TerraLex Cross-Border Guide to Pre-Merger Notification Guide

Yes, if certain conditions are fulfilled (see section 4 below).

If it is not clear which details of a combination have to be notified or whether a combination reaches the notification threshold at all, the parties can make a preliminary request to the office of the Swiss Competition Commission to avoid losing time or to eliminate the risk of a post-closing challenge.

The Federal Act on Cartels and Other Restraints of Competition applies to private or public enterprises which are parties to cartels or to other agreements affecting competition, which exercise market power or which participate in combinations of enterprises. Combinations of enterprises are the merger of two or more enterprises previously independent of each other and any transaction, in particular the acquisition of a participation or the conclusion of an agreement, by which one or more enterprises acquire direct or indirect control of one or more previously independent enterprises or parts thereof.

A combination shall be notified to the Competition Commission if during the last business year preceding the combination the participating companies have reached: - an aggregate turnover of at least CHF 2 billion (approximately US$ 2.,03 17 billion, as of January March 1, 202219, or

• an aggregate turnover of at least CHF 500 million in Switzerland (approximately US$ 508 542.23 million, as of March 1, 2022January 1, 2019); and
• at least two of the participating companies have reached a turnover of at least CHF 100 million in Switzerland (approximately US$ 101,6108.45 million, as of March 1, 2022January 1, 2019) each.

For insurance company combinations, the annual gross premium income is relevant instead of the turnover, for bank combinations the gross revenues.

In addition, once the Competition Commission has established that a specific enterprise holds a dominant market position in a market in Switzerland, every merger transaction involving that enterprise in either the market in which it holds a dominant position or an adjacent market or a market upstream or downstream thereof is subject to the notification requirement, irrespective of any thresholds.

Joint ventures are subject to mandatory notification if at least two of the participating companies exceed the above-mentioned thresholds (see section 4 above) and if the joint venture acts as independent supplier or purchaser and can be considered as an independent business entity on a permanent basis (i.e. the joint venture performs all the functions of an autonomous economic entity on a lasting base).

However, the office of the Swiss Competition Commission has decided in a case that a merger is exempted from notification if the following two conditions are both met: firstly, the joint venture neither has activities in Switzerland nor generates any revenues in Switzerland, and secondly, neither such activities or revenues in Switzerland are planned nor to be expected in the future.

As noted in section 4 above.

The required information refers to the involved parties, to the intended combination (agreement), to the turnovers or the balance totals of the involved companies as well as their quotas related to Switzerland and the description of the markets concerned.

The notification shall contain the following information: company name, domicile, a brief description of the business activities of the enterprises as well as the alienators of the participations; a description of the intended combination, the relevant facts and circumstances, as well as the objectives that are pursued by the combination; the turnover, or the balance sheet total or gross premium income, as well as the portions attributable to Switzerland of the participating enterprises; information on all product markets and geographical markets affected by the combination, and in which the combined market share in Switzerland of two or more of the participating enterprises amounts to 20% or more or in which the market share in Switzerland of one of the participating enterprises amounts to 30 percent or more; furthermore a description of these markets indicating, at a minimum, the structure of distribution and demand, as well as the importance of research and development; as to these markets, the market shares of the participating enterprises for the last three years, and as far as known, the market shares of the three most important competitors and an explanation of the basis for the calculation of the market shares; as to the above mentioned markets, information concerning the enterprises that entered the market within the last five years and the enterprises which may enter the market within the next three years; and, if possible, the costs of market entry.

The notification has to be made in an official Swiss language (German, French or Italian). The enclosed documents can also be submitted in English.

The Swiss Competition Authority has specified its policy with regard to the markets affected by combinations on which one involved company has a market share of at least 30%. According to its revised practice, the Swiss Competition Authority requires the regular submission of detailed descriptions of relevant markets if another involved company is active on an upstream or downstream or neighboring market; or if it pursued such market entry during the past two years; or if it is the owner of intellectual property rights in the respective market; or if it is active on the affected functional market, but not on the geographical market. Therewith, the Swiss Competition Authority approximated its practice to the practice of the EU.

Yes. The parties of a combination can make a preliminary request to the office of the Swiss Competition Commission in order to agree upon the details of the notification content. The office can relieve the parties from the obligation to produce certain information or documents if it is of the opinion that such information is unnecessary for the examination of the case.

For the examination of such transaction, the Swiss Competition Commission shall levy a fee of CHF 100 to CHF 400 per hour expended. For the first stage, when the Swiss Competition Commission has to decide whether it will examine the combination, a flat fee of CHF 5,000 is imposed.

The parties have to notify the intended combination, which is regularly based on a concluded agreement, before the combination transaction is executed. A notification may be submitted at the earliest if all the necessary information to be submitted to the Competition Commission is available. As the Swiss Competition Commission has to decide within one month, whether the intended combination shall be examined and thereafter within four months whether the combination is prohibited or authorized, the notification has to be made at the latest five months before the date of execution of the intended combination.

The parties must not complete the transaction for one month after notifying the planned combination. If during this time, the Swiss Competition Commission does not inform the parties involved that it will conduct an examination, the parties can complete the transaction.

If the Competition Commission informs the parties within a month after the notification of the intended combination that it will conduct an examination, the Competition Commission has to decide whether the transaction may exceptionally be preliminarily consummated or whether it shall remain suspended.

The Competition Commission has to complete the examination of the intended combination within four months. If it does not render a decision about the admission of the transaction within this period of time, the combination has to be considered as admitted unless the Competition Commission states that it was prevented from conducting the examination due to circumstances attributable to the participating companies.

As noted in section 11 above, the Swiss Competition Commission has to render its decisions within certain time limits. In principle, these time limits cannot be extended. If the Commission does not decide within these time limits, the notified combination is allowed.

Within one month, the Competition Commission has to decide, whether to examine the planned combination. If the Competition Commission decides to open an examination, this examination has to be conducted within four months.

In practice, however, the time period to clear a transaction depends upon the complexity of the transaction and the relevant market conditions, whereby in particular the preparation before the notification to the Competition Commission may need considerable time.

The private law effects of a combination subject to notification shall be suspended, subject to expiry of the time period of one month and the authorization of the preliminary consummation. If the Competition Commission does not decide within the time period of four month, the combination shall be deemed to be authorized unless the Competition Commission states in an order that it was prevented from conducting the examination due to circumstances attributable to the participating enterprises. For so long, the private law effects of the combination remain suspended.

If a combination of enterprises subject to notification was executed without notification, the examination proceedings shall be opened ex officio. In this case, the time period of one month shall start to run as soon as the authorities are in possession of the information that a notification must contain.

If a prohibited combination is consummated or a consummated combination is prohibited, the participating enterprises shall be obligated to take the necessary measures for the restoration of effective competition. The Competition Commission may demand that the participating enterprises submit binding proposals on how effective competition shall be restored. If the Competition Commission accepts the proposals, it may decide in which way and within which period of time the participating enterprises shall implement the measures. If the Competition Commission does not receive the requested proposals, or if these are rejected, it may order the separation of the combined enterprises or assets, the termination of the controlling effects or other measures suitable for restoring effective competition.

Under administrative law, a company that executes a notifiable combination without notification can be charged with a fee up to the amount of CHF 1 million (approximately US $1.0161.084 million, as of March 1, 2022January 1, 2019).

Under penal law, anyone (especially the competent staff) who executes a notifiable combination without notification shall be punished with a fine of up to CHF 20,000 (approximately US$20,32021,689, as of March 1, 2022January 1, 2019).

In principal, in such cases there is no possibility of a post-closing challenge. But the Competition Commission may revoke an authorization or decide to examine a combination after the expiry of the time limit of one month for the decision about the examination if the parties have provided incorrect information, if the authorization of the combination was obtained fraudulently or if the participating enterprises seriously contravene an obligation connected with an authorization.

If the Competition Commission is of the opinion that a combination should not have been admitted after the admission of the combination was granted and if the parties have notified the intended combination correctly, the Commission cannot examine the combination again and interdict it subsequently. In other words, if the parties of a combination notify the intended combination correctly and execute the combination transaction to the extent it has been authorized, there is no risk of a post-closing challenge.

The Swiss Competition Commission is an official authority whose members are appointed by the Swiss Federal Counsel (the Swiss government), but they are independent of the government. The Swiss Competition Commission decides independently whether it shall examine an intended combination and whether it shall admit the examined combination.

If the parties do not agree with an order of the Swiss Competition Commission, they can appeal against it to the Federal Administrative Court and then to the Swiss Federal Court.

The competition authorities are subject to official secrecy. Their publications shall not disclose any business secrets of the involved companies. Even if third parties wish to inspect the case file, the business secrets are absolutely protected.

Swiss antitrust law interdicts a combination if it creates or reinforces a market dominant position that can eliminate effective competition (and no improvement of the competition conditions on other markets is reached). As a general guidance, combinations are likely to face challenge if only one sole company (or group) or a small number with a large relevant market share and several companies with minor market shares would remain.

It is advisable to contact the office of the Competition Commission to discuss matters which are likely to be relevant for the admission of the combination before submitting a notification. The office, however, cannot decide itself, but it has to prepare the cases for the Competition Commission, conduct investigations and take the procedural decisions. Furthermore, it submits motions to the Competition Commission and implements its decisions.

There are restrictions for foreigners who want to buy real estate property in Switzerland or shares of companies that invest in real estate properties in Switzerland. No authorization is required if the purchased real estate property serves commercial purposes only (e.g. a hotel business) and does not allow housing for individuals.

Furthermore, if a party or parties acting in concert are buying shares of a publicly listed company to the extent of three percent and more of the voting rights, they may have to notify such holding to the Swiss Stock Exchange (applicable thresholds: 3, 5, 10, 15, 20, 25, 33⅓, 50 and 66⅔ of the voting rights).

Furthermore, if a Swiss licensed bank is under a controlling foreign influence, certain additional licensing requirements have to be met. The requirements in case of a controlling foreign influence in a Swiss bank are as follows:

• the country of residence of the qualified foreign investor in the bank shall guarantee reciprocity (exceptions apply for WTO members);
• the corporate name of the foreign-controlled bank shall not suggest that it is Swiss-controlled;
• if the bank is part of a financial services group or a group being, among other things, engaged in the banking business, appropriate consolidated supervision by the foreign supervisor, which should be a recognized supervisor, must exist and be evidenced.