Federal Administrative Court annuls Competition Commission decision
On September 23 2014 the Federal Administrative Court annulled a 2010 Competition Commission decision in which the commission had fined several companies active in the window and window-door mountings business for allegedly coordinating price increases in 2006. Three companies had appealed the commission's decision.
The court concluded that there was insufficient proof of a violation of the Cartel Act – both of the existence of an agreement and of a significantly restrictive effect of the parties' behaviour on competition. The court found that it was unclear whether the parties' price increase announcements in 2006 were the result of a meeting between them or an earlier agreement between the manufacturers at the EU level, which included the enforcement of the agreement in Switzerland and led to an investigation by the European Commission and a fine.
The court's decision is significant for its application of Article 5 of the Cartel Act. According to Article 5 (1), an agreement is unlawful if:
- it significantly restricts competition and is unjustified on grounds of economic efficiency; or
- it eliminates effective competition.
Article 5 further contains a rebuttable presumption that certain hardcore horizontal agreements (Paragraph 3) and vertical agreements (Paragraph 4) eliminate effective competition. In two earlier decisions (Gaba v Competition Commission and Gebro v Competition Commission, both December 19 2013) regarding the prohibition of parallel imports of Elmex toothpaste into Switzerland, the court decided that the mere existence of a vertical agreement for which the act contains such a presumption of elimination includes, by its nature, an irrefutable presumption that it leads to a significant restriction of competition within the meaning of Article 5(1), regardless of its actual effects on competition or the parties' market shares.
However, in the window decisions allegedly relating to horizontal rather than vertical hardcore agreements (Article 5(3)), the court did not apply its reasoning from Gaba and Gebro. The court instead confirmed the view generally accepted before Gaba that, regardless of an agreement's nature, certain behaviour is inadmissible only if the authority can prove that it leads to an actual significant restriction of competition.
Both Gaba and Gebro, as well as two of the three window judgments, have been appealed and are pending before the Federal Court.