Swiss Federal Supreme Court Narrows The Scope Of The Agency Privilege

• Published date: 17 May 2022
• Subject Matter: Corporate/Commercial Law, Anti-trust/Competition Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Antitrust, EU Competition , Trials & Appeals & Compensation, Privilege
• Law Firm: Lenz & Staehelin
• Author: Mr Beno't Merkt, Sevan Antreasyan, Marcel Meinhardt and Astrid Waser

The Federal Supreme Court published its judgment regarding Les Editions Flammarion SA in the book market case and excludes the application of the agency privilege to exclusivity clauses partitioning the Swiss market.

Investigation of the French-language book market

Following an investigation opened by the Competition Commission ("Comco") in 2007, Les Editions Flammarion SA ("Flammarion") was sanctioned in 2013 along with 12 other distributors and diffusers. The Comco held that the nature of the commercial relationship between Flammarion and its partner for distributing French-language books on the Swiss market should be qualified as a distribution agreement, subject to sanction, and not as an agency contract, which was confirmed by the Federal Administrative Court in its decision of 30 October 2019.

On 31 March 2022, the Federal Supreme Court published its decision 2C_44/2020 confirming the sanction imposed on Flammarion for obstructing parallel imports under Art. 5 para. 4 CartA.

The qualification of the agency contract or competition agreements within the meaning of Art. 2 para. 1 and 4 para. 1 CartA

In its appeal, Flammarion referred in particular to the content of the European Guidelines on Vertical Restraints (OJ C 130/1 of 19 May 2010), according to which, in the case of an agency relationship, limitations on the territory, customers or price or conditions on or to which the agent may sell the goods or services concerned are not subject to competition rules, the Comco also applying such "agency privilege" to Swiss law by analogy with European law. Therefore, according to Flammarion, the relationship between Flammarion and its agent did not constitute an agreement within the meaning of Art. 4 para. 1 CartA.

The Federal Supreme Court summarized the characteristics of the economic relationship between Flammarion and its contractual partner, recognizing in fine that there were elements in favor of a qualification as an agency agreement, confirming in particular that the agent never became the owner of the books diffused by Flammarion and did not bear commercial risk. However, the Federal Supreme Court did not finally ruled on the qualification of the commercial relationship, considering it unnecessary to conclude that the practices were unlawful.

Agency privilege does not apply to exclusivity clauses partitioning the Swiss market

Setting aside the reasoning of the Federal Administrative Court and the practice of the Comco so far, and relying in...