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Swisscom: Complaint against Weko approved by the Federal Court – News

  • The Federal Court has approved a complaint by the telecommunications provider Swisscom against a decision by the Competition Commission (Comco).
  • Comco fined Swisscom over 7 million francs in 2015 for violating antitrust law in a postal tender.
  • The highest court overturned a ruling by the Federal Administrative Court, which had largely confirmed the Comco decision.

As can be seen from the Federal Court ruling, Swisscom had a dominant market position when it won the contract for a post office network.

No inappropriateness in price

However, it did not impose unreasonable prices on either its competitor Sunrise or the Post Office. In both cases the element of coercion was missing. According to the Federal Court, Swisscom behaved correctly when setting prices for wholesale products on which Sunrise was dependent. In addition, it has not been proven that the prices were unreasonable or grossly excessive.

At the post office, the hammer price was the result of negotiations and was therefore not set unilaterally by Swisscom. Apart from that, the Federal Court found that the element of inappropriateness was missing, as the hammer price and Swisscom’s profit margin could not be considered excessive. Ultimately, there was no abusive behavior on the part of Swisscom in the sense of a margin squeeze against Sunrise.

Weko had sued because of the cost-price squeeze

In 2008, the postal service put out a tender for the establishment and operation of a “wide area network” for its approximately 2,300 locations. Swisscom won the contract. The losing Sunrise filed a complaint with the Weko. The Comco came to the conclusion that Swisscom had violated the antitrust law by abusing its dominant market position.

Brightly lit Swisscom logo on wall

Legend:

A Swisscom branch in 2007

KEYSTONE/Ennio Leanza

Specifically, the Weko accused Swisscom of forcing unreasonable prices on Sunrise and the post office as well as a cost-price squeeze on Sunrise. The Comco imposed a fine of 7.9 million francs for this. The Federal Administrative Court rejected the main points of Swisscom’s complaint against it, but reduced the fine to 7.5 million francs.

With the cost-price squeeze, dominant companies reduce the profit margins of their competitors in a downstream market in which the competition sells their products.

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