Antitrust Limits on Shareholder Agreements and Non-Compete Clauses

In a series of judgements handed down in January and February, the Federal Administrative Court (FAC) has clarified a key issue for joint ventures (JVs): when do non-compete clauses between non-controlling shareholders constitute territorial agreements? The rulings serve as a reminder to exercise caution when structuring cooperation arrangements, as even contracts dating back decades can lead to antitrust sanctions.

Backround

In the Belagswerke Bern investigation, the Competition Commission (COMCO) imposed sanctions on several construction companies that held shares in BERAG Belagslieferwerk Rubigen AG. A memorandum of association dating from 1976 prohibited the shareholders from operating their own paving plants or acquiring a stake in such plants within BERAG’s catchment area. The companies concerned contested the decision before the FAC, arguing, amongst other things, that the clauses were no longer actively enforced and that the non-competition clause was permissible under the law of obligations.

Judgment of the FAC

The FAC fully upheld the COMCO’s decision and confirmed the sanctions. It held that the non-competition clauses constituted hard territorial agreements within the meaning of Article 5(3)(c) of the Competition Act (KG), which significantly restrict competition. The argument that these were non-competition clauses permissible under the law of obligations within the meaning of Article 536 of the Swiss Code of Obligations (OR) did not preclude the application of the KG.

The FAC further held that the right to impose sanctions is not time-barred as long as the contractual relationship formally continues, even if the clauses were not actively enforced.

Key takeaways

The judgement underscores the strict stance taken by the Competition Commission (COMCO) and the courts regarding horizontal agreements. Non-competition clauses in shareholder agreements are problematic under competition law if they are not justified by a genuine situation of control. Existing agreements concerning joint ventures should also be reviewed in light of this.

The judgements may be appealed to the Federal Supreme Court (in German, French and Italian only).

The decisions can be accessed here under case numbers B-1425/2022, B-992/2022, B-1369/2022, B-1390/2022 and B-1391/2022.