- Laura Melusine Baudenbacher and Patrik Ducrey speak about their respective roles in the Swiss competition agency, mergers, cartels, competition advocacy, and the role of Swiss competition enforcement in the European context.
Laura Melusine Baudenbacher, is the President of the Swiss Competition Commission (ComCo) since January 1, 2023. She studied law at the University of Berne and earned her Ph.D from the University of Zurich. She clerked for the president of the Swiss Federal Administrative Court, and practiced with two international law firms before co-founding Baudenbacher Kvernberg, the first Swiss-Norwegian business law firm, where she continues to practice in addition to her duties at ComCo. Patrik Ducrey has been Director of the Secretariat of the Swiss Competition Commission (ComCo) since 2018. Prior to that, he was the Vice-Director and a Deputy Director, respectively since 1997. He is a titular professor for Swiss and European competition law at the University of Berne. They were interviewed for the Antitrust Magazine Online by Andreas Reindl on March 31, 2023.
ANTITRUST MAGAZINE ONLINE: Thank you very much for taking the time to talk with us about the Swiss competition law and Swiss competition law institutions. Perhaps you could first explain the organization, how the competition authority is set up, and why we have two interviewees with us today.
LAURA MELUSINE BAUDENBACHER: We have “two souls in one body,” so to speak, in our authority. We have the professional, full-time Secretariat, of which Patrik is the Director, and they are the people who investigate the cases and prepare the decisions. They do the dawn raids, they are the ones who speak to the parties, receive all the briefs, analyze the evidence, and just generally handle the case.
Once that is done, they submit a proposal for a decision to the Commission. The Commission consists of twelve individuals, of whom seven are independent and five are representatives of the large trade associations in Switzerland. These twelve members, all of us, are a part-time Commission. I have a 50 percent role and the rest of the members a bit less.
The background of this approach is very Swiss. We generally do not have fully professional bodies, so even our Federal Parliament is a part-time Parliament. The idea behind this is that we want our authorities to have real-life experience, to have close ties to the people, to the economy, and to companies, and that decision-makers should not be issuing orders from an ivory tower. That is why in many areas we have this so-called “militia system”, where individuals dedicate time aside from their regular job in private practice or academia to serve part-time in a public authority. To ensure that we do not have conflicts of interests, we have mechanisms in place to be transparent about that.
PATRIK DUCREY: The Swiss approach is indeed a bit special, as Laura mentioned, because of this militia system that I believe is quite unique in the world. It also leads to a separation between the investigation and decision-making process.
At the start of a case, the President of the Commission is involved in the opening of the proceedings because she has to sign the order initiating the investigation, but from there the Secretariat leads the investigation. At the end, we submit our proposal for a ruling to the Commission, which ultimately decides. So we have a separation between investigative and decision-making body already at first instance.
LAURA MELUSINE BAUDENBACHER: A type of checks and balances.
PATRIK DUCREY: Yes, checks and balances, and it works very well. We have a very good track record before the courts.
ANTITRUST MAGAZINE ONLINE: I want to follow up on this. Clearly the idea behind separating investigation and decision making is a good one. Other competition authorities sometimes are under criticism for combining too much of everything in one and the same body. But I understand that questions have been raised in Switzerland: Is the system really effective? Is the Commission sufficiently independent? Are there concerns from the business side or private practice? Are they justified? Are there ways you can think of improvements with the investigations or the thinking?
PATRIK DUCREY: Some lawyers and companies have concerns as to the length of proceedings. While we strive to do what we can on our end to accelerate cases, we are also very aware of respecting parties’ procedural rights, which may in some cases drag out matters. However, I note that both our Supreme Court in particular as well as the European Court of Human Rights in general have deemed our system of enforcement of antitrust law to be in line with the rule of law.
While ideas may be floating around about changing or “improving” our system, we would first have to analyze whether there are points to improve, whether it is necessary to improve them, or whether it would just be nice to have.
LAURA MELUSINE BAUDENBACHER: I agree 100 percent with Patrik. Of course, you can always discuss whether there is a need to change something or where there are areas that you could improve, but again you would have to really look at whether there are such grave issues as are sometimes alleged.
Something that is perhaps not considered is when you start tinkering with a system that is well-established, it is hard to see what consequences could arise on the enforcement side. If you start playing with that system, you will need to be really sure that it does not weaken enforcement.
This is the debate we are currently having in Switzerland where, on one hand, there are a lot of claims without much basis that something should be changed and, on the other hand, we have a great track record before the courts. We typically win our cases.
As Patrik said, in 2011 there was a Europe-wide debate on whether the model that exists in most European countries, the administrative enforcement model—where, as you know, one body investigates, decides, and sanctions—is in line with the European Human Rights Convention, particularly Article 6 which guarantees a fair trial. In the famous Menarini decision, the European Court of Human Rights ruled that as long as at least one independent and impartial court of law reviews the decisions of an antitrust body on all points of fact and law, the right to a fair trial under Article 6 of the Human Rights Convention is respected.
We have two courts above us that you can appeal to, one on facts and law, and the Supreme Court on law. The Federal Administrative Court, which is the first-instance court, is decidedly detailed in its analysis. It does not shy away from re-reviewing the facts and coming to a different conclusion, at times even striking down our decision or elevating the sanctions. They can certainly be described as being hands-on.
ANTITRUST MAGAZINE ONLINE: Let’s talk quickly about ComCo. Clearly it is a competition authority. Are there other tasks beyond competition law enforcement that are within your remit?
LAURA MELUSINE BAUDENBACHER: Yes, the Internal Markets Act, because surprisingly we are a small country of 8.7 million citizens where internal market issues remain a thing. It is still sometimes a challenge to go from one state, or canton as they are called, to the next to be able to practice your job there. There are still unlawful barriers in place to practice in a job that you have learned in one state in another state. For example, one of our cases concerns a midwife trained in one state who has faced unreasonable barriers to entry to work in another state. This would be like moving from Washington D.C. to Virginia or Maryland and having to re-certify—at your own cost—that you are trained to practice as the certified professional that you already are. This is also part of our work.
PATRIK DUCREY: To add to that, we do not have any other tasks like unfair competition, consumer protection, or data protection, so we can really focus on the application of antitrust law.
ANTITRUST MAGAZINE ONLINE: Laura, you are a recent arrival at the Competition Commission. When you arrived, what were your thoughts?
LAURA MELUSINE BAUDENBACHER: My approach has from the start been to first understand the authority, get to know the people, and understand how it all functions. I never thought that I could come in and think I could improve things. First you have to figure out how well things are working.
I have to say that particularly the Secretariat is an extremely professional body. The team is very hard working, we have superb lawyers and economists who deliver top-notch work, and the drafts I have received so far have been of the highest quality. And on a personal level, it is a true pleasure to work with them, they are just really great people to be around. I have worked in various places on different sides of the bar, and I can confidently say that I have rarely met a better and kinder team of antitrust lawyers and economists to work with.
ANTITRUST MAGAZINE ONLINE: From your previous experience—and I know you have been in private practice also—do you see any particular experiences that you think you can bring to your new job, where you perhaps have a new perspective and have new ideas?
LAURA MELUSINE BAUDENBACHER: I hope I can perhaps bring a little bit of the international experience to the table. Again, we are twelve members in the Commission, so we have a very diverse set of opinions, and I hope my experience can add another piece in the mosaic to those discussions.
ANTITRUST MAGAZINE ONLINE: Patrik, you are the opposite. Laura is very new. You have a lot of experience with the authority. You have been with the authority in various positions for quite some time.
PATRIK DUCREY: About twenty-six years.
ANTITRUST MAGAZINE ONLINE: What do you see as the main things that have changed? What was the main development over these years in the way the authority works, the people work, and the qualifications of people?
PATRIK DUCREY: The law was fundamentally changed in 1995, modernized, so to speak. Since then, Swiss antitrust enforcement is focused on the trinity of antitrust law: anticompetitive agreements, abuses of dominant positions, and merger control. At the time, the authority started from scratch, so to speak. We had new personnel, we had a new law, everything was new. It took perhaps ten to fifteen years to have a sufficient amount of case law to develop a standing practice on our side.
In 2008 and 2009, we coordinated an external evaluation of our work where everything was on the table—our enforcement track record on anticompetitive agreements, abuses of dominance, and merger control, the duration of our proceedings, the structure of our authority, and the collaboration between the Secretariat and the Commission. Overall, the assessment was highly satisfactory. We have therefore continued on our path—which has repeatedly been confirmed by the highest courts of the country. We have also considerably benefitted from international networks of antitrust enforcement. Aside from the ABA, which is obviously a great place to learn from professionals from around the world, we participate in the the ECA (European Competition Authorities), the annual meetings of the UNCTAD Competition Committee, the OECD Competition Committee, the DACH-Competition Group, and the ICN (International Competition Network). This has allowed us to learn from more experienced authorities, to improve our investigative tools and our procedures, and has ultimately led to an authority that is highly professional today.
I always say to my colleagues who are on the other side, on the lawyers’ side, “If you would be as professional as we are, you would also sometimes win a case before a court.”
LAURA MELUSINE BAUDENBACHER: Patrik is so right about that. The Secretariat of ComCo has really done its homework in the past years, and has developed into an enforcer to reckon with.
PATRIK DUCREY: We try to improve our proceedings on a continuous basis. To take an example, initially some cases were successfully challenged before the courts on procedural grounds, leading us to go over our books. In the meantime, we have professionalized and streamlined proceedings to a degree that we rarely lose a case on this.
On the other hand, an important value of our authority is transparency. We try to be as open as possible towards the public on our activities. On our website, you can find every decision we have ever taken, including references to any relevant rulings of the appeal courts; information on cases we have opened or closed; as well as guidelines on the interpretation of the most important statutory norms. We are also always open to discussing possible antitrust concerns of cooperation agreements or distribution agreements in an informal way.
ANTITRUST MAGAZINE ONLINE: There are authorities that are constructed in a similar way, so you have to hire civil servants and on top of it a Commission, sometimes a political person. For a person in your position sometimes you have to navigate a little bit between what in your case the Commission expects, sort of the higher decision-making body, and what your staff expects. Has that been an issue that you have seen, that sometimes you need to serve two interests or you need to balance interests?
PATRIK DUCREY: Not at all. We have a very good working relationship with the Presidency, which consists, aside from the President, of two Vice Presidents—one economist and one lawyer. We regularly have discussions on our policy, the focus of our investigations, and which sectors to consider. While we certainly have intense debates, we enjoy a close relationship between the heads of the Commission and the head of the Secretariat and we act as one authority.
ANTITRUST MAGAZINE ONLINE: Let’s start with the big picture before we dive into more specific competition law issues. Switzerland is in a very unique position within Europe. It is a highly integrated economy, extraordinarily international, yet you are not in the European Union, you are not in the European Economic Area, and certain cooperation mechanisms that exist within the European Union are not directly available to you. How does this very peculiar position within Europe affect competition law enforcement? Do you find yourself fully integrated? Are there things that you do in Switzerland a little differently than in the neighboring countries because of the particular position you are in?
LAURA MELUSINE BAUDENBACHER: I would say generally competition law is a very international field, not just European but also worldwide. As mentioned by Patrik, we have definitely benefitted substantially from international forums, not just places like the ABA, but also networks such as the European Competition Authorities where Switzerland—alongside the fellow non-EU and/or EEA members UK, Iceland, Lichtenstein, and Norway—can learn from DG Competition and other European authorities. There are also the International Competition Network meetings, there is OECD, UNCTAD, and DACH. There are a lot of exchanges between antitrust authorities.
It goes back to the point that Patrik just made. I think we are more connected to international developments through these networks than people on the other side of the bar are, and they perhaps are not always aware of the newest best practices and developments because the legal market tends to be a bit foreclosed in Switzerland.
Something that has surprisingly been met with little awareness—also internationally—is that in 2012 we concluded a cooperation agreement with the European Union that enables us to enforce antitrust law more effectively in cross-border situations. The same type of agreement has recently been concluded with Germany, and there are discussions to also extend it to Austria. These agreements enable us to cooperate efficiently with the antitrust authorities of Germany and the European Union, to exchange information, to coordinate investigations, dawn raids, and so on. So I am not sure that our non-EU/EEA membership negatively impacts enforcement at all.
PATRIK DUCREY: The legislature decided in 1995 to draw up the new law in line with European competition law, so we have more or less the same rules, and our decisions and jurisdiction are really in line, with a few exceptions, with European competition law.
Even though we are not a Member of the European Union and are not a member of the European Competition Network, we have, as Laura mentioned, a cooperation agreement with the European Union. This is of paramount importance. We are like an external member of the ECN via the cooperation with the European Commission, and this is a very fruitful cooperation agreement.
ANTITRUST MAGAZINE ONLINE: You did mention there were a few exceptions now. Because of your position, are there “Swiss elements” in your competition law?
LAURA MELUSINE BAUDENBACHER: To put it very simply, anything that would be aimed at foreclosing the market would obviously be a problem, but that is not much different from other jurisdictions. There is nothing very exotic that would be different.
PATRIK DUCREY: Indeed, there are no fundamental differences between our system and the one in the EU. There is one area which some have described as a “Swiss finish”.
Switzerland is still a “high-price island,” so we act against agreements or behavior that forecloses Switzerland from international markets. Consequently, indirect parallel import restrictions aimed at foreclosing the Swiss market are considered anti-competitive. Some may say this is a Swiss peculiarity that would not be in the center of the European Commission’s practice, but it is unclear how this would be handled in the EU. As far as we are aware, the European Commission has not yet had a comparable case, but it would be surprising should it accept a foreclosure of EU markets through indirect parallel import restrictions.
LAURA MELUSINE BAUDENBACHER: Perhaps one thing which is a bit peculiar—or a type of “Swiss finish”—is the statutory possibility to justify anti-competitive agreements based on efficiency-grounds which are considered as hard-core agreements in the EU for which a justification is per se ruled out. In that sense, we are—at least on paper—more generous than the European Union. Whether it will be successful is another question, but there is no automatic ban where certain clauses are per se prohibited.
ANTITRUST MAGAZINE ONLINE: For me this sounds very European Union. There is always the possibility of bringing efficiency justifications when we practice, but it is very difficult.
PATRIK DUCREY: It is rarely successful, but as Laura said, this option exists in theory and we do hear parties on this point. The EU Commission would not even do that.
ANTITRUST MAGAZINE ONLINE: But you raised a great topic now, the question of market integration and encouraging imports. As I understand it, there are in principle two tools: competition law, but you also have this regulatory regime trying to create a Cassis de Dijon-type rule that allows the marketing of products that have already been put on the market in the European Union, so this is not directly within your powers to implement the law. From your experience do you see that this type of law that tries also to encourage imports has an effect on the market? Has it changed things?
PATRIK DUCREY: Not really. There have been studies to measure the effect of these regulations of the Cassis de Dijon-type in Switzerland, and the studies showed no effect because the markets were already open.
ANTITRUST MAGAZINE ONLINE: On the competition law side you mentioned you have cases that try to prosecute arrangements that make imports more difficult. Is it your impression that there is awareness, that the degree of compliance has increased, that companies are more careful?
LAURA MELUSINE BAUDENBACHER: Yes, certainly since the Elmex and BMW decisions. Short background: Both cases concerned parallel import bans, one from Austria and one from the European Union, into Switzerland on toothpaste and cars. Toothpaste was the first one, not as sexy and not as expensive a product, so perhaps not registered as widely. But then came BMW, which concerned products purchased by consumers, businesses, and public buyers. The fine was also one of the highest issued up until that point, nearly 160 million Swiss francs (about USD 180 million).
I think that drew a lot of attention in circles outside of Switzerland, and that is where I think practitioners outside of Switzerland realized: “Oh, there could be an issue. Switzerland is no longer this nice place where you can just foreclose as you wish. You will face consequences.” I think that has definitely had an impact.
PATRIK DUCREY: BMW was a very important decision, so everybody took notice of this case and of the sanction of 156 million Swiss francs. For us it was a very important case to show that it is not possible to foreclose the Swiss market from European markets with vertical agreements, that we do not accept this.
Even if the companies are located in European countries, for us that is not a problem. We try to also involve them in the procedure. Normally they mandate a lawyer in Switzerland, so in fact this is not a problem.
LAURA MELUSINE BAUDENBACHER: Full disclosure at this point: I was back in the day involved in both the toothpaste case and the BMW judgment as a clerk at the Federal Administrative Court.
ANTITRUST MAGAZINE ONLINE: For both regimes that we just discussed, the regulatory regime and the very strict competition law enforcement, the driver is the idea that with more imports you can put pressure on prices.
LAURA MELUSINE BAUDENBACHER: Imports from low-price countries, that is the idea, yes.
ANTITRUST MAGAZINE ONLINE: At least from a Swiss perception every country around you is lower priced than Switzerland. [Laughter]
Is there any perception that this actually makes a difference? This is inherently very difficult to study, but does that make a difference or are there still other factors that perhaps explain the pricing structure?
PATRIK DUCREY: It is very difficult to say. We have our decisions, we try to open markets; but, on the other hand, the euro fell against the Swiss franc to a level that has never been reached before. We began 2010 with the euro being at 1.6 Swiss francs and at the end of 2010 it was at one franc. For Swiss customers, products in the European Union, especially in Germany, have become much cheaper than before without any change in the law and without any decisions of the Competition Commission. It has just been a fact.
But now with inflation we see prices in Germany and in other European countries have increased much more than in Switzerland, so this price difference is now being reduced also by an external effect. It is not a decision or the practice of the Competition Commission.
LAURA MELUSINE BAUDENBACHER: It is a very valid question because if you go back to the legislative materials regarding the first modern Cartel Act of 1995 and the revision of 2003, this is a recurring theme: How do we bring down prices in Switzerland?
Patrik mentioned that Switzerland is a “high-price island”—that is the term that is used—a little island in the sea of cheap consumer price countries.
Two years ago, in 2021, a revision was passed to the Cartel Act following a consumer-led initiative called the “Fair Price Initiative”. It was based on the same thought and introduced the concept of relative market power. One goal was to aid smaller buyers or smaller companies in Switzerland who are faced by a large supplier who is not necessarily dominant per se on the relevant Swiss market, but in this relationship enjoys a relatively dominant position. This was also passed with the idea to enable companies in Switzerland to ask for the prices for that product from Germany, France, Italy, or Austria rather than the Swiss prices.
ANTITRUST MAGAZINE ONLINE: Have you any enforcement experience already with this?
LAURA MELUSINE BAUDENBACHER: We have two cases pending.
PATRIK DUCREY: We have two investigations that are open, one in the pharmaceutical sector regarding cross-border purchasing to Germany and the other in books regarding cross-border purchasing to France. The two Swiss companies who submitted complaints alleged that they tried to buy these products at lower prices in Germany and France, respectively, and that this was denied. We are now conducting the investigation and we cannot say much more about this at this moment.
ANTITRUST MAGAZINE ONLINE: But at least there is an experiment to see how it works.
Let’s stay on the vertical issues. The debate in the EU on restrictions in vertical agreements has been dominated by questions of online sales, digital products, and so on. Enforcement has also focused on various kinds of online sales restrictions. How does this play out in Switzerland?
PATRIK DUCREY: We also have a Communication on Vertical Agreements available on our website, which we amended in December 2022 to introduce the same rules as in the new EU Block Exemption Regulations.
We do our best to create a level-playing field between Switzerland and the EU for market operators. In that sense, Switzerland is in the field of antitrust law quite integrated into the European Union.
ANTITRUST MAGAZINE ONLINE: Does this also mean that the less-strict standards that now prevail in the European Union for certain restrictions concerning online sales would then equally apply to Swiss activities?
PATRIK DUCREY: Yes.
ANTITRUST MAGAZINE ONLINE: Patrik, when we talked about high prices you did mention inflationary pressures as a concern that exists across Europe and across the world. For some competition authorities this has become an issue because there is a high political expectation that in the face of not being able to do anything you turn to the competition authority and say, “Do something,” without really specifying what it is that competition law or competition law enforcement could really change about inflation. How did this play out for you? Did you face pressure to do something?
PATRIK DUCREY: Not a general pressure. We had some questions from politicians in the energy sector, gas and other energies, but in all the other sectors inflation in Switzerland is much lower than in European countries. We are actually at the level of around 3 percent. In the European Union, the Euro countries, it is at 10 percent or more. These questions were thus not as pressing in Switzerland as in other countries. We do not feel this pressure as, for example, other competition authorities within Europe are feeling.
ANTITRUST MAGAZINE ONLINE: So you were also not pushed to do investigations or sector inquiries where you know probably from the outset that you will not find anything—you would show activity, but very little result.
PATRIK DUCREY: The only branch was energy, and there we could show that the energy prices in Switzerland followed the international prices. We did not find any indications of collusion or cartels, so we did not see a need to follow-up.
ANTITRUST MAGAZINE ONLINE: This takes us a little bit into a different, although connected, area. Have you tried to use advocacy efforts to find areas where perhaps structural changes in the market could introduce more competition and facilitate consumer choice? Is that part of your role in this area to help markets to work better?
PATRIK DUCREY: Not in recent times. We issued a series of decisions around the year 2008 regarding bid rigging in the construction sector. Subsequently, we started a campaign with the cantons (the States) and the municipalities, with a special focus on public procurement units. We sensitized individuals through providing information and holding training sessions. Thanks to this dual-approach—strict enforcement paired with advocacy-efforts—bid rigging has become very rare in Switzerland. We are still pursuing some cases, but not on the same level as we did ten or fifteen years ago.
LAURA MELUSINE BAUDENBACHER: To add to Patrik’s point, thanks to all of these efforts we now have a lot of awareness in public purchasers, and municipalities, and they will actively approach us, so they are aware that this is an issue.
We also—and this is actually pretty cool—developed a screening tool to identify patterns of bid rigging in offers submitted. People in the Secretariat discovered that there are certain patterns, a certain spread, a certain coefficient, and it is an indication that something is off. Creating awareness and providing this tool to public buyers has been essential in strengthening our enforcement activities.
ANTITRUST MAGAZINE ONLINE: It is great to have a conversation on competition law and use the word “cool.” I love that.
PATRIK DUCREY: Just to mention this screening tool, some say that it is artificial intelligence. It is not. It is a statistical method to detect indications of whether bid rigging has occurred.
ANTITRUST MAGAZINE ONLINE: It goes back a little bit also to the OECD work in this area.
PATRIK DUCREY: We presented this screening tool on many occasions on the international level, at the OECD and ICN, we presented it also to the Department of Justice and the public procurement units in the United States. It is something that is now quite well-known.
LAURA MELUSINE BAUDENBACHER: I have to add, I am not generally very patriotic, but I have to say I am pretty proud of the Swiss antitrust authority, which has not only come a huge way since 1995 in developing into one of the most respected antitrust authorities in the world. When we started, we did so behind most modern nations and, as you said, we were not a member of any European integration project, so we could not from the start benefit from input from Brussels or Berlin. But the fact that we nevertheless caught up and are now even a bit avant-garde I think is cool, to use the term again.
ANTITRUST MAGAZINE ONLINE: Let’s switch topics a little bit into another cool area of competition law: mergers. Internationally within Europe, obviously there have been huge debates about mergers, and it has actually two aspects: (1) there is a lot of thinking about how you can adjust your jurisdiction to catch mergers which perhaps under traditional thresholds are more difficult to reach; and (2) more on the substantive valuation side, do we need new theories of harm to reach potential problems that more traditional theories of harm do not capture?
How have these debates—and I really want to cover both topics—played out so far in Swiss merger control law? Especially also again with the position of Switzerland as a country that is very open and very international.
LAURA MELUSINE BAUDENBACHER: We have multiple very high thresholds for us to become active in the area of merger control.
First, we have very high turnover thresholds. Most practitioners of antitrust law have rarely notified a merger in Switzerland. Even some of the biggest ones in the world are sometimes not notifiable because our thresholds are so high.
Once those thresholds are met, for our authority to block a merger there is another again quite strict three-prong test, which is: (1) does the merger create a dominant position; (2) does this dominant position eliminate competition—and “eliminate” is literal; it completely has to eliminate competition, so if there is one little bit of competition flying around somewhere, that is sufficient that this test is not met; and (3) you have to show that this elimination of competition through the dominant position created by the merger is not outweighed by benefits in another market. That is a very high test, which is why rarely become active in merger cases.
That being said, there are now discussions on a political level to introduce the “significant impediment to effective competition” test in Switzerland—we will see whether that will pass—but the status quo is that have very laid-back merger enforcement, and this is politically desired.
If you back into the legislative materials, it is quite interesting from a non-Swiss perspective to read the assessment of why we do not want strong merger control, which in a nutshell is: “It is hardly imaginable that a merger could create anticompetitive issues. The only exception could be stagnant markets, but such would likely be rare and not justify a strict merger control regime. Companies should be able to merge and do business freely. International enforcers were better placed to intervene, and additional enforcement in Switzerland would have little to no impact but just create additional burdens for businesses.”
PATRIK DUCREY: While, as mentioned, the proposed amendment foresees to lower the intervention threshold by introducing the SIEC test, like in the European Union, there are no discussions on lowering the notification thresholds. As an authority, we are happy with this approach. We prefer to have fewer cases with a higher possibility to intervene, should this seem necessary.
We must also say that we have some highly concentrated markets in Switzerland, for example the retail or banking sectors. Any mergers in these markets have to be notified with the Swiss competition authority. If you lower the thresholds for notification, then you have many more international mergers, but these international mergers normally do not have an impact on competition in Switzerland. So you would have more notifications and fewer interventions.
ANTITRUST MAGAZINE ONLINE: Because you mentioned there are concentrated markets, these transactions must be notified because the parties are so large that they meet the thresholds or because there are special thresholds for particular markets?
PATRIK DUCREY: Normally they all meet the thresholds. Some have also been found to be dominant on certain markets in previous investigations, in which case a notification obligation typically arises.
ANTITRUST MAGAZINE ONLINE: Creating the link to the European Union, very recently there has been confirmation that even if a merger does not meet the thresholds, competition authorities can use traditional antitrust tools against the abuse of dominant position to prosecute the merger or go after the merger. Is that something you consider would be appropriate in Switzerland despite the political decision not to be too aggressive? Would that work under Swiss competition law?
LAURA MELUSINE BAUDENBACHER: We apply the abuse-of-dominance rules if we find that they are met, not necessarily with a perspective of trying to apply them to enforce merger control because we have quite high thresholds.
On the flip side, even if it becomes more concentrated and we have indications that companies would have a dominant position after a merger, that does give us the possibility to monitor these companies more closely and to ensure that their behavior is in line with the Cartel Act.
ANTITRUST MAGAZINE ONLINE: So intervene on the conduct side rather than on the transaction, the structural side?
LAURA MELUSINE BAUDENBACHER: Yes, you could put it like that.
ANTITRUST MAGAZINE ONLINE: Typically when we talk about mergers, especially in the European context, there are often questions about industrial policy and mergers. You are well aware of the debate in the European Union whether merger control makes industrial policy more difficult or not. It sounds like from your first description that there is a broad consensus in Switzerland that you limit the reach of merger control in part also because you accept the common industrial policy perspective that you accept that mergers happen.
LAURA MELUSINE BAUDENBACHER: Yes.
ANTITRUST MAGAZINE ONLINE: One merger that obviously raised very interesting questions and had a lot of international attention was Credit Suisse/UBS. I understand the law allows the parties to merge without Swiss merger control intervention.
LAURA MELUSINE BAUDENBACHER: There is a norm in the Cartel Act that stipulates that when creditors’ interests are at risk in a merger situation, the Financial Market Supervisory Authority FINMA steps into the place of the Competition Commission. They are the ones who are now holding the reins in this. They cleared the merger, and the law foresees that ComCo will submit an opinion on this transaction. But the decision-making power now lies with FINMA and any possible future decisions in relation to that transaction would have to be taken by them.
ANTITRUST MAGAZINE ONLINE: But at least you are involved in a consultative role?
PATRIK DUCREY: Yes.
ANTITRUST MAGAZINE ONLINE: Would that also then involve, for example, focusing on particular local markets where you could then say you are not against the merger but perhaps here is a branch that should be divested, or are you not getting into that type of detailed review?
PATRIK DUCREY: In fact, the merger control procedure will only take place when we get the complete notification from the parties. As Laura said, we are not competent to take a final decision, but we will be heard. The competition analysis of how this merger has an impact on local or regional markets and on which products, et cetera, will be done by us. Then we will give a recommendation to the Financial Market Authority, but in the end this authority will decide.
They will have our analysis, and they will likely have to balance competition considerations with other factors such as financial stability.
As mentioned, even if we should conclude that the new entity is dominant on a particular market and FINMA refrains from taking action, further transactions in this area will be notifiable and the new entity will then also be under closer scrutiny for possible abuses of dominance.
ANTITRUST MAGAZINE ONLINE: We have managed to speak for quite a while without talking about the digital economy, which is unusual because frequently this topic seems to be the only topic that is on people’s minds.
How is the Swiss involvement in this debate? Are you bringing a case against Google tomorrow, or are you following the debate and trying to understand what is going on, but in more of an observer role?
PATRIK DUCREY: We created many years ago an internal working group that follows international developments in digitalization and competition law.
We also took a general decision to refrain from opening parallel investigations for example against Google when the European Commission is already doing so. We have limited resources and focus on cases that are Swiss-specific.
Of course, we expect companies to implement enforcement decisions by European and international enforcers also in Switzerland, and we will actively approach them to ensure this. In that sense, we are free-riding a bit on the practice of the European Commission and other enforcers.
Through this, the new regulations introduced by the Digital Markets Act and the Digital Services Act will also have an impact in Switzerland, as the companies will typically change their policies for the whole of Europe, also for Switzerland. We expect that many issues currently being discussed on European-level will also be solved in Switzerland.
ANTITRUST MAGAZINE ONLINE: Do you hear complaints? Are you getting pushed by local players, smaller digital players, that have concerns and then turn to you and say, “Do something?”
PATRIK DUCREY: Yes, regularly. But as mentioned, our cases are focused on Switzerland. One case concerned the mobile payment market. Swiss banks have developed a mobile payment solution called TWINT. Initially, this payment solution was overridden on iPhones through Apple Pay.
We intervened with Apple and they changed the suppression code so that now iPhone users in Switzerland can pay with TWINT and Apple Pay—whichever they prefer. That was a Swiss-specific case, and we solved it through a cooperative dialogue with Apple rather than pursuing a lengthy investigation and issuing a decision.
ANTITRUST MAGAZINE ONLINE: Do you see the flip side also? Obviously, the digital debate focuses very much on the very large American platforms, but then when you talk to competition authorities about their regional markets, it turns out that sometimes in regional markets you have very large players in that market that sometimes actually engage exactly in the same behavior that raises big concerns under the DMA or EU antitrust law.
Do you have a similar phenomenon in Switzerland where you have large platformsm that also raise concerns or lead to complaints?
PATRIK DUCREY: Sure. We have several actors in Switzerland that are only active in Switzerland, but within Switzerland they have a large market share, so they are under the control of the Swiss Competition Commission. While, for example, eBay and Amazon do not have online shops in Switzerland, there are other online trading or online retail platforms that keep us busy.
ANTITRUST MAGAZINE ONLINE: Then some of the similar concerns can come up about self-preferencing, data use, and so on.
PATRIK DUCREY: Yes.
LAURA MELUSINE BAUDENBACHER: With the Fair Price Initiative change that we mentioned earlier, a change was also introduced into the Unfair Competition Act, “UWG” in German, which prohibits geo-blocking. Should this become relevant in a B2B-relationship where one party may be relatively dominant, we could become active.
ANTITRUST MAGAZINE ONLINE: We did touch quickly on your advocacy role when we talked about procurement rules and strengthening the procurement process. Is the area of sector inquiries and market studies something that is also part of your remit that you see as an important tool to understand markets, change markets, or change market structures?
PATRIK DUCREY: No. In fact, we do not have enough resources for market sector inquiries. We focus our resources on investigations that lead to decisions and create legal certainty.
Where concerns arise in a certain market we, can, however, conduct a market observation. It is not as comprehensive as a sector inquiry with multiple rounds of questionnaires, we try to be more targeted in our investigation, focusing on those points which have been brought to our attention.
ANTITRUST MAGAZINE ONLINE: You say you focus mostly on investigations, what drives the sectors where you have investigations? Is it mostly reacting to complaints or do you also have tools to prioritize and to say, “Now we want to see what is going on in this sector or we will more proactively focus on particular concerns?”
PATRIK DUCREY: In fact, we are both proactive and reactive. The best example is the mentioned bid rigging cases, where we tackled the issue through strict enforcement coupled with considerable advocacy. Our intervention followed numerous complaints from various stakeholders. Because we are a fairly small authority with limited resources, we focus on areas where we have indications of problems.
LAURA MELUSINE BAUDENBACHER: Perhaps to add a point, we try to be also proportionate in deciding whether we open an investigation at all. There are different tools available to us.
In the first step we can also seek a dialogue with the companies, as in the example that Patrik gave about Apple Pay/TWINT. We do not always have to immediately choose the harshest tools we have. Often, we can resolve competitive concerns by approaching the companies, laying out our concerns, and then in a cooperative manner try to find a solution that would be procompetitive and not significantly disrupt their business.
It’s perhaps a bit of a more Swiss approach. It comes back to this militia idea as well, that you want to have authorities that are a bit closer to people—approachable, let’s say.
ANTITRUST MAGAZINE ONLINE: Let us close off just with one or two questions again on procedure and the institution.
On the institution, within the European Union the structure and powers of competition authorities have been reshaped a lot by the ECN+ Directive.
Is that something that you follow? Are there areas where you find that your investigatory powers should be strengthened, things from the ECN+ Directive that inspire discussions?
PATRIK DUCREY: This is not an issue in the current discussions around the amendment of the Swiss competition law. And as we are not a member of the European Union, these developments have less of an impact on us.
LAURA MELUSINE BAUDENBACHER: In fact, some of the suggestions in the current revision would turn back the clock on the enforcement-side and create a regulatory gap between the European Union and us. We would take a step back to the “good old days of cartels.”
ANTITRUST MAGAZINE ONLINE: If it works in Switzerland, that is the most important thing.
LAURA MELUSINE BAUDENBACHER: We are hoping it will not go through. Should it pass our authority would have to prove negative effects even for hardcore cartels. That would draw out proceedings considerably and render them more costly. It would make it more difficult to set precedents. It is even unclear whether you can prove down to the last dime what harm a bid-rigging cartel caused, so we would definitely be moving away from the European Union, from the OECD, and from UNCTAD—to name just a few.
What is disappointing is that this proposal has received considerable support from practicing attorneys. While it may on a personal level be attractive when proceedings are drawn out, I believe as attorneys we also have a higher responsibility as administrators of justice (in German: “Organ der Rechtspflege”). As such, I am convinced we have a duty to take on a statesman-like role in such discussions and to support the rule of law to the general benefit of antitrust enforcement in Switzerland and, thus, the Swiss economy.
ANTITRUST MAGAZINE ONLINE: One last question that has come up many, many times in past years. The legal profession thinks about diversity and realizes that diversity is not where it should be. This has also started to impact the discussions and organization of authorities.
How does this discussion play out in Switzerland? Are there concerns or efforts to increase diversity?
LAURA MELUSINE BAUDENBACHER: Well, define diversity first. I personally find it a very difficult term to define. In Switzerland, if we are talking about migratory diversity, we would likely need to include different groups than, say, Germany, France, or other surrounding countries. Historically, there has also always been an attempt to ensure a balance in public positions between representatives from Catholic and Protestant regions, although this has become less of a focus in recent times. Another question could be age diversity, or family-background. So the US-influenced diversity discussions are not really transferable to our country.
What we try to do is to ensure a balance between the four language regions in our country. We try to have people from every area because we need the language capabilities, but it is also a constitutional obligation to try to ensure that balance. That is, I think, the most essential for our country.
If we are talking about gender diversity, I am the President and we are currently at an even 50-50 male-female split, so I don’t know if we have an issue. We are now in the process of renewing parts of the Commission, and one of the questions is whether diversity should be an issue. Personally, my focus is on two qualities: independence and competence.
ANTITRUST MAGAZINE ONLINE: And for you, Patrik, within the Secretariat, are there discussions about representation of women?
PATRIK DUCREY: Yes, federal laws stipulate diversity quotas on language, gender, and some other factors. We are a shining example that language and gender diversity for years have not been an issue in both our bodies. As noted by Laura, the Commission of twelve members is made up of six female and six male members, the presidency has two women and one man, and all the language regions from Switzerland are represented.
The same goes for the Secretariat: of the eighty-five people working there, 47 percent are women and 53 percent are men, the Executive Management is 40% female, and we have employees from all language regions.
We have done our homework, so current discussions are not that relevant for us.