May 10, 2013 6:11 pm

Switzerland and EU antitrust cooperation agreement set for 17 May signing

This article is provided to FT.com readers by PaRR (Policy and Regulatory Report)— a newly launched product of The Mergermarket Group providing proprietary intelligence and research on competition law and sector-specific regulatory changes around the world. www.parr-global.com

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* Agreement unlikely to come into force until late 2013 at earliest

* Could be applied to on-going investigations, but not to documents already on the file

* The Swiss freight forwarding investigation would have been affected

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The second generation antitrust cooperation agreement between the EU and Switzerland is set to be signed on 17 May, a person familiar with the matter has told PaRR. But the Swiss chambers are unlikely to ratify the agreement before late 2013 or more likely 2014, the person continued.

Similarly, European Parliament (EP) consent process normally takes six months from signing, a source at the EP indicated.

According to two people familiar with the matter, once in force the agreement would allow the competition authorities to exchange information in on-going investigations and not just in new, subsequent cases. But the second person specified that it was unlikely that confidential documents obtained prior to the entering into force of the agreement could be shared.

The agreement, negotiated by the European Commission (EC) and published in early June 2012, will allow, subject to conditions, the Swiss Competition Commission (COMCO) and the EC’s Directorate General for Competition to share confidential information obtained, for example, in dawn raids.

The agreement is known as “second generation” cooperation agreement because, unlike with existing agreements, it would allow the authorities to exchange confidential information without needing waivers from the parties. It is the first “second generation” agreement to be negotiated by the EC.

As previously reported by PaRR, competition lawyers have described the agreement to this news service as “far-reaching” and “revolutionary”.

Freight forwarding cartel probe

The Swiss freight forwarding cartel case is an example of a case that would have be handled differently under the new agreement, Rafael Corazza, Director of the Secretariat of COMCO, recently told PaRR.

In March 2012, the EC fined 14 freight forwarders a total of EUR 169m for price-fixing. Almost a year later, in February 2013, COMCO imposed a fine of around EUR 5m on four freight forwarders.

“Such an agreement would have helped with the freight forwarders cartel case because it was the same cartel being investigated in the EU and Switzerland,” he said. “But the authorities could not exchange information, and instead had to carry out separate investigations”

Under the agreement, both COMCO and DG Comp must both be investigating a matter in order to share confidential information related to it.

COMCO and DG Comp are currently both investigating alleged collusion relating to the London Interbank Offered Rate (LIBOR), Euro Interbank Offered Rate (EURIBOR) and Tokyo Interbank Offered Rate (TIBOR).

However, COMCO is not investigating other big cartels probed by the EC in the autoparts, optical disk drives and smart cards industries, according to the second person.

In July 2012, PaRR reported that the pending cooperation agreement was unlikely to accelerate the Swiss rates probe.

The first person predicted that the number of exchanges would be in the region of one or two per year rather than 10. Exchanging confidential information would not be automatic, he added.

The second person agreed that it would be a rare occurrence for the authorities to exchange confidential materials.

But the agreement will allow the two competition authorities to share information, without necessarily exchanging confidential documents, in the early stages of proceedings. “The plan is going forward to exchange information on preparatory steps to antitrust investigations, including on dawn raids and leniency filings,” Corazza said.

Nonetheless, the first person stressed that the agreement dictates “best endeavours, but does not oblige the authorities to cooperate.”

The first person predicted that the agreement would be signed in Brussels on 17 May by the Swiss Minister for Economic Affairs, Education and Research, the European Commissioner for Competition, Joaquin Almunia, and a representative of the rotating EU Presidency, currently Ireland.

On 22 April 2013, the EU Council approved the decision on the signing of the agreement with Switzerland. Once the agreement has been signed, the Council must seek the approval of the EP before adopting the agreement definitively.

The consent procedure, which was introduced by the Lisbon Treaty under Article 218(5)(B) TFEU, usually takes six months, according to the EP source. But the process can be speeded up or slowed down depending on the political agenda.

In Switzerland, once the agreement has been signed, the Swiss Federal government will put it before the Swiss parliaments for debate.

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