Switzerland, known for its robust economy and competitive business landscape, has laid down digital law as a response to the market’s evolving needs. For consumers, businesses, online marketers, and legal professionals, staying informed and compliant is not just smart; it is essential for thriving in Switzerland’s competitive landscape. Join me on this journey as I highlight how stakeholders may navigate this legal landscape.

In this blog, I will unpack the Swiss Federal Act Against Unfair Competition of 1986, highlighting its key provisions and implications for businesses, online marketers, and legal professionals, and offer practical guidance for compliance.

Swiss Federal Act Against Unfair Competition of 1986

Enactment

Article 94 of the Swiss Federal Constitution empowers the Federal Parliament to oversee the sectors of commerce and industry to safeguard the country’s economic interests. Furthermore, Article 97 of the same constitution permits the Federal Parliament to implement strategies for consumer protection. In light of these mandates, in 1986, Swiss lawmakers introduced legislation to combat unfair competition, known subsequently as the Unfair Competition Act. This statute served as a successor to the Federal Act of 1943. Drawing upon the authority granted by Articles 95(1), 96, 97(1) and (2), and 122(1) of the Federal Constitution, and after reviewing the dispatch presented by the Federal Council on May 18, 1983, the Federal Assembly of the Swiss Confederation amended the UCA of 1986, in January 2022.

The aim of the Unfair Competition Act (UCA)

Article 1 of the Swiss UCA as amended states that the purpose of the Act is to guarantee fair and genuine competition in the interests of all concerned. The expression “all concerned” means that the act intends not only to protect competitors’ interests but also consumers and the public in general. Fairness and genuine competition aim together to foster environment of integrity and equitable playing field for businesses.

The definition of unfair competition

Article 2 of the UCA outlines a broad prohibition against unfair competition. Unfair and unlawful under Art. 2 of the UCA means any conduct or business practice that is misleading or which otherwise violates the principle of good faith such that it influences the relationship between competitors or between suppliers and customers. Article 2 also stipulates that individuals have the right to expect fair practices in the marketplace. This expectation of good faith is violated when an individual undermines these expectations. Similarly, an individual who ignores the rules of competition, jeopardizes the essential functions of competition, or threatens the expected results of competition is also violating the principle of good faith as outlined in Section 2.

Article 3 indicates certain conducts as unfair. Under Art. 3 of the UCA, unfair conducts includes, for example, disparaging competitors or their offerings, providing false information about their own or their business’s credentials, causing confusion in the marketplace, offering goods or services below cost to mislead about market capabilities, adding premiums to distort the value of an offer, using aggressive sales tactics, concealing important product or service information, mismanaging consumer credit information or agreements, misleading or denigrating comparative competition, deceptive bait-and-switch selling, undue influence, and the misuse of trade secrets.

Companies engaging in e-commerce are required to be transparent about their products and services, providing clear and comprehensive information to avoid any misunderstandings. Article 3, para s of the UCA specifically provides that entities engaging in electronic commerce are mandated to: clearly and comprehensively disclose their identity and contact details, including their email address; detail the various technical steps required to finalize a contract; supply suitable technological means for identifying and rectifying errors before an order is submitted; and promptly acknowledge the customer’s order through an email confirmation.

Enforcement and Sanctions

Under Article 9 UCA, victims of unfair competition can seek remedies, including injunctions, to prevent impending harm, obtain remedies for harm already incurred, and secure a declaration of illegality of the damage, especially if it continues to adversely affect them. Moreover, they can specifically require that corrections or the court’s decision be disclosed to external parties or be published. Furthermore, the Act entitles affected parties to pursue legal action under the Code of Obligations, seeking compensation for damages, emotional distress, and the surrender of any profits earned by the offender, as dictated by the rules concerning actions undertaken without proper authorization., damages, and the publication of judgment.

Article 23 provides that anyone deliberately engaging in unfair competition, as described in the Act may face up to three years of imprisonment or a fine, if a complaint is filed. Additionally, individuals entitled under Article 9 can initiate a criminal complaint.

Case Law

The Federal Court applied the Unfair Competition Act (UCA) to a journalist in Bernina case (ATF 117 IV 193; JdT I 1378), decided in 1991. A Swiss German local newspaper published a critical article about Bernina sewing machines in 1988, featuring a headline that read: “Bernina sews technically backwards.” The article included comments from a specialist in sewing machines, who was also a representative for Elna and Pfaff, Bernina’s competitors. One notable statement was that “the new Bernina machines are already outdated when they appear on the market.” The court concluded that this statement was false, thus constituting an unfair statement under the 1986 UCA.

There have been subsequent cases where UCA was applied. Among them  is a case decided in January 1998 (ATF 124 III 72)  featuring a company marketing a branded medication (Contra-Schmerz) that initiated legal proceedings against Swiss TV. The lawsuit was based on the broadcast of negative information specifically about this drug, which created the erroneous perception that Contra-Schmerz brand was the only one implicated, when in fact  the adverse information also concerned comparable drugs  of other brands , made of same substance. The court held that the press could not criticize one drug and fail to clearly mention that other drugs present similar dangers. The Federal Court insisted that even if the press has a duty to inform the public and warn consumers against health hazards, it is not relieved from a duty of journalistic care and prudence in that the press must avoid discriminating against certain competitors.

Implications for Different Stakeholders

The UCA is a cornerstone of Swiss commercial law, designed to ensure fair play in the marketplace by prohibiting practices that are deceptive, misleading, or unjustifiably impede competition. Understanding this law is crucial for businesses (regardless of size), marketing companies, legal professionals, and consumers, as it shapes the contours of permissible commercial behavior in Switzerland.

1. Businesses: For businesses, compliance with the UCA is non-negotiable. Understanding and adhering to its provisions can prevent legal repercussions from potential victims, protect reputation, and enhance consumer trust.
2. Legal Professionals: Legal professionals play a critical role in advising businesses on UCA compliance, representing clients in disputes, and staying abreast of evolving jurisprudence in this area.
3. Online Marketers: With digital marketing tactics under scrutiny, it is vital to ensure all online promotions, content marketing, and data handling are legitimate.

Navigating Compliance: Tips and Tricks

1. Transparency: Ensure all advertising and marketing materials are clear, truthful, and not misleading.
2. Educate Your Team: Make sure everyone, from sales to social media managers, understands what the Act permits.
3. Stay Updated: Laws evolve, so keep an eye on any changes to the Act that might affect your business.
4. Due Diligence: Regularly review business practices for compliance with the UCA.
5. Seek Legal Advice: When in doubt, consult a legal professional familiar with Swiss law to avoid potential pitfalls.

Conclusion

The Swiss Federal Act Against Unfair Competition is a pivotal law ensuring that business practices are conducted fairly, promoting a healthy competitive environment. Adhering to the act’s provisions, businesses can avoid legal pitfalls, build consumer trust, and contribute to a vibrant market economy. For businesses, marketing companies, and legal professionals alike, understanding and respecting the UCA is paramount for navigating the Swiss market successfully.

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