Federal Administrative Court rules on abuse of dominant position.
The Federal Administrative Court recently upheld a Sfr7 million fine issued by the Swiss Competition Commission in 2010 against SIX Group regarding the processing of credit and debit card payments. The decision concerned SIX's abuse of its dominant market position pursuant to Article 7 of the Cartel Act (similar to Article 102 of the Treaty on the Functioning of the European Union).
This long-awaited decision dealt with numerous legal questions which are relevant for dominance cases; however, it is not yet final, as an appeal is pending before the Federal Supreme Court.
The decision concerned 'dynamic currency conversion' (DCC), a service that enables cardholders abroad to choose their home currency instead of the local currency when making payments.
SIX had been an active provider of payment transaction services and dynamic currency conversion, as well as payment card terminals. In early 2005 it launched payment terminals on the market that offered DCC.
DCC services are not part of the electronic funds transfer (EFT) point of sale standard of 2000 (ie, the specification standard for processing and setting up EFT transaction payments in cashless payment transactions). Card acquirers and terminal manufacturers therefore depend on the disclosure of interface information in order to connect their terminals, which also offer DCC, to the SIX processing platform.
Between early 2005 and early 2007, SIX refused to disclose this information and therefore merchants using SIX payment card terminals had to use the DCC function.
According to the Federal Administrative Court, SIX's refusal to disclose interface information qualified as abusive conduct by a dominant undertaking (ie, a refusal to deal and the tying of services).
Whether the Cartel Act applied was initially disputed. According to Article 3(2) of the act, it does not apply to effects on competition that result exclusively from IP laws. However, the Federal Administrative Court confirmed a restrictive interpretation of the provision, such that it must be understood not as a reservation of application, but rather as a means of ensuring that the objectives of IP law are not neglected in a substantive examination.
With regard to examinations of abusive conduct, two aspects are of particular interest:
the comments on the assessment of interface information under the Cartel Act; and
the comments on the distortion of competition.
As regards the interface information, the Federal Administrative Court concluded that a copyright on interfaces may exist in individual cases, subject to the condition that the interface in question qualifies as a protected work under the Copyright Act. For this purpose, the interface must exhibit sufficient creative individuality; however, according to the court, this is usually not the case (such as in the present case).
As regards the abusive conduct and distortion of competition, a theory of harm is not required once one of the legal examples set out in Article 7 of the Cartel Act is fulfilled. Further, regarding the abusive conduct at hand, the Cartel Act does not contain a de minimis threshold; small effects on competition may also be sufficient.
The Federal Administrative Court's decision contains a series of new elements regarding competition law investigations and assessments of abusive conduct. In particular, it deals with questions at the intersection of antitrust and IP law.
The decision also corresponds with a growing trend towards a more formalistic pratice – observed over the past few years – from the actual examination of effects on competition to a formal examination of the abuse. An effect on competition may no longer be necessary in order to prove certain abuses (eg, a refusal to deal). This brings the Federal Administrative Court's practice on the abuse of a dominant market position closer to that of unlawful agreements affecting competition.
Supporting its decision in Gaba, the court held that under certain circumstances it is not necessary to examine the actual effects of an agreement. However, the difference in the present case was that the court's assessment was based on the individual circumstances of the case and related to a refusal to deal. Therefore, the decision cannot be applied to abuse cases in general and should be read in the context of the specific conduct examined by the Federal Administrative Court.
Further, as seen in Gaba, the court emphasised that, in principle, it follows EU competition law and practice but deviates from these individual cases if it leads to a broader application of competition law.
It remains to be seen whether the Federal Supreme Court will follow the Federal Administrative Court's increasingly formalistic practice with regard to the abuse of a dominant position.