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22 November 2011, Jean-Pierre (67) replaced Bringhen to this day. At 8 am, eight investigators and two armed police officers suddenly arrived at the Bringhen AG office in Visp VS. Also being searched are the offices of four other sanitary goods wholesalers and the industry’s Swiss Wholesalers Association. Suspicion: illegal price fixing.
Jean-Pierre Bringhen is detained and interrogated until 9 pm. He is being pressured to confess. He refuses. He is not aware of any errors. Then one of the officers enthusiastically emerges, holding a file labeled “Cartel.” But joy is early. It is the catalog of the hygienic product of the same name. This is how Bringhen recalls the day in question at the meeting.
Million dollar mortgage on heirs?
In the summer of 2015, the Competition Commission (Comco) made its decision: The companies had agreed on price-determining factors such as gross prices, discounts, discount categories or transport costs. The penalty is very severe: Eight companies and associations were ordered to pay 80 million francs. Those affected will not let it stay that way. They all went to the Federal Administrative Court, where the cases have been pending ever since. There are several hundred pages in the dispute, filling entire folders.
The million-dollar fine hangs over Bringhen AG like the sword of Damocles. “I can’t arrange my inheritance if I don’t know whether I will leave such a mortgage to the next generation,” says the 67-year-old actor. “If Comco’s decision is final, I may have to lay off a large number of my employees,” he says in horror. The company employs approximately 400 people in 15 locations across Switzerland.
Wholesalers mostly offer the same products. That’s why they agreed on a standard catalog with gross prices, says Bringhen. “It would cost a company around 300,000 francs to print its own catalogue.”
Hygiene wholesalers claim that they make discounts on these prices and that this creates competition. As a document shows, Comco approved this system with a preliminary study in 2006. The raid takes place five years later.
Bringhen calls for adjustments to antitrust law
What particularly angered Bringhen: “Comco has completely reversed the burden of proof. It was not checked whether the companies ultimately offered different prices. The existence of uniform gross prices is sufficient evidence.” Bringhen is calling for changes to antitrust law. “Comco must clearly demonstrate that the agreements were actually implemented and had a detrimental effect. “With the current Comco practice, any coordination through associations poses a danger for SMEs,” he said.
Bringhen wants to prove his innocence and prepares two reports. Reiner Eichenberger (62), economics professor at the University of Freiburg, took a closer look at the plumbing wholesalers market in 2014. It concludes that Comco “has not provided convincing and understandable (…) justifications for the anti-competitive behavior of hygiene wholesalers.” He finds it contradictory that Comco analyzes price differences based on gross prices rather than net prices.
The Economic Affairs and Taxes Committee of the Council of States (WAK) will discuss the partial revision of the Cartel Law again on Monday. For many parliamentarians, the powers of the Competition Commission (Comco) go too far. They want to turn back time. Until 2017.
At that time, Comco adapted its practice to a landmark decision of the Federal Court in which rigid agreements such as prices or sales areas were generally considered important. According to the Federal Council’s proposal, this tightening can now be reversed.
Accordingly, Comco will also need to examine quantitative criteria such as market shares of companies in strict agreement situations in the future.
Frank Stüssi (52), deputy director of Comco, believes that the Bundestag’s offer is balanced. But there are also efforts to turn back the clock in a significant way. “But to the extent that Comco must prove the concrete harmful effects of the cartels on effective competition, antitrust law will become a blunt knife and we will be back in the 1990s.” Today, Comco basically needs to disclose its damage potential.
Stüssi gives an example: ComCo has uncovered agreements covering more than 1,000 construction projects in the canton of Grisons. Many construction companies have admitted that the purpose of these agreements is to increase prices. However, there is no data on what prices will be offered if the companies do not reach an agreement. If ComCo had to prove its effectiveness, it could not ban the harmful agreement.
Comco was able to demonstrate the concrete effects of the 20 decisions it made in Ticino in only one case. There, about 18 road construction companies have agreed on nearly 200 construction projects over the years. “After the end of the cartel, bid prices dropped by over 30 percent,” says Stüssi.
The Economic Affairs and Taxes Committee of the Council of States (WAK) will discuss the partial revision of the Cartel Law again on Monday. For many parliamentarians, the powers of the Competition Commission (Comco) go too far. They want to turn back time. Until 2017.
At that time, Comco adapted its practice to a landmark decision of the Federal Court in which rigid agreements such as prices or sales areas were generally considered important. According to the Federal Council’s proposal, this tightening can now be reversed.
Accordingly, Comco will also need to examine quantitative criteria such as market shares of companies in strict agreement situations in the future.
Frank Stüssi (52), deputy director of Comco, believes that the Bundestag’s offer is balanced. But there are also efforts to turn back the clock in a significant way. “But to the extent that Comco must prove the concrete harmful effects of the cartels on effective competition, antitrust law will become a blunt knife and we will be back in the 1990s.” Today, Comco basically needs to disclose its damage potential.
Stüssi gives an example: ComCo has uncovered agreements covering more than 1,000 construction projects in the canton of Grisons. Many construction companies have admitted that the purpose of these agreements is to increase prices. However, there is no data on what prices will be offered if the companies do not reach an agreement. If ComCo had to prove its effectiveness, it could not ban the harmful agreement.
Comco was able to demonstrate the concrete effects of the 20 decisions it made in Ticino in only one case. There, about 18 road construction companies have agreed on nearly 200 construction projects over the years. “After the end of the cartel, bid prices dropped by over 30 percent,” says Stüssi.
“It is not possible to eliminate the burden of proof”
Two years later, ETH Zurich economics professor emeritus Bernhard Plattner (73) is going through the filing cabinets at Bringhen AG. “Comco never examined the Bringhen AG database and did not draw conclusions based on untrue and therefore unsubstantiated allegations,” he said.
Authorities oppose this. “A look at Comco’s 700-page order shows that the agreements and their implementation can be proven. “There was no reversal of the burden of proof,” emphasizes Frank Stüssi (52), deputy director of Comco. For example, companies agreed to convert euro prices of products to a fictitious rate of 1.60 euros instead of the current rate of 1.20 euros, resulting in prices in Switzerland being correspondingly more expensive.
“No excessive profit”
Bringhen says that’s the point. “Catalog prices, including the euro exchange rate, are ultimately gross prices and play no role in actual pricing for end customers.” That’s why he can’t do anything with Comco’s argument: “The report also states that it cannot be proven that the companies are making excessive profits. This does not add up.”
This Monday Bringhen will be heard by the Economic Affairs and Taxes Commission (Wak) of the Council of States in Bern. He wants to campaign for compliance with the current Comco practice there.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
