Sanction Against Bmw Ag for Restricting Direct and Parallel Imports

Sanction against BMW AG for restricting direct and parallel imports

The Swiss Federal Administrative Court (FAC) recently passed a new judgments on vertical agreements. The Court endorsed its previous Gaba case law and confirmed a sanction against BMW AG amounting to CHF 156 million for restricting direct and parallel imports.

According to the ComCo, BMW’s European Economic Area (EEA) dealer contracts contained export ban clauses which prohibited EEA dealers from selling new BMW and MINI branded vehicles to customers outside the EEA and therefore to Swiss customers. The Comco also found that BMW had foreclosed the Swiss market and prevented competitive pressure on end-selling prices of new BMW and MINI vehicles. Therefore, end customers in Switzerland were not able to benefit from the significant exchange rate advantages.

In May 2012, the Competition Commission (ComCo) imposed a fine amounting to CHF 156 million on BMW AG for restricting direct and parallel imports into Switzerland.

Firstly, the FAC stated that pursuant to the effects doctrine restrictions of competition committed outside Switzerland also fall into the geographic scope of the Swiss Federal Act on Cartels (CartA). Some of BMW's distribution agreements contained a clause prohibiting authorized dealers within the EEA from selling cars to customers outside this area. Because Switzerland is not part of the EEA, this restriction also applied to customers located in Switzerland. The ComCo considered that the Swiss market was affected by the restriction, and that the CartA was applicable according the CartA Art.2 al.2

Secondly, the FAC found that this export prohibition fell under Article 5(4) CA. Article 5(4) CA presumes that the restriction of passive sales into Switzerland eliminates effective competition. Switzerland is not an EEA member state; consequently, a prohibition to sell into countries outside the EEA restricts passive sales into Switzerland.

While the presumption of elimination of effective competition could be rebutted, the FAC held that the export prohibition would constitute an unlawful significant restriction of competition. In general, a restriction of competition has to be qualitatively and quantitatively significant to be unlawful. The FAC, however, argued that since a restriction of passive sales would presumptively eliminate effective competition, it would be deemed to restrict competition significantly (a maiore ad minus-argument) and there would be no need to show that the export prohibition would be quantitatively significant (for example due to the adherence rate, the market shares of the parties, the lack of interbrand competition etc.). Consequently, the export prohibition imposed by BMW would be unlawful

Based on this, the FAC concluded that the export bans in BMW’s EEA dealer contracts constitute a significant restriction of competition. The FAC confirmed the possibility of a justification based on economic efficiency grounds. However, BMW did not succeed in demonstrating such grounds in the case at hand.

On appeal, in its judgment of 13 November 2015 the FAC fully confirmed the fine imposed on BMW. With this judgment, the FAC fully confirmed its Gebro case law in which it had for the first time established the concept of per se restrictions in Switzerland.