Assessing Relative Market Power: A New Approach in Swiss Competition Policy, But Is It Enough to Address High Prices?

In a significant step forward for competition policy in Switzerland, the Competition Commission (Weko) has for the first time examined whether a company is abusing its relative market power. This decision underscores the limitations of the new instrument and highlights the need for a more comprehensive approach to addressing high prices in certain sectors.

For years, Switzerland has faced dissatisfaction with higher costs of goods and services compared to neighboring countries. In response to public concern, parliament amended antitrust laws in 2019 to prevent foreign companies from charging excessive prices in Switzerland. The rules also apply to companies within Switzerland. The provisions on relative market power have been in effect since January 2022, marking a new approach in competition policy that focuses on protecting individual market participants rather than competition as a whole.

Under this new approach, companies can seek assistance from Weko if they believe they are being unfairly treated by suppliers or buyers. A company is considered to have relative market power if its business partner is deemed dependent with no reasonable alternative. Each case is quantitatively assessed by Weko to determine if this is true. One of the first cases involved a healthcare sector dispute between Galexis, a wholesaler in the Galenica Group, and Fresenius Kabi over tube feeding formula. Weko found that Galexis was not dependent on Fresenius Kabi and that there was no abuse of market power. This decision highlights the limitations of the new rules on relative market power as it requires significant dependence on the part of the buyer and only minor price differences between Switzerland and other countries.

Critics argue that Switzerland’s high prices are mostly influenced by domestic factors rather than the actions of foreign companies. Sectors like food, energy, and construction show the largest price disparities with neighboring countries, indicating that the root causes of high prices lie within Switzerland itself. This suggests that addressing the issue of high prices will require a more comprehensive approach that goes beyond regulatory enforcement against foreign companies.

In conclusion, while Weko’s examination marks an important step forward for competition policy in Switzerland, it underscores