New Approach in Competition Policy: First Examination of Relative Market Power, Limitations and Challenges

For the first time, the Competition Commission (Weko) has examined whether a company is abusing its relative market power. This decision demonstrates that the new instrument may not produce miraculous results. Switzerland, known as the high-price island, consistently faces dissatisfaction with the higher costs of goods and services compared to neighboring countries. A few years ago, parliament responded to public concern by amending antitrust laws 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 the beginning of 2022. This is a new approach in competition policy that focuses on protecting individual market participants rather than competition as a whole. Companies can now seek assistance from the Competition Commission (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 the 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 the German company Fresenius Kabi over tube feeding formula. The Competition Commission 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.

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