With the entry into force of the Competition Commission’s (COMCO) revised Verticals Notice (VertBek) on 1 January 2023, companies now have one year to adapt their distribution to the new regulations. However, in addition to making it easier to organise distribution systems, the new VertBek provides for stricter regulations than the EU when it comes to price recommendations.
Agreements between companies at different market levels, e.g. between manufacturers and retailers, are common and can increase efficiency within a production or distribution chain. However, agreements such as price maintenance and foreclosure of the Swiss market are fundamentally illegal. COMCO and the European Competition Authority indicate which types of behaviour are permitted and which are not. COMCO publishes the Vertical Block Exemption Notice (VertBek) including explanatory notes, while the EU publishes the Vertical Block Exemption Regulation including Vertical Guidelines (Vertical Block Exemption Regulation).
COMCO has now revised the VertBek 2010, which is based on the European Vertical Block Exemption Regulation of 2010. This was prompted by the fact that the EU revised its Vertical Block Exemption Regulation, including its Vertical Guidelines, in 2022. Consequently, COMCO adopted its new VertBek and its explanatory notes in its decision of 12 December 2022. This ensures that the same rules apply in the area of vertical agreements as in the EU. It also takes into account the latest Swiss case law and practice.
Based on the Vertical Block Exemption Regulation, companies are permitted more organisational options for their distribution systems. For example, Art. 4 VertBek now also allows for shared exclusive distribution, whereby the supplier can exclusively allocate a territory or customer group to up to five customers. The provisions in Art. 15 VertBek also provide for extended protection options for exclusive and selective distribution, according to which a combination of exclusive and selective distribution systems in different territories is now also possible. Active sales bans within a distribution system can now also be imposed on lower distribution levels such as the distributor’s customers.
The VertBek also provides for adjustments to dual distribution, which are based on the Vertical Block Exemption Regulation. If a supplier does not distribute its products exclusively via independent distributors, but also in parallel via its own distribution network, the exchange of information between the dual distribution partners now only falls within the scope of the VertBek pursuant to Art. 10 para. 3 VertBek if the exchange of information either directly concerns the implementation of the vertical competition agreement or is necessary to improve production or distribution. However, this privilege pursuant to Art. 10 para. 4 VertBek does not apply to hybrid online platforms, i.e. if the provider of the online intermediary services is a competitor on the relevant market for the sale of the intermediated goods or services.
According to Art. 15 lit. e VertBek, certain restrictions on online sales or online advertising are to be qualified as qualitatively serious restraints of competition, such as bans on entire types of online advertising channels such as search engines or price comparison services. On the other hand, restrictions on the use of certain online sales channels and dual pricing systems, whereby the buyer pays a different wholesale price for products sold online than for products sold offline, are generally unobjectionable.
Not yet provided for in the consultation draft of the explanatory notes, the revised explanatory notes to the VertBek now contain the relief for certain vertical non-compete obligations already introduced in the EU. According to Art. 15 let. g VertBek, non-compete obligations are considered qualitatively serious if their duration is indefinite or exceeds five years. However, non-compete obligations that can be tacitly extended beyond a period of five years are now unproblematic, provided that the buyer can effectively renegotiate or terminate the vertical agreement with a reasonable notice period and at reasonable cost.
While the European Vertical Block Exemption Regulation stipulates circumstances in which second-hand price maintenance appears to be permissible, COMCO is adhering to the stricter Swiss practice in the case of vertical price agreements. The revised VertBek thus also takes into account the Federal Supreme Court’s case law on recommended prices in the so-called Hors-Liste-Medikamente judgement. Second-hand price maintenance is a vertical competition agreement concerning the setting of minimum and fixed prices (see Art. 12 VertBek). Art. 4-9 of the explanatory notes to the VertBek explicitly state that even a “particularly intensive communication of the price recommendation” without additional pressure or incentives results in the necessary coordination for unauthorised resale price maintenance. In particular, such coordination may already exist if, for example, price recommendations from suppliers are repeatedly transmitted electronically to the cash register systems of retailers. The requirements for unauthorised second-hand price fixing are therefore set low by COMCO. The stricter practice compared to the EU is probably due to the fact that Switzerland has always been considered a high-price island and therefore price agreements can have a serious impact on the Swiss domestic market.
Finally, the revised VertBek contains several similarities to the new EU regulations, but there are also some special Swiss features that need to be taken into account. As a result, contracts with an impact on the Swiss domestic market will also have to comply with the stricter Swiss rules in future. Conformity with European law is not sufficient for this. We therefore advise companies to review their contracts in good time during the one-year transition period and adapt them to the new regulations.
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