On December 17 2015 the Federal Administrative Court annulled a Competition Commission decision regarding alleged resale price maintenance between an importer of mountaineering equipment (Altimum SA) and its retailers.(1) In its August 20 2012 decision the commission concluded that the price recommendations issued by Altimum amounted to a vertical agreement on resale prices between Altimum and its retailers.
As a preliminary remark, the court stated that distribution agreements which are not in violation of EU competition law are, in principle, also permissible under Swiss competition law. The court held that price recommendations amount to vertical agreements on resale prices if either the recommended price has explicitly or tacitly been accepted by retailers (agreement) or the issuer of the recommendation exercises pressure on the retailers or incentivises adherence to the recommendation and the recommendation is adhered to by retailers to a great extent (known as 'concerted practice').
When assessing the effects on competition, the court confirmed that an agreement must have actual significant negative effects on effective competition in order to be illicit under Swiss competition law. In its assessment of those negative effects, the court concluded that the market position of the issuer of the price recommendation is relevant, but not sufficient to establish such negative effects. In addition, the degree of adherence to the recommendation and the market position of those retailers which adhere to the recommendation must be considered.
The decision is significant for two reasons. First, the commission has taken a rather strict approach to price recommendations in the past by relying heavily on the degree of adherence. Consequently, issuers of price recommendations bore the risk of ending up in an illicit vertical agreement on prices rather than engaging in unilateral behaviour without having induced or forced retailers to adhere to the recommendation. The court has now stated that mere adherence to a price recommendation by its addressees is insufficient, for both the recommendation to qualify as an agreement or concerted practice and to establish the recommendation's negative effects on competition.
Second, it is currently debated in Switzerland whether agreements which are considered to be particularly harmful to competition are prohibited regardless of their actual effects (for further details please see "Federal Administrative Court annuls Competition Commission decision"). In the Altimum decision, the court confirmed that hardcore agreements, including vertical price agreements, are prohibited only if there is proof of an actual negative effect on competition.
The decision has been appealed by the commission and is pending before the Federal Court.
For further information on this topic please contact Marquard Christen at CMS von Erlach Poncet Ltd's Zurich office by telephone (+41 44 285 11 11) or email ([email protected]). Alternatively, contact Pascal G Favre at CMS von Erlach Poncet Ltd's Geneva office by telephone (+41 22 311 00 10) or email ([email protected]). The CMS von Erlach Poncet Ltd website can be accessed at www.cms-vep.com.
Endnotes
(1) B-5685/2012 at www.bvger.ch/publiws/download?decisionId=94c41efe-d067-4b1a-a08b-3a7c524d7719 (in French).
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
