Merger Control in Switzerland

Introduction

Merger control in Switzerland is governed primarily by the Federal Act on Cartels and Other Restraints of Competition (CartA) and the Merger Control Ordinance. These competition regulations came into force on 1 July 1996 and were revised in 2003. Currently, there is another revision of the CartA ongoing, including the merger control regime.

Concentrations are assessed by the Competition Commission,² an independent federal authority based in Berne that consists of up to 15 members, who are nominated by the federal government. The Competition Commission currently comprises 12 members, including its president, Dr Laura Melusine Baudenbacher, with the majority of members being independent experts (i.e., professors of law or economics and practising lawyers). Deputies of business associations and consumer organisations take the other seats. Cases are prepared and processed by the Secretariat of the Competition Commission (with a current staff of 71 full-time and part-time employees [i.e., 61.1 full-time equivalents], mostly made up of lawyers and economists). It is organised under four divisions: product markets, services, infrastructure and construction. A resources division is in charge of administrative and technical tasks within the Secretariat of the Competition Commission.

The types of transactions that are subject to control are mergers of two or more previously independent undertakings and direct or indirect acquisitions of control by one or more undertakings over one or more previously independent undertakings or parts thereof. Joint ventures are also subject to merger control if the joint venture exercises all the functions of an independent business entity on a lasting basis. If a joint venture is newly established, it is subject to merger control if, in addition to the above criteria, the business activities of at least one of the controlling shareholders are transferred to it.

Pursuant to Article 9(1) of the CartA, pre-merger notification and approval are required if two turnover thresholds are reached cumulatively in the previous business year before the concentration as follows:

1. the undertakings concerned have reported a worldwide aggregate turnover of at least 2 billion Swiss francs or an aggregate turnover in Switzerland of at least 500 million Swiss francs; and
2. at least two of the undertakings concerned have reported an individual turnover in Switzerland of at least 100 million Swiss francs.

These thresholds are considered to be relatively high in comparison with international standards. A particularity of the Swiss regime is that, if the Competition Commission has previously issued a legally binding decision stating that an undertaking holds a dominant position in a particular market, that undertaking will have to notify all its concentrations, regardless of the turnover thresholds, provided that the concentration concerns that particular market or an upstream, downstream or neighbouring market (Article 9(4) of the CartA). In 2020, the Federal Administrative Court confirmed the Competition Commission's view that the proximity requirement to such other markets must be interpreted broadly. According to Article 4(2) of the CartA, an undertaking is considered to hold a dominant position if it is 'able, as regards supply and demand, to behave in a substantially independent manner with regard to the other participants in the market (competitors, suppliers, buyers)'.

If the thresholds are met, or in the case of a dominant undertaking (as explained above), the concentration must be notified to the Competition Commission before its implementation. If a concentration is implemented without notification or before clearance by the Competition Commission (or if the remedies imposed are not fulfilled), the companies involved may be fined up to 1 million Swiss francs. Members of company management may also be fined up to 20,000 Swiss francs. To date, the Competition Commission has imposed several fines on companies for failure to notify but there have been no criminal sanctions (fines) on members of management.

Furthermore, the Competition Commission may order the parties to reinstate effective competition by, for instance, unwinding the transaction.

The CartA does not stipulate any exemptions to the notification requirements. However, if the Competition Commission has prohibited a concentration, the parties may in exceptional cases seek approval from the federal government if it can be demonstrated that the concentration is necessary for compelling public interest reasons; however, no such approval has been granted so far.

Specific rules apply to certain sectors. Thus, a concentration in the banking sector may be subject to a review by the Swiss Financial Market Supervisory Authority (FINMA), which may take over a case involving banking institutions subject to the Federal Law on Banks and Saving Banks and authorise or refuse the concentration for reasons of creditors' protection alone, irrespective of the competition issues. If the parties involved in a concentration hold special concessions (e.g., radio, television, telecommunications or rail or air transport), a special authorisation by the sector-specific regulator may be required. Moreover, under the Federal Law on the Acquisition of Real Estate by Foreign Persons, for any concentration involving a foreign undertaking and a Swiss real estate company holding a portfolio of residential properties in Switzerland, the approval of the competent cantonal or local authorities may also be necessary.

The Swiss merger control regime features a very high standard of assessment compared with other jurisdictions; this is sometimes called the dominance-plus test or the qualified dominance test.³ Pursuant to Article 10 of the CartA, the Competition Commission may prohibit a concentration, or authorise it subject to conditions and obligations, if the investigation indicates that the concentration:

1. creates or strengthens a dominant position;
2. is capable of eliminating effective competition; and
3. causes harmful effects that cannot be outweighed by any improvement in competition in another market.

In two decisions issued in 2007 (Swissgrid and Berner Zeitung AG/20 Minuten (Schweiz) AG), the Swiss Supreme Court had to determine whether a concentration could be prohibited if there were a mere creation or strengthening of a dominant position or whether the conditions in points (a) and (b), above, were cumulative. This question has significant practical consequences because, if the two conditions are cumulative, then a concentration must be authorised, even if a dominant position is created or strengthened, if it cannot be established that the concentration will eliminate (or is capable of eliminating) effective competition. In the Swissgrid case, the Swiss Supreme Court held that the conditions in points (a) and (b), above, were cumulative. The reasoning followed by the Supreme Court was that merger control is part of the control of market structure. Therefore, to justify an administrative intervention, the concentration must result in a concrete negative change in the market structure and the competition must be altered. In this case, the Court found that competition did not exist prior to the concentration. Accordingly, the concentration would not change the market conditions and the administrative intervention was not justified. In some cases (notably the Tamedia/PPSR (Edipresse) case from 2009), the Competition Commission examined whether the concentration could eliminate effective competition but in a way that might indicate that it is in fact reluctant to give an autonomous scope to that criterion. In practice, the efficiency gains provided in the condition in point (c), above, have only recently started playing a role. In the Gateway Basel North joint venture case from 2019, the Commission undertook an in-depth assessment of the condition in point (c), above (i.e., whether harmful effects of a concentration in a certain market were outweighed by an improvement in competition in another market). The Commission found that the establishment of Gateway Basel North, Switzerland's first large-scale terminal with a gateway function, eliminated effective competition for the handling of containers, swap bodies, and semi-trailers in import and export traffic, primarily with regard to the turnover of goods transported by rail and ship-to-rail trans-shipment. However, in its assessment, the Commission found that the terminal was also expected to produce substantial economies of scale in intermodal transport and increase competition in the import and export rail transport. The Commission concluded that these advantages outweighed the negative effects in the area of cargo handling and, therefore, approved the concentration.

The threshold for intervention by the Competition Commission based on single dominance depends largely on the significance of the market shares of the merging entities, whereas the intervention in the case of lower market shares may be possible based on the theory of harm of collective dominance. By way of example, in the Sunrise/UPC case from 2019, the Competition Commission examined a planned takeover of UPC (Liberty Global) by Sunrise. With the merger, Sunrise would have become the second-largest telecommunications company in Switzerland after incumbent Swisscom by offering – as does Swisscom – fixed network, broadband internet and mobile telephony services as well as digital television on its own infrastructure in Switzerland. The in-depth investigation focused on the likelihood of the creation of joint dominance of the new Sunrise and Swisscom. However, the Commission concluded that the acquisition would not lead to a collective dominance by Sunrise and Swisscom and that coordination between the companies was unlikely because UPC and Sunrise on one hand and Swisscom on the other were positioned differently. As a result, the merger was not considered to lead to the creation or consolidation of a dominant position in any of the markets analysed and, therefore, was approved by the Commission. The deal was later cancelled because it lacked the backing of Sunrise shareholders.

Year in review

General overview

In 2024, there was a significant increase in the number of merger notifications received, rising from 33 in 2023 to 43 in 2024, which confirms the upward trend in mergers and acquisitions as shown in the statistics in the Competition Commission's 2024 Annual Report. While 43 notifications were assessed within the statutory one-month deadline and cleared in Phase I with no conditions or additional requirements, one merger notified in 2023 was prohibited in Phase II in January 2024.

UBS/CS merger

In 2023 and 2024, the most notable concentration in the Swiss banking sector so far took place and may have set a precedent in merger control practices as its assessment and approval was carried out by the FINMA, quashing the competence of the Competition Commission.

The takeover of Credit Suisse (CS) by UBS was announced after much disruption surrounding the news of the precarious situation of the second biggest bank in Switzerland. The merger was facilitated by the Federal Council, the Swiss National Bank (SNB) and FINMA, all three stepping in to bail out CS (which had been deemed too big to fail). The Federal Council's Emergency Ordinance of 19 March 2023 blocked potential opposition to the merger from UBS shareholders. The SNB provided the necessary liquid backing to secure deposits, while in March 2023 FINMA approved the concentration in advance.⁴ In autumn 2023, the Competition Commission issued an opinion assessing in detail the impact of the merger on competition, concluding that UBS has market power or is potentially dominant in certain markets. In view of the findings made in its opinion, the Competition Commission set out a series of recommendations for the Swiss parliament and the authorities, highlighting the need for continued monitoring of the new market conditions in the Swiss financial sector from a competition law perspective, as well as the importance of enhanced cooperation among the relevant authorities. The opinion was published in June 2024, shortly after FINMA released its ruling in May 2024. Despite the concerns raised by the Competition Commission, FINMA formally concluded the merger control proceedings between UBS and CS without imposing any conditions, requirements or calling for further review.⁵ With the conclusion of the procedure, FINMA's special responsibility came to an end. At the same time, the federal Price Supervisor has placed UBS under surveillance and since then engaged in constructive dialogue with the bank and the other relevant authorities.⁶

Mergers of this size clearly pass the notification threshold levels requiring assessment and approval by the Competition Commission. Under Article 10(3) of the CartA, however, if a concentration of banks within the meaning of the Banking Act is deemed necessary by FINMA for creditor protection reasons, the interests of creditors may be given priority. In these cases, FINMA takes the place of the Competition Commission, which is invited only to submit an opinion. Evoking the above-referenced provision of Article 10 of the CartA, FINMA carried out the review and approval of the transaction, leaving the Commission to a great extent as a mere bystander.

Being the first of a kind, the UBS/CS merger was largely covered by the media for its possible implications on the future stability of the Swiss banking industry and its potential ripple effects on the economy as a whole. Nonetheless, or maybe for these same reasons, most scholars, financial advisers and economists alike kept cautiously silent about FINMA having taken over from the Competition Commission in what may prove to be the concentration with the most significant effects on competition in the banking sector. In view of the findings made in its opinion published in June 2024 (that were not binding upon FINMA), the Competition Commission may scrutinise UBS's conduct in the future to ensure compliance with Article 7 of the CartA (prohibition of abuse of market power).

Prohibition of takeover by Swiss Post of Quickmail resulting in new case law on Failing Company Defence

As mentioned above, the thresholds for merger control intervention in Switzerland are very high. As a result, prohibition decisions by the Competition Commission are rare. In January 2024, the Commission prohibited a merger for the third time only in the CartA's entire history. Swiss Post, Switzerland's national postal services provider, intended to acquire Quickmail Group (Quickmail), a group of companies that delivers letters, unaddressed items (e.g., advertising flyers), newspapers and magazines as well as parcels throughout Switzerland. The Competition Commission found that the takeover would lead to (1) an elimination of competition in the market for national addressed mail items weighing more than 50 grams (i.e., in the area above Swiss Post's legal monopoly) for business customers and (2) a significant strengthening of Swiss Post's position on the market for the delivery of newspapers and magazines resulting in a de facto monopoly of Swiss Post with negative impacts on competition to the detriment of customers. Swiss Post therefore had to resort to the 'Failing Company Defence' arguing that the negative impact on competition would also occur without the merger. The Failing Company Defence consists of the following conditions: (1) the allegedly failing company would be forced out of the market in the near future if not acquired by another company; (2) the market share of the failing company would be absorbed by the acquiring company once the failing undertaking exits the market; and (3) there is no better alternative from a competition perspective to the notified merger. In its decision of 15 January 2024, the Competition Commission found that – while concluding that Quickmail was likely to disappear from the market within a short period of time without external support, and as a result, most customers of Quickmail would switch to Swiss Post anyway – the third condition of the Failing Company Defence was not fulfilled. According to the Commission there was indeed another potential buyer that was willing and able to continue the business of Quickmail Group, thereby upholding the existence of a competitor of Swiss Post. As a result, the Failing Company Defence was not applicable and the Competition Commission prohibited the merger.⁷ Shortly after the Competition Commission's ruling, Quickmail was taken over by Planzer (which was not the potential buyer identified by the Commission).⁸

Other relevant case law

As part of a preliminary investigation, the Competition Commission carried out an extensive market survey to analyse the takeover of watch retailer Bucherer by watch manufacturer Rolex. Although the analysis did reveal indications that the merger would create or strengthen a dominant position in the national markets, as well as in the local markets in Geneva for after-sales services for Rolex and Tudor watches, the Competition Commission decided against conducting an in-depth review of the proposed merger. This decision was based on commitments by Rolex, such as maintaining the existing distribution of Rolex and Tudor watches, preserving the current network of service centres, continuing the supply of spare parts to independent after-sales service providers, and allowing Bucherer to continue its multi-brand sales.⁹

In its advisory capacity, the Secretariat of the Competition Commission had to assess whether a transfer of ownership of a fibre optic network constituted a merger. In this case, incumbent Swisscom had developed a fibre optic network in Switzerland in collaboration with several partners. Some of these partners were then considering leaving the business and selling their part of the network to Swisscom. The Secretariat came to the conclusion that such purchase by Swisscom would qualify as a merger. Furthermore, if an agreement were in place to terminate all customer relationships and transfer them to Swisscom, this process would, in line with the established practice of the competition authorities, also be regarded as a customer takeover and thus a corporate merger.¹⁰

As part of the planned merger between Fastweb and Vodafone Italia, the Competition Commission approved Swisscom's purchase of the entire share capital of Vodafone Italia SpA. A preliminary assessment of the transaction showed an already very strong market position of Swisscom in the Swiss end-consumer market for mobile services as well as for broadband connections in the business customer sector. Although the merger would have increased Swisscom's market share in these markets, the increase was not substantial enough to alter competition in a way that could affect the assessment of merger projects. In December 2024, the Italian competition authority AGCM, which is responsible to evaluate the impact of the merger on competition conditions in Italy, authorised the proposed merger as well.¹¹

With regard to Article 9(4) CartA (see above), the Secretariat of the Competition Commission stated in an advisory opinion regarding SIX Group AG that, if an undertaking whose dominant position has been legally established sells its dominant part to another undertaking, the special notification requirement under Article 9(4) CartA passes to the acquirer. At the same time, the special notification requirement expires in principle for the selling undertaking. However, the Secretariat pointed out that the special notification requirement for the seller may continue to apply in two cases: (1) if, even after the sale, the seller remains linked to the sold undertaking in such a way that it can effectively continue to benefit from its dominant position (continuing economic ties), it must be carefully examined whether the dominant position continues to exist de facto; (2) furthermore, the special notification requirement does not cease to apply if the dominant undertaking attempts to divest itself of its dominant part by means of formal circumvention mechanisms (such as restructuring or liquidation of the company while continuing its business), even though it still effectively holds a dominant position.¹²

The merger control regime

If the turnover thresholds are reached by the undertakings concerned or if the concentration involves a company holding an established dominant position and takes place in a related market (Section I), the filing of a merger notification is mandatory before the implementation of the concentration. Under Swiss law, there are no deadlines for filing. A transaction can be notified before the signing of the final agreements; however, the parties must demonstrate a good faith intention to enter into a binding agreement and complete the transaction (in practice, the standard is similar to that of the European Commission).

The legislator has outlined in Article 11 of the Merger Control Ordinance the information that must be included in a notification. As regards affected markets (i.e., those affected by a transaction in which either two or more of the undertakings concerned jointly hold a market share of 20 per cent or more in Switzerland or one of the undertakings concerned holds a market share of 30 per cent or more in Switzerland), additional information about these markets must be included in the notification.

The Secretariat of the Competition Commission can be contacted informally before the notification, which can help to streamline the notification procedure. For example, the Secretariat can agree to waive some legal requirements in relation to the content of the notification or confirm completeness of the notification prior to the official filing. Furthermore, parties often contact the Secretariat for a preliminary assessment of the question of whether or not a given transaction is subject to notification.

In the case of a merger, the notification must be made jointly by the merging undertakings. If the transaction is an acquisition of control, the undertaking acquiring control is responsible for the filing. Until 2024, the filing fee for a Phase I investigation was a lump sum of 5,000 Swiss francs; however, if the assessment of a draft notification involved a large amount of work, the Secretariat could invoice this work as billable advisory activity. In Phase II investigations, the Secretariat of the Competition Commission used to charge an hourly rate of between 100 Swiss francs and 400 Swiss francs. On 6 November 2024, the Federal Council amended the Federal Ordinance on Fees under the CartA so that effective 1 January 2025, all proceedings conducted by the Competition Commission and its Secretariat are billed on the basis of the time spent. The flat-rate fee of 5,000 Swiss francs for Phase I investigation has been abolished due to the gap that has widened considerably since 2016 between the fees charged and the workload involved. Going forward, the fees charged for these procedures are calculated on a pro rata temporis basis, as for other procedures.

Once the notification form is filed and the Competition Commission considers the filing complete, it will conduct a preliminary assessment (Phase I) and must decide within one month of the date of the filing whether there is a need to open an in-depth investigation (Phase II). If the Commission decides to launch a Phase II investigation, it must complete it within four months.

As regards internal organisation, under its internal rules of procedure, the Competition Commission has created a chamber for merger control, which has been granted the power to decide whether a Phase II examination should be conducted and whether the merger can be implemented ahead of the regular schedule. However, the Competition Commission retains a certain residual power in the preliminary assessment, in that it will be informed of the chamber's decision and may conduct its own independent investigation (and, as the case may be, overrule the chamber's decision). The Commission can also delegate other tasks to the chamber if practical considerations dictate that as appropriate. Pursuant to the internal rules of procedure (in force since 1 November 2015), Laura Melusine Baudenbacher (president since 1 January 2023), Igor Letina and Danièle Wüthrich-Meyer (both vice presidents of the Competition Commission) as well as Rudolf Minsch (as substitute member) have been appointed as members of the chamber for merger control.

As a rule, the implementation of a concentration should not take place before it has been cleared by the Competition Commission; however, in specific cases, an implementation may be allowed before clearance if there are compelling reasons. This exception has been used mainly in cases of failing companies and, more recently, in the case of a pending public takeover bid. Contrary to the European merger control rules,¹³ no exception for public bids is provided under Swiss law. Therefore, each case is to be assessed individually. In the Schaeffler/Continental case (in which Schaeffler and Continental eventually agreed on the conditions of a public takeover),¹⁴ the Commission decided that a request for early implementation of a concentration can be granted before the notification is submitted if the following three conditions are fulfilled:

1. the Competition Commission must be informed adequately about the concentration;
2. specific reasons must be provided explaining why the notification cannot be submitted at that time; and
3. if, after the Commission's review, the concentration is not allowed, a potential cancellation of the transaction must be assessed.

In the Schaeffler/Continental case, these conditions were fulfilled. However, the Commission imposed two additional conditions: the obligation not to exercise voting rights except to conserve the full value of the investment and the obligation to submit a full notification within a relatively short amount of time.

In practice, the one-month period for a Phase I investigation can be shortened in less complex filings, especially if a draft filing was submitted to the Secretariat of the Competition Commission for review before the formal notification.

If the Competition Commission decides to launch a Phase II investigation, it has to publish its decision to do so. It will then send questionnaires to the parties, and to their competitors, suppliers and clients. Usually, a Phase II hearing with the parties takes place. If the parties propose remedies, close contact is established between the Secretariat of the Competition Commission and the undertakings involved to determine the scope of the remedies. Ultimately, however, the authority to impose remedies lies with the Commission, which enjoys a wide power of discretion (subject to compliance with the principle of proportionality).

Third parties have no formal procedural rights at any point in the procedure. If the Competition Commission opens a Phase II procedure, it will publish basic information about the concentration and allow third parties to state their position in writing within a predetermined deadline; however, the Commission is not bound by third-party opinions or by the answers to the questionnaires. Third parties have no access to documents and no right to be heard. Moreover, the Swiss Supreme Court has held that third parties are not entitled to any remedy against a Competition Commission decision to permit or prohibit a given concentration.¹⁵

A decision of the Competition Commission may be appealed before the Federal Administrative Tribunal within 30 days and, ultimately, before the Swiss Supreme Court. The duration of an appeal procedure varies but may exceed one year at each stage.

The publication of merger control decisions may also be an issue. In a merger procedure in the media sector, the Commission and one of the parties to the merger could not agree on the qualification of business secrets with regard to a large number of pieces of information. At the request of the undertaking, the Commission stated in a separate decision that the parties to a merger under review could not just blackline sections of the decision they considered as business secrets but had to explain why the information concerned had to be protected.

The Secretariat of the Competition Commission has published a communication on the notification and assessment practice regarding merger control.¹⁶ The Merger Control Communication first clarifies in Section I, at Paragraphs 3 and 4, the concept of 'effect' in the Swiss market in the case of a joint venture. Article 2 of the CartA provides that the CartA 'applies to practices that have an effect in Switzerland'. Up until the time when the Merger Control Communication was issued, the Competition Commission and the Swiss courts held that each time the turnover thresholds set forth in Article 9 of the CartA were reached, the concentration would be considered to have an effect on the Swiss market. Therefore, if a joint venture with no activity in Switzerland were created in which the turnover thresholds were met by the parent companies, a notification would be required (see, for example, the Merial decision of the Swiss Supreme Court of 24 April 2001).¹⁷ However, in the Merger Control Communication, the Competition Commission takes a different approach: if the joint venture is not active in Switzerland (i.e., no activity or turnover in Switzerland; in particular, no deliveries into Switzerland) and does not plan to be active in Switzerland in the future, then the creation of the joint venture is not considered to have any effect in Switzerland and, accordingly, no notification is required, even if the turnover thresholds are met by the parent companies. In the Axel Springer/Ringier case (of May 2010),¹⁸ Ringier AG and Axel Springer AG formed a joint venture in Switzerland in which they concentrated all the printed and electronic media activities they had in eastern European countries. In light of the criteria set out in the Merger Control Communication, the Competition Commission took the view that the joint venture was subject to Swiss merger control because some of the entities concentrated in it had achieved a turnover in Switzerland in the year preceding the concentration, whereas others had made deliveries into Switzerland.

In the context of a recent consultation request to the Secretariat of the Competition Commission, the Secretariat interpreted narrowly the exemption from the notification obligation for joint ventures as stated in Section I, Paragraph 4 of the Merger Control Communication. In its consultation statement, the Secretariat of the Competition Commission took the position that the exception applied in the first place only if the joint venture's activities were clearly unrelated to competition in Switzerland and that to prevent merger projects with a potential impact on the Swiss market from not even being examined, Section I of the Merger Control Communication should not be applied in a schematic manner. Instead, all circumstances of the individual case should be taken into account, whereby in case of doubt a notification obligation is to be assumed. In another recent consultation, the Secretariat stated that the exception might not apply only to the establishment of joint ventures but also to the acquisition of sole control and, in particular, to cases under Article 9(4) of the CartA.

Another jurisdictional issue dealt with by the Merger Control Communication generalises the position taken by the Competition Commission in its Tamedia/PPSR (Edipresse) decision dated 17 September 2009.¹⁹ In this case, the deal was structured into three phases over a period of three years, with a shift from joint to sole control by Tamedia during that period. The Competition Commission decided (and later held in the Merger Control Communication) that the deal could be regarded as a single concentration only if the three following conditions were met:

1. constitution of joint control during a transition period;
2. a shift from joint control to sole control concluded in a binding agreement; and
3. a maximum transition period of one year.

Until that decision, the Competition Commission considered that a transition period of up to three years was acceptable to analyse a case as a single concentration; however, to align its practice with that of the European Commission in its Jurisdictional Notice of 10 July 2007,²⁰ the Competition Commission decided to reduce the transition period to one year.

On a related topic, in an informal consultation in 2017, the Secretariat of the Competition Commission provided clarification on a series of transactions, whereby the first transaction would lead to the sole acquisition of a target by one undertaking and a subsequent transaction to the acquisition of joint control over the same target by several undertakings (including the undertaking that acquired sole control in the first place). The Secretariat of the Competition Commission held that only the second transaction would trigger the duty to notify, provided that the individual transactions were dependent on each other and together formed a single operation.

The Merger Control Communication also addresses the subject of the geographical allocation of turnovers. In general, the test for this is the contracted place of delivery of a product (place of performance) and, respectively, the place where the competition with other alternative suppliers takes place. The billing address is not relevant. Special rules apply to the calculation of turnover based on the provision of services.

The Merger Control Communication further clarifies the examination criteria and the notification requirements for markets affected by concentrations in which only one of the participants operates but has a market share of 30 per cent or more (see above).²¹ The issue is the extent to which the other companies involved in the concentration may be categorised as potential competitors. Once again, the Competition Commission has aligned its practice in this regard with the practice in the European Union. In general, a detailed description of such markets in the context of the merger control notification is required only if one of the following additional conditions is met: (1) another undertaking involved plans to enter the affected market or that undertaking has pursued this objective in the past two years (e.g., the development of competing medicines that has entered an advanced phase may be interpreted as the intention to enter a new market); (2) an exclusion of potential competitors is also possible if an undertaking involved holds important intellectual property rights in the market, even if it is not active in the market concerned; or (3) the authority will also examine more closely cases in which another undertaking involved is already active in the same product market but not the same geographical market or in an upstream, downstream or neighbouring market closely linked with the market in which the relevant undertaking holds a market share of at least 30 per cent.

The clarification added in the Merger Control Communication in the latest update of 1 October 2019²² concerns takeovers by means of joint ventures (i.e., if a joint venture acquires control over the target). In this event, in general, only the joint venture is considered to be an undertaking acquiring control and thus a concerned undertaking. However, the Competition Commission will instead consider the parent companies as the undertakings concerned, rather than the joint venture, if one of the following conditions is met:

1. the joint venture has been formed specifically for the purpose of acquiring the target or, respectively, has not yet started to operate;
2. an existing joint venture is not a full-function joint venture;
3. the joint venture is an association of undertakings; or
4. the parent companies are actually involved in the acquisition of the target.

Other strategic considerations

The Competition Commission maintains close links with the European Commission. It accepts that, in cases in which a notification has also been filed with the European Commission, the parties provide the Form CO filing as an annexe to the Swiss notification. This reduces the workload for the drafting of the Swiss notification, as the parties have to add only specific data regarding the Swiss market. That said, although annexes to the Swiss notification may be provided in English, the main part of the notification must still be drafted in one of the three official languages used in Switzerland: French, German or Italian.

The Competition Commission usually strives to make a decision consistent with that of the European Commission in cases requiring parallel notifications in Brussels and Berne. On 17 May 2013, the Swiss government signed an agreement between the Swiss Confederation and the European Union concerning cooperation on the application of their competition laws (the Agreement). Under the Agreement, which entered into force on 1 December 2014, in merger procedures with parallel notifications in Switzerland and the European Union (as may often be the case in cross-border mergers and acquisitions), the Secretariat of the Competition Commission no longer requires the prior consent of the parties to a transaction to initiate exchanges with the staff of the Directorate General for Competition on technical and substantive issues to ensure coordination and streamlining in the parallel proceedings.

More generally, the January 2009 report of the Taskforce Cartel Act,²³ a panel formed in 2006–2007 by the head of the Federal Department of Economic Affairs, Education and Research (EAER) to evaluate the ongoing effects and functioning of the CartA, stated that in the context of growing globalisation, it would be appropriate for Switzerland to conclude cooperation agreements with its main trading partners to allow for the exchange of confidential information between competition authorities. In essence, the Agreement regulates cooperation between the Swiss and European competition authorities. The Agreement is of a purely procedural nature and does not provide for any harmonisation of substantive competition laws. The two competition authorities must notify each other in writing of enforcement activities that could affect important interests of the other contracting party. The Agreement contains a list of examples of cases in which notification must be given and provides for a time frame for notifications in relation to mergers and other cases (Article 3, Paragraphs 3 and 4). Furthermore, the Agreement sets forth the legal basis for the competition authorities to be able to coordinate their enforcement activities with regard to related matters.

On 1 November 2022, Switzerland also signed an agreement with Germany on the cooperation between their competition authorities which entered into force on 1 September 2023. In relation to merger control, the agreement provides for an exchange of information and a mutual notification obligation in the case of enforcement measures.

The CartA does not contain any specific rules regarding public takeover bids; however, the Competition Commission should be contacted in advance so that it can coordinate its course of action with the Swiss Takeover Board. This is particularly important for hostile bids. Past practice has shown that, in most cases, the Competition Commission, in this regard also, substantially follows the rules on public takeover bids of the EU Merger Control Regulation.²⁴ In addition, it is possible to request an early (provisional) implementation of a concentration prior to clearance, specifically in public takeover bids (see 'The merger control regime' section).

Outlook and conclusions

As regards concentrations, in its January 2009 report (see also above), the Taskforce Cartel Act took the view at the time that, compared with other countries, the Swiss system – which only prohibits concentrations that can eliminate effective competition (under the current dominance-plus test) – is deficient and provides a relatively weak arsenal to enhance competition effectively. According to the experts, a risk exists that concentrations adversely affecting competition might be approved. The Taskforce recommended a harmonisation of the Swiss merger control system with the EU merger control system to eliminate such a risk and to reduce the administrative workload in respect of transnational concentrations because of diverging tests, as well as the implementation of modern instruments to control the criteria governing intervention in the case of concentrations (the significant impediment to effective competition (SIEC) test, an efficiency defence and dynamic consumer welfare standard).

In contrast to the current dominance-plus test, the SIEC test allows for an intervention, in particular in the case of unilateral (non-coordinated) effects below the threshold for single market dominance. With the SIEC test, concentrations can be prohibited or cleared subject to remedies if they lead to a significant impediment to competition. Under the current standard of review with the dominance-plus test, an intervention is possible only if a merger not only results in the creation or strengthening of a dominant position but also entails the risk of eliminating effective competition. The introduction of the SIEC test would align the applicable test under the Swiss merger control regime with that under EU law. For undertakings, the complexity of the merger control proceedings is likely to increase, whereby economic analyses of concentrations will become more important.

In the subsequent efforts to revise the Cartel Act, the federal government has, among others, released a set of draft amendments to merger control, such as the introduction of the SIEC test. However, in September 2014, after a long parliamentary debate, the National Council finally rejected the proposed amendments and the CartA was not revised at the time. As a result, several important changes proposed by the Council of States, including changes to the merger control regime, were no longer on the table.

Following rejection of the reform in 2014, individual parliamentary proposals have been submitted with the aim of revising specific points in the CartA.²⁵ At the same time, the Federal Council, based on its report on the issue of restrictions of parallel imports (dated 22 June 2016), instructed the EAER to prepare a consultation bill on modernising the merger control procedures in the CartA. The Federal Council takes the view that the current merger control regime does not sufficiently take into account the negative and positive effects of mergers, and that the current dominance-plus test should be replaced by the SIEC test. The Federal Council expects this possible change to have positive effects on the competitive environment in Switzerland in the medium to long term. The State Secretariat for Economic Affairs (known as SECO), which had overall responsibility for drafting the bill, commissioned two reports on the implications of the introduction of the SIEC test on the Swiss merger control regime. The first report, which was released on 27 October 2017, analysed from an economic perspective the consequences that were likely to result from the introduction of the SIEC test in Switzerland. Among other conclusions, it recommended that such a test be introduced. The second report, which was released on 12 February 2020, examined the extent to which mergers would have been assessed differently in Switzerland under the SIEC test. It concluded that the SIEC test is particularly suitable for intervening in mergers that are harmful to competition.

On 24 November 2021, the Federal Council published the preliminary draft for a partial revision of the CartA and opened a public consultation. The preliminary draft suggests a number of changes to the current CartA and provides for the following amendments with regard to the merger control regime: (1) the implementation of the SIEC test; (2) the introduction of an efficiency defence in the form of the dynamic consumer welfare standard; (3) a simplification of the notification requirement for cross-border mergers for markets that include Switzerland and at least the EEA; and (4) an alignment of the deadline extensions with those of the European Union. However, the draft, once again, does not contain any changes to the turnover-based intervention thresholds or provide for the introduction of new thresholds, such as the transaction volume. The centerpiece of the suggested amendments to the merger control regime is, once again, the introduction of the SIEC test.

Following completion of the consultation period on 11 March 2022, the Federal Council instructed the EAER on 17 March 2023 to submit a dispatch to the Parliament on the draft revision of the CartA by mid-2023. On 24 May 2023, the Federal Council adopted the dispatch concerning the partial revision.²⁶ The Council of States approved the revision, including the implementation of the SIEC test, on 11 June 2024. After being approved by the National Council's Committee for Economic Affairs and Taxation (known as the CER-N) in January 2025, the draft partial revision is expected to be discussed by the National Council in the course of 2025.

Another subject raised in the context of a revision of the Swiss merger control regime is the introduction of a control mechanism for direct foreign investments in Switzerland to allow for security and public order considerations when assessing such investments. Contrary to the Federal Council's recommendation, both the Council of States on 17 June 2019 and the National Council on 3 March 2020 adopted a parliamentary motion²⁷ mandating the Swiss Federal Council to prepare a draft bill on foreign investment control. Recognising that Switzerland is one of the world's largest recipients of foreign investment and one of the biggest investors abroad, the Federal Council cautions that the Swiss economy's key to success is to remain open to investments. Notwithstanding its own opposition to the introduction of the new legislation because of concerns that it would diminish the attractiveness of Switzerland to foreign investors, on 18 May 2022, the Federal Council launched public consultations on the draft Swiss legislation on monitoring foreign direct investment with an explanatory report of the EAER on the consultation procedure. With the introduction of authorisation regimes, the aim of the proposed bill was to protect the Swiss economy, public order and security from possible threats, in particular from investors with ties to foreign governments. The consultation concluded on 9 September 2022.²⁸ On 15 December 2023, the Federal Council submitted its draft to the Parliament. The scope of the draft was reduced compared to the preliminary draft as it only provided for acquisitions of Swiss companies by foreign state investors (and private investors directly or indirectly controlled by a state) to be subject to notification. Furthermore, notification was limited to acquisitions in sectors that could potentially jeopardise public order or security in Switzerland with the draft listing the following sectors as being critical: military equipment or dual-use goods, electricity grids, water supply, healthcare, telecommunications and transport infrastructure. Furthermore, the draft provided for de minimis thresholds.²⁹ The draft was approved in September 2024 by the National Council, but the National Council extended the scope of the control mechanism by subjecting all foreign investors to the investment review regime, not only the State-controlled foreign investors. According to the latest draft, Swiss FDI control would further, in addition to the areas of public order and security, also apply to investments related to the area of supply of essential goods and services and provide for the possibility of a domestic company to obtain a preliminary and binding decision on the question whether their acquisition is subject to authorisation or not (such decision being binding for 12 months, extendable by another 12 months). The draft is currently being discussed in the Council of States.

In March 2024, the Federal Council announced its intention to reform the institutional setup of the competition authorities. The administration has been instructed to prepare a proposal by mid-2025. One of the points of discussion is the strengthening of the separation of investigative and decision-making powers to reinforce the Competition Commission's independent decision-making, as well as the reduction of the number of members of the Commission with the aim of professionalising the authority. There are also plans to introduce amendments on the level of the appeal procedure, for example by appointing specialised judges on the level of the Federal Administrative Court.³⁰

Footnotes

¹ Marquard Christen and Jérôme Levrat are partners at CMS von Erlach Partners Ltd (CMS Switzerland). The authors thank Tania Luminuku, senior associate and Leandra Diem, trainee attorney at CMS Switzerland, for their assistance with the latest update.

² Wettbewerbskommission (www.weko.admin.ch).

³ See below on the currently ongoing revision of the CartA by which the SIEC test is supposed to be introduced in Switzerland.

⁴ https://www.finma.ch/en/news/2023/03/20230319-mm-cs-ubs/ (accessed 8 May 2025).

⁵ https://www.finma.ch/en/news/2024/06/20240619-mm-zusammenschluss-ubs-cs/ (accessed 8 May 2025).

⁶ Competition Commission, Annual Report 2024 (https://www.weko.admin.ch/weko/en/home/praxis/annual-reports.html), p. 14.

⁷ Competition Commission, decision of 15 January 2024, Post CH AG/Quickmail Holding AG, Annual Report 2023 (https://www.weko.admin.ch/weko/en/home/praxis/annual-reports.html), p. 14.

⁸ Competition Commission, Annual Report 2024 (https://www.weko.admin.ch/weko/en/home/praxis/annual-reports.html), p. 6.

⁹ Competition Commission, Rolex/Bucherer, RPW 1/2025, p. 181 ff.

¹⁰ Competition Commission, Annual Report 2024 (https://www.weko.admin.ch/weko/en/home/praxis/annual-reports.html), p. 15.

¹¹ Competition Commission, Annual Report 2024 (https://www.weko.admin.ch/weko/en/home/praxis/annual-reports.html), p. 15.

¹² Secretariat of Competition Commission, Sondermeldepflicht der Six Group AG, RPW 3/2024, p. 685 ff.

¹³ Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation), Article 7(2).

¹⁴ Case No. COMP/M.5294 – Schaeffler/Continental.

¹⁵ See Competition Commission, Annual Report 2022 (https://www.weko.admin.ch/dam/weko/en/dokumente/2023/jahresbericht_2022.pdf.download.pdf/Annual%20Report%202022.pdf (accessed 8 May 2025)).

¹⁶ Merger Control Communication dated 25 March 2009, last updated on 1 October 2019 (see
https://www.lexology.com/library/detail.aspx?g=6a80e653-d241-49d9-9bd1-4df024c4b018 (accessed 8 May 2025)).

¹⁷ Federal Supreme Court Decision, ATF 127 III 219, of 24 April 2001.

¹⁸ Competition Commission statement of 28 May 2010, Axel Springer AG/Ringier AG, DPC 2010/3, p. 562.

¹⁹ Competition Commission, decision of 17 September 2009, Tamedia/Presse Publication SR SA.

²⁰ Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings (2008/C95/01) (https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:095:0001:0048:EN:PDF (accessed 8 May 2025)).

²¹ Merger Control Ordinance, Article 11(1)(d).

²² See https://www.lexology.com/library/detail.aspx?g=6a46161c-9c9d-40c2-8ef2-a5e43a9dc328 (accessed 8 May 2025).

²³ See https://www.weko.admin.ch/weko/en/home/rechtliches_dokumentation/evaluation-of-the-cartel-act.html (accessed 8 May 2025).

²⁴ Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation), as amended and in force.

²⁵ See, for instance, the de Buman Parliamentary Initiative of 30 September 2016, which demanded that four specific undisputed points addressed in the proposal rejected in 2014 be reintroduced, namely the amendments to the merger control regime. These were withdrawn subsequently.

²⁶ https://www.parlament.ch/press-releases/Pages/mm-wak-s-2024-05-03.aspx (accessed on 8 May 2025).

²⁷ Motion 18.3021 Rieder (Protection of the Swiss Economy Through Investment Controls).

²⁸ 'Federal Council initiates consultation on legislation to screen foreign investment' (18 May 2022) (www.seco.admin.ch/seco/en/home/seco/nsb-news.msg-id-88884.html (accessed 5 June 2023)).

²⁹ See draft Investment Control Act of 15 December 2023 and status of the deliberation in Parliament at https://www.parlament.ch/de/ratsbetrieb/suche-curia-vista/geschaeft?AffairId=20230086.

³⁰ Federal Council decides on direction for reform of competition authorities, 15 March 2024 (https://www.weko.admin.ch/weko/de/home/medien/medieninformationen/nsb-news.msg-id-100426.html).