1. Requirements for Relative Market Power

According to the COMCO practice, the finding of relative market power cumulatively requires that (i) there is a dependence between the undertakings concerned, (ii) the dependent undertaking has no countervailing power and (iii) the dependence is not the result of gross negligence on the part of the dependent undertaking.

2. Dependence

Whether a dependence within the meaning of Art. 4 para. 2bis of the Cartel Act (CA) exists is determined based on the specific circumstances of the individual case. As possible examples, the revised guideline mentions the dependence of a reseller on the supply of certain goods that customers expect to be offered, or the dependence on the continuation of a certain business relationship in order to obtain a return on previous investments. The assessment is carried out in three steps:

• First, any possible alternatives are identified, taking into account the specific market conditions (e.g. switching to another supplier, but also foregoing the product or service in question). 

• Second, the expected consequences of switching to the identified alternatives are assessed, including loss of sales, higher costs, loss of customers, lower profits or a shortfall in contribution margins.

• Third, it is examined whether the evading undertaking can reasonably be expected to bear these consequences, taking into account its individual business situation. This includes an assessment of the significance of any potential loss of sales to the undertaking in question. While insignificant consequences are considered tolerable, undue hardship is not limited to cases where the existence of the undertaking is threatened. In the recent practice, undue hardship has been affirmed where 20% of sales were affected and disaffirmed where less than 0.2% of sales were affected.

3. Lack of Countervailing Power

In the revised guideline, the Secretariat reiterates its view that any countervailing power of the allegedly dependent undertaking must be taken into account when assessing relative market power. Countervailing power is determined by the interest of the undertaking allegedly having relative market power in obtaining the consideration or by the harm to the such undertaking if the legal relationship in question is not concluded or terminated. If the interest of the undertaking allegedly having relative market power in maintaining the legal relationship is equal or similar to the interest of the allegedly dependent undertaking, it can be assumed that there is a balance of power and that no relative market power can be established.

4. Gross Negligence of the Dependent Undertaking

According to the revised guideline, an undertaking cannot rely on the provisions protecting against the abuse of relative market power if the alleged dependence is due to its own gross negligence. For this assessment, all individual circumstances at the time of the relevant business decision must be taken into account. The fact that a business decision turns out to be unfavorable in hindsight is not sufficient to establish gross negligence. Rather, the dependence must be the result of a serious individual error of the dependent undertaking.

5. Abusive Conduct by Undertakings with Relative Market Power

In the context of relative market power, the restriction of an undertaking's ability to supply abroad under local market conditions, as defined in Art. 7 para. 2 lit. g CA, is of particular importance. According to the Secretariat, the decisive factor for the abusive nature of these so-called "Switzerland surcharges" is whether the dependent undertaking's procurement conditions in Switzerland are worse than those which a comparable foreign company would enjoy abroad. Since this assessment requires the inclusion of numerous parameters that may be difficult to compare (e.g. sales volumes, delivery times, right of return and compensation), the Secretariat does not consider it abusive if the conditions are only slightly less favorable.

6. Participation of Third Parties in Investigations

Interested third parties are free at any time to (even anonymously) provide the competition authorities with leads or information relevant to an investigation. However, COMCO's practice sets high hurdles for any further participation of third parties in an investigation regarding the abuse of relative market power. According to Art. 43 para. 1 lit. a CA, admission as a non-party participant to the proceedings requires that the undertaking in question is impeded by the alleged restriction in taking up or exercising a competitive activity. Since the abuse of relative market power is generally understood as a bilateral form of conduct that only affects the parties to the legal relationship in question, the guideline maintains that there are normally no other affected competitors that would be entitled to participate in the proceedings.

7. Amendments to the Notification Form

The amended notification form requires the notifying undertaking to provide information on the expected consequences of possible evasive actions, in particular with respect to potential loss of profit or sales, a potential shortfall in contribution margins or expected additional costs. Information is also required on the potential consequences of foregoing the offer or demand in question on which the notifying undertaking may be dependent.