equity interest or the conclusion of an agreement, by which one or more undertakings acquire direct or indirect control of one or more previously independent undertakings or parts thereof.

The Swiss Merger Control Ordinance affirms “control” of an undertaking acquiring control over a previously independent undertaking if it is able to exercise a decisive influence over the activities of the other undertaking by the acquisition of rights over shares or by any other means. The means of obtaining control may in particular involve the acquisition of the following, either individually or in combination:

• ownership rights or rights to use all or parts of the assets of an undertaking;
• rights or agreements which confer a decisive influence on the composition, deliberations, or decisions of the organs of an undertaking.

The Swiss Merger Control Ordinance affirms “control” also in case of a joint venture, i.e., in a situation whereby two or more undertakings acquire joint control over an undertaking which they previously did not jointly control if the joint venture performs all the functions of an autonomous economic entity on a lasting basis.

On receiving a notification of a planned concentration of undertakings (article 9 Cartel Act, CartA), the Competition Commission decides if there are grounds for conducting an investigation. The Competition Commission notifies the undertakings concerned of the opening of an investigation within (1) month of receiving the notification (preliminary investigation).

If no such notice is given within that time period, the concentration may be implemented without reservation (article 32 paragraph 1 CartA).

The period of one (1) month for the opening of an investigation commences on the day following receipt of the complete notification and expires at the end of the day in the following month which has the same number as the day on which the period commenced; should this day not exist in the following month, the period shall expire on the last day of the following month (article 20 Merger Control Ordinance, MCO).

The undertakings concerned must refrain from implementing the concentration for one (1) month following the notification unless the Competition Commission has at their request authorised them to do so for good cause (article 32 paragraph 2 CartA).

If the Competition Commission decides to conduct an investigation, the Secretariat publishes the principal terms of the notification of the concentration and states the time frame within which third parties may comment on the notified concentration (article 33 paragraph 1 CartA).

At the outset of the investigation, the Competition Commission decides whether the concentration may exceptionally be implemented provisionally or whether it should remain suspended. 

The Competition Commission must complete its investigation within four (4) months (in-depth investigation), unless prevented from doing so for reasons attributable to the undertakings concerned (article 33 paragraph 3 CartA)

The legal effect of a concentration that has to be notified is suspended, subject to the expiry of the deadline of one (1) month and any provisional authorisation to implement the concentration. If the Competition Commission does not take a decision before the expiry of the deadline set out within the deadline of four (4) months, the concentration is deemed authorised, unless the Competition Commission asserts by way of ruling that it has been prevented from conducting the investigation for reasons attributable to the undertakings concerned.

The Competition Commission may

• clear the transaction (article 16 MCO) or tacitly clear the transaction by not notifying the undertakings concerned within one (1) month from the corresponding notification (article 32 paragraph 1 CartA);
• prohibit a concentration (article 10 paragraph 2 CartA);
• authorise a concentration subject to conditions and obligations (article 10 paragraph 2 CartA); 
  

The notifying parties may submit both structural and/or operational remedies either together with the notification of the concentration or during the merger control review by the COMCO. 

Possible examples of such remedies are:

• prohibition to acquire any further companies in the corresponding segment/market during a specific period of time
• obligation to notify any future merger irrespective of the applicable thresholds
• prohibition to offer exclusivity to suppliers
• obligation regarding the composition of the future board of directors

Notwithstanding the foregoing, the COMCO may itself, i.e., without corresponding proposals from the parties, impose such remedies and authorise a concentration subject to the fulfilment of such remedies only.

Any undertaking that implements a concentration that should have been notified without filing a notification, fails to observe the suspension obligation, fails to comply with a condition attached to the authorisation, implements a prohibited concentration, or fails to implement a measure intended to restore effective competition shall be charged up to CHF 1 million.

In case of repeated failure to comply with a condition attached to the authorisation, the undertaking shall be charged up to 10 per cent of the total turnover in Switzerland achieved by all the undertakings concerned.

The enforcement of merger control should not fail because the parties to the merger have already realised their plans or created irreversible facts (so-called gun-jumping). As a consequence, gun-jumping also entails a sanction.

If the Competition Commission decides to conduct an in-depth investigation, the Secretariat publishes the principal terms of the notification of the concentration and states the time frame within which third parties may comment on the notified concentration (article 33 paragraph 1 CartA).

On completion of the investigation, the Secretariat shall arrange for the publication of the decision of the Competition Commission in the Federal Gazette and the Swiss Official Trade Journal. The publication shall contain the name and domicile of the undertakings concerned, a brief description of the planned concentration, a summary account of the grounds for the decision and the decision itself (article 23 MCO).