In the spring session of 2021, Parliament voted on the Federal Council’s indirect counter-proposal to the Fair Price Initiative. It decided on a ban on geo-blocking and the extension of the ban on abuse under cartel law. These provisions make an important contribution to Switzerland’s competitiveness. This was probably also the opinion of the initiative committee and they conditionally withdrew their initiative.
The Fair Price Initiative
The Fair Price Initiative aims to reduce procurement costs for domestic companies and public instructions, as well as to lower purchase prices for consumers in Switzerland. In particular, it focuses on imported products and services whose prices in Switzerland are far higher than those abroad. This is because the Swiss market is often sealed off from abroad by internationally active companies in order to push through higher prices in Switzerland and thus skim off the high willingness to pay. By preventing these price surcharges, Swiss companies should become more competitive both domestically and in the export economy. On the other hand, consumers will benefit from lower procurement costs, which will indirectly curb shopping tourism.
The initiative aims to achieve these goals by amending antitrust law and introducing new regulations on unfair competition. In addition to market-dominant companies, so-called companies with relative market power are now to be covered by anti-trust abuse control. The initiative also wants to achieve non-discriminatory shopping in online trade by means of a ban on private geo-blocking.
Since the Federal Council shared the initiative’s concern in principle, but wanted to keep the costs low for the Confederation, cantons and companies and avoid the enforcement difficulties abroad, it drew up an indirect counter-proposal. In the spring session, parliament approved the counter-proposal after contentious debates. Initially, the Federal Council wanted to refrain from regulating a ban on geoblocking, but the National Council ultimately prevailed.
Prohibition of geo-blocking for non-discriminatory shopping in online trade
The adopted regulation of the National Council provides for a ban on private geo-blocking in the Unfair Competition Act (UCA) in order to fundamentally guarantee non-discriminatory shopping in online commerce. Geoblocking is the term used to describe measures by companies that restrict access to their online offer on the basis of residence or place of establishment. The adjective “private” serves to distinguish it from state-ordered geoblocking measures, such as those expressly provided for in Art. 86 of the Gaming Act.
The so-called EU Geoblocking Regulation served as a template for the drafting of the new provision under Art. 3a revUWG. The new provision states that in free trade, without objective justification, customers in Switzerland may not be discriminated against on the basis of nationality, place of residence or establishment, the registered office of the payment service provider or the place of issue of their payment instrument
- discriminates in price or other payment terms; or
- restricts or blocks access to a website; or
- redirected to another website without his consent.
In this respect, this regulation merely prohibits the different treatment of offers to customers in Switzerland. However, there is no obligation to deliver to Switzerland. In Art. 3a para. 2 revUWG, the legislator also provides for numerous exceptions to the prohibition of geo-blocking, for example in the case of services in the financial sector, public transport or services of a non-economic nature of general interest.
In this context, the UWG regulation refrains from criminal prosecution and sanctions. Thus, the enforcement of the ban on geo-blocking will only take place through civil law.
Prohibition of abuse also for companies with relative market power
Next, the revision of the Cartel Act (Cartel Act) provides that the scope of anti-competitive behaviour of market-dominant companies will be extended to companies with relative market power.
In this context, a company is to be considered as having relative market power if other companies are dependent on it in such a way that there are no sufficient and reasonable possibilities for them to switch to other companies for procurement or sales. The provision in Art. 4 para. 2bis RevKG thus only covers companies, as only such companies can be dependent in the sense of the proposed regulation. Accordingly, consumers and the public sector are not covered, unless they are considered to be enterprises in individual cases.
As a result, the scope of application of Art. 7 CO and the companies covered by it is greatly expanded, whereas the legal uncertainty as to whether a company holds a dominant position according to the legal definition of Art. 4 para. 2 CO is eliminated.
Here, too, the legislator refrains from imposing criminal sanctions. However, the relatively market-dominant companies are threatened with the risk of civil proceedings and thus damages payments.
New element of abuse under Art. 7 para. 2 lit. g revKG
Finally, Art. 7 para. 2 lit. g RevKG introduces a further element of abuse. According to this, suppliers behave unlawfully if, by abusing their position in the market, they prevent customers in Switzerland from purchasing goods or services abroad at prices that are not in line with local market prices and conditions that are customary in the industry. Here, too, the aim is to prevent customers in Switzerland from being discriminated against when purchasing abroad.
Conclusion and Outlook
The main demands of the initiators were heard in the counter-proposal that was passed. This is the first time that private geo-blocking has been banned in Switzerland and the ongoing discussion about the significance of relative market power has come to an end. It remains to be seen whether the regulation on geoblocking will one day find its way into an e-commerce law. Overall, the adoption represents an important step in the fight against the “high price island Switzerland”.