Switzerland: Swiss Competition Report - Reporting Period: October 03 – December 03

On October 21, 2003, the FCC decided to conduct an in-depth investigation into the acquisition by Berner Zeitung AG of the joint control over 20 Minuten (Schweiz) AG ("20 Minuten") (see 2003/3 report). On September 15, 2003, the FCC had authorized the takeover of 20 Minuten by Tamedia, and decided to conduct a new investigation into the participation of Berner Zeitung AG, based on new elements resulting from the plan of Espace Media Group ("Espace"), parent company of Berner Zeitung AG, to acquire a minority participation in Bund Verlag AG, Berner Zeitung AG's main competitor. Espace, respectively Berner Zeitung AG, already controls the daily newspapers with the largest distribution in the Bern suburbs, as well as a large range of the multimedia offers. The preliminary investigation showed signs that the participation of Berner Zeitung AG in 20 Minuten might create or strengthen a dominant position on the local and regional advertisement market as well as on the readers market in the Bern suburbs. The in-depth investigation will show whether the participation in question will in fact create or strengthen a position allowing Berner Zeitung AG to behave independently in respect of price fixing and commercial conditions.

On October 20, 2003, after an in-depth investigation, the FCC authorized, with conditions, the increase of the indirect participation of Ringier SA ("Ringier") in SA Le Temps (see 2003/3 report). As a result of the acquisition, Edipresse Publications SA ("Edipresse") and Ringier have equal shareholding in SA Le Nouveau Quotidien ERL SA ("SANQ"), which owns 82.6% of SA Le Temps. In order to ensure the independence of SA Le Temps from the now two major shareholders Edipresse and Ringier, the FCC maintained and extended the charges imposed at the time of the foundation of the newspaper Le Temps, in December 1997. First, the Chairman of the Board of SA Le Temps as well as the one of SANQ must be independent from Edipresse and Ringier. Second, any modification in the shareholding of Edipresse and Ringier will be subject to the approval of the FCC. Third, they must inform the FCC of any agreement between them in the range of medias in the French language, distributed in Switzerland.

On November 3, 2003, the FCC decided to authorize on a temporary basis as of January 1, 2004, the collaboration of Espace Media Groupe ("Espace") and Der Bund Verlag AG in relation to the newspaper "Der Bund". In connection with the planned acquisition by Espace of the joint control over Der Bund Verlag AG (see 2003/3 report), various collaborations regarding "Der Bund" are contemplated, including a joint publishing with the newspaper "Die Berner Zeitung" on the advertisement market and the takeover by Espace of the management and acquisition of the advertisement in question. The FCC took into consideration the losses of Der Bund Verlag AG and the advantage for a collaboration on the advertisement market to start beginning 2004. The FCC however rejected the other requests, pertaining to an anticipated participation of Espace in the share capital of Der Bund Verlag AG and the granting to Espace of a seat at the Board of Directors of Der Bund Verlag AG.

On October 6, 2003, the FCC closed the procedure against Swisscom, concluding that Swisscom did not infringe the amicable settlement, which it had made on May 6, 2002 with the FCC, relating to advertisements attached to invoices for telephone connection (see 2002/2 report). The advertisements were not mailed to customers of other service providers with the intent to cause their return to Swisscom, but rather to avoid that Swisscom customers switch over to another service provider. The FCC will now clarify whether further measures in relation to the amicable settlement are necessary to ensure competition neutrality of the invoices in question.

On November 5, 2003, the FCC opened an in-depth investigation against Swisscom Directories AG in relation to the market of address and phone directories. The preliminary investigation showed signs that Swisscom Directories AG might be abusing of its dominant position by providing the data necessary to the publication of directories and to the providing of related services to other directories editors under anticompetitive conditions. There are signs that Swisscom Directories AG provides the data, which is need for the directories, at prices and conditions that complicate or make impossible the creation of new directories, which would be in competition with "ETV" or other products based on "ETV", Swisscom Directories AG's own electronic directory.

On December 15, 2003, the FCC compelled Swisscom to give up its discount practice that allows its subsidiary Bluewin to benefit from cheaper prices for the use of the network than competing ADSL service providers. This decision confirms the provisional measures ordered by the FCC at the time of the opening of the investigation (see 2002/2 report). The FCC concluded that Swisscom enjoys a dominant position on the wholesale market for broadband Internet services. The use of the Swisscom network is the only possibility for independent Internet service providers to reach their clients everywhere in Switzerland. The discounts granted to Bluewin were discriminatory and not justified on economic grounds.

On October 20, 2003, the FCC closed its investigation, which it had opened against Migros on April 12, 2003, regarding a possible abuse of its dominant position in connection with BSE tests. The subject of the investigation was Migros' practice of indicating to its beef meat suppliers which laboratories were to perform the BSE tests and at what price. Due to Migros' strong position as a buyer, this practice had the effect of excluding from the market other laboratories for a long period of time. The FCC did not have to take any measures as Migros terminated the general agreement setting out the conditions for the carrying out of the BSE tests, with effect on January 31, 2004. Any laboratories agreed by the Federal Veterinary Office will now be allowed to submit their offers.

On November 3, 2003, the FCC opened a preliminary investigation in the field of old-age insurances. Mid-2003, four insurance companies (Winterthur Assurance, Zurich Assurance, Genevoise Assurance and Helvetia Patria) announced the same new conversion rate in the field of the optional old-age insurance. The FCC will investigate whether there are signs of an agreement between the companies as to the appropriate conversion rate.

On November 14, 2003, the FCC Secretariat closed its preliminary investigation, which it had opened on April 15, 2003 against private building insurers. The FCC found no sign of an agreement between private building insurers. The fact that the premium of private insurers are about 13% higher than those of state insurance institutions may be explained by other factors, such as the costs borne by private insurers, as opposed to state insurance institutions, for marketing and acquisition and for the remuneration of the venture capital.

On December 2, 2003, the FCC opened an investigation against Zurich Airport (Unique) following the reorganization by Unique of the Zurich airport area. The reorganization directly affects the service providers of Valet Parking, whose authorization has not been renewed by Unique. As a result, they were barred from offering their services on the Zurich airport parking area. Unique's behaviour may amount to an abuse of its dominant position. In order to guarantee the actual situation, the FCC ordered provisional measures.

On December 4, 2003, the FCC announced that the investigation opened on April 15, 2002 against TicketCorner in relation to the exclusivity provisions, which it included in its distribution agreements with event organizers showed that TicketCorner had abused of its dominant position. Under the exclusivity provisions in question, event organizers who wanted to contract with TicketCorner had to commit to distribute, for a certain period of time, all the tickets for all their events exclusively through the TicketCorner distribution network. The FCC has found that TicketCorner holds a dominant position on the ticket distribution network and that the exclusivity provisions constitute unfair business conditions, which hinder new competitors from entering or competing in the relevant market. Therefore, the FCC has prohibited TicketCorner from imposing exclusivity provisions in its distribution agreements.

On December 15, 2003, the FCC opened an investigation regarding a possible unlawful agreement on Interchange Fees for the MasterCard and Visa credit card networks. Investigations showed that, in Switzerland, acquirers (i.e., credit card companies which affiliate the traders) and issuers (i.e., companies issuing the credit cards) reach agreement to fix the "Domestic Interchange Fee", i.e. the fee applying – for MasterCard and Visa systems – to transactions within Switzerland. Since the level of the Domestic Interchange Fee influences the conditions for competition on the "acquiring" and "issuing" markets, the FCC will also examine these markets.