Cooperation Agreement Switzerland - EU on Competition Law
Bulletin November 6, 2014
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Cooperation Agreement Switzerland – EU on Competition Law becomes effective on 1 December 2014
Facilitation of the Transmission of Confidential Information and Documents between Swiss and European
Competition Authorities
The new Agreement between Switzerland and the
European Union (EU) concerning the cooperation
on the application of their competition laws
(Agreement) becomes effective on 1 December
2014. It enables the competition authorities in
Switzerland and the EU to discuss and transmit
confidential information and documents obtained in
merger control and competition proceedings. Even
though the agreement was signed on 22 May
2013, it was ratified only during the course of the
year 2014.
No legal basis up to date
Up to date no general legal basis regarding the
cooperation in competition law existed between
Switzerland and the EU. The Aviation Agreement
(1999) contains extensive cooperation obligations
(including the transmission of confidential information), however, its scope of application is restricted to aviation matters. The WTO-Agreement
(1994) and the Free Trade Agreement (1972)
merely contain general cooperation obligations
excluding the transmission of confidential infor-
mation. The OECD Guidelines concerning the
Cooperation between Authorities on Anticompetitive Practices (1995) and Hard Core Cartels (1998)
are restricted to recommendations, and the International Competition Network only provides for a
discussion platform to debate abstract questions.
Waiver practice
Due to the lack of a general legal basis regarding
the transmission of confidential information, in
Swiss practice the transmission was achieved by
way of a so called "waiver". A waiver is a statement of a party in merger control proceedings, with
which it waives its right to the confidential treatment of information towards another authority. The
waiver practice is based on voluntariness. Unlike in
merger control proceedings, in cartel proceedings
the parties only rarely provide waivers.
Cooperation Agreement Switzerland - EU on Competition Law
Bulletin November 6, 2014
Transmission of information under the Agreement
In principle, under the new Agreement the competition authorities in Switzerland and the EU are no
longer dependant on the consent of the involved
companies.
The new Agreement allows the Swiss and European competition authorities to discuss (article 7 paragraph 2) and to transmit (article 7 paragraph 3)
confidential information. In the absence of the consent of the affected company, the competition authority may, upon request, transmit for the use as
evidence, information obtained by investigative
process to the other competition authority under
the following conditions:

both competition authorities must be investigating the same or related behavior or
transaction;

the request for such information must be
made in writing and must include a general
description of the subject matter and nature
of the investigation or the proceedings to
which the request relates; and

the competition authority receiving the request must determine, in consultation with
the requesting competition authority, what
information in its possession is relevant and
may be transmitted.
The Agreement does not stipulate an obligation to
discuss or transmit information (article 7 paragraph
5).
The competition authorities may not discuss or
transmit information that was obtained under the
respective leniency or settlement procedures, unless the affected company has given its express
consent in writing (article 7 paragraph 6). Furthermore, the competition authorities may not discuss,
request or transmit information obtained by investigative process if using such information would be
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prohibited under the procedural rights and privileges provided by Swiss or European law (article 7
paragraph 7). This includes the right against selfincrimination and the legal professional privilege.
The discussed or transmitted information may only
be used for the effective enforcement of competition law (article 8 paragraph 1). The receiving authority may only use information obtained by investigative process for the enforcement of competition
law regarding the same or connected behavior or
transaction (article 8 paragraph 2). Information that
has been discussed or transmitted pursuant to the
Agreement may not be used to impose sanctions
on natural persons (article 8 paragraph 4).
The European Commission has a right to transmit
information obtained under article 7 to the national
competition authorities, but only to comply with its
consultation duties before issuing its decision. The
information so transmitted must not be used other
than for the enforcement of competition law by the
European Commission and it must not be disclosed (article 10 paragraph 2). The national competition authorities must not open own proceedings
based on the information so received.
In summer 2014, the Swiss parliament decided to
regulate the information exchange in a new article
42b Swiss Cartel Act (CA) that will likewise enter
into force on 1 December 2014. According to this
article, the transmission of confidential information
to a foreign competition authority based on an
international agreement and without the affected
company's consent, may only be allowed under
certain conditions set out in article 42b paragraph
2 CA and that are met by the Agreement. Furthermore, the competition authorities have to inform
the involved companies and invite them to provide
comments prior to transmitting the information to
the foreign competition authority (article 42b paragraph 3 CA).
Cooperation Agreement Switzerland - EU on Competition Law
Bulletin November 6, 2014
Remaining questions and problems
As far as the Swiss competition authorities are
concerned, the Agreement will promote a more
effective enforcement of competition law because
cartels can be investigated better and merger control proceedings can be conducted more efficiently.
From the point of view of the undertakings concerned, however, the Agreement prompts new
questions and problems:
Limited protection of data secrecy
—
The protection of personal data will be determined by the law of the receiving authority. If that is the EU Commission, information
may lose the data protection it would otherwise have enjoyed due to the lower levels of
protection provided in the EU.
—
Any "Swiss Finish" (e.g. Swiss bank customer secrecy) will get lost upon transmission of information to the EU Commission
since the confidentiality of transmitted information will be governed by the law of the receiving authority.
Effect on leniency and settlement procedures
—
The provision in the Agreement pursuant to
which the competition authorities will not exchange any information obtained from leniency applications may still be problematic
for leniency applicants. It still allows for an
exchange of information and documents that
have been submitted by other parties but
which refer to the leniency applicant. It may
also (depending on the reading of the
Agreement which does not contain an explicit rule in this regard) allow for an exchange of evidence that the leniency applicant has submitted together with the actual
leniency application.
—
The provision contained in the Agreement
pursuant to which the competition authorities
will not exchange any information obtained
during settlement procedures may be equally problematic. Depending of the reading of
the Agreement, it does not prevent the competition authorities from exchanging (and us-
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ing) information before a settlement procedure is commenced.
Definition of "obtained by investigative process"
—
In the document that accompanies the bill
(Botschaft) the Federal Council sets out that
the exchange of confidential information
pursuant to article 7 paragraphs 3 and 4 is
limited to formal proceedings within the
meaning of article 27 CA. Yet in the Agreement, "obtained by investigative process" is
defined as including information obtained by
using investigative rights or received pursuant to a legal obligation. In Switzerland, this
i.a. comprises information obtained through
requests for information according to article
40 CA (cf. article 2 paragraph 6 lit. b). Since
those requests for information can also be
made during preliminary investigations pursuant to article 26 CA, it is possible, based
on the wording of the Agreement, that information that has been obtained during preliminary investigations can also be exchanged. This reading of the Agreement
would be particularly harmful for the undertakings concerned since in preliminary investigations there is no right to access the
file. It is therefore impossible to find out
whether, and if so which, information has
been transmitted to the EC Commission.
Remedies
—
The Agreement itself does not provide for
appeals against the exchange of confidential
information and documents.
—
Pursuant to the document accompanying
the bill (Botschaft), the transmission of information does not constitute an official order (Verfügung) which is why no appeal is
possible. Rather, for the measures contained in the Agreement to be effective, a
quick and efficient exchange is necessary,
and an appeals procedure that lasts for several months would deprive the Agreement of
its purpose.
Cooperation Agreement Switzerland - EU on Competition Law
Bulletin November 6, 2014
—
—
—
—
The legislative material on the new article
42b CA states expressly that the possibility
to submit a statement prior to transmission
of the information shall not be interpreted as
a right for appeal and shall therefore not
lead to blockings of the exchange of information.
The document accompanying the bill
(Botschaft) sets out, however, that the
Agreement does not restrict the rights of the
parties provided by domestic law to appeal
against an interim or a final order of the
competition authorities if, in the opinion of
the parties, obtaining the information has violated their rights.
If the remedies provided for by Swiss law
remain unaffected by the Agreement, an undertaking concerned has the right to insist
that an exchange of information which is improper in its opinion shall not be carried out
as a matter of fact (Realakt, article 25a
Swiss Administrative Procedure Act). In that
case, the competition authority has to issue
an official order (Verfügung) which can be
appealed by the undertaking concerned.
It is unclear whether the legislator intended
to also exclude this indirect possibility to appeal based on article 25a Swiss Administrative Procedure Act with its statements in the
document accompanying the bill (Botschaft)
and in the legislative material on the new article 42b CA. Without an explicit legal provision stipulating the exclusion, such farreaching consequences can hardly be assumed. Ultimately, however, the courts will
have to answer this question.
Conclusion
According to its article 1, the purpose of the Agreement is to contribute to the effective enforcement
of the competition laws of Switzerland and the EU
through cooperation and coordination, including
the exchange of information. The Agreement will
probably achieve this goal. In its current form, the
Agreement may, however, impact the incentives to
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apply for leniency or to enter into settlement negotiations.
Franz Hoffet
Dr. iur., LL.M., Rechtsanwalt
[email protected]
T +41 43 222 10 00
Marcel Dietrich
Dr. iur., LL.M., Rechtsanwalt
[email protected]
T +41 43 222 10 00
Gerald Brei
Dr. iur., Rechtsanwalt
[email protected]
T +41 43 222 10 00
Homburger AG
Prime Tower
Hardstrasse 201 | CH-8005 Zürich
Postfach 314 | CH-8037 Zürich
T +41 43 222 10 00
F +41 43 222 15 00
[email protected]