Competition watchdog hounded over "interests"

Walter Stoffel, Comco's president, admits that the situation needs reviewing Keystone

Pressure is mounting for a shake-up of the Federal Competition Commission (Comco) amid criticism that too many members have close ties to the economic community.

This content was published on September 22, 2006

Walter Stoffel, Comco's president, acknowledged to swissinfo that the body lacked credibility and needed to be looked at, but said there were strict rules in place to avoid potential conflicts of interest.

Concerns over the composition of Comco have circulated for several years but were thrust into the spotlight earlier this year by the Organisation for Economic Cooperation and Development (OECD).

In a report published in April, the OECD noted that "some so-called 'independent' members sit on the boards of several companies".

"Given the structure and conditions of membership, with a large minority of members representing interest groups and the possibility of members holding directorships, it seems difficult for Comco to guarantee full independence when taking decisions," said the OECD.

Seven of the commission's 15 members – all appointed by the government – sit on company boards or represent trade and industry interest groups.

One member, Klaus Hug, sits on the board of more than a dozen firms and organisations, including a casino group, telecoms giant Cablecom and the Swiss business federation, economiesuisse. He is also chairman of the foundation board of the Swiss Chocolate and Cocoa Industry.

Reform needed

The OECD report prompted a group of parliamentarians in May to demand government action to restructure the commission. But the response last month was vague in the extreme.

The government said any reform of the composition of Comco would require a change in the cartel law, which was revised in 2003.

Ministers pointed out that the law was currently under review and this might lead to the creation of a working group to examine the possibility of restructuring Comco. No timeframe was given.

Alexander Baumann, who raised the issue of reform in parliament, told swissinfo that at least this marked the semblance of a start towards tackling what he described as an "interests' club".

"Not good enough"

Under the cartel law, members of Comco must excuse themselves if there is a conflict of interest. The revision also introduced a requirement for members to declare their interests in a special register.

But Christian Bovet, vice-president of Switzerland's telecommunications watchdog, says this is not good enough.

"There has been a real problem on several occasions when independent members have had to withdraw because they were on the board of banks or companies active in retail commerce," said Bovet, a leading Swiss authority on competition law.

"I would like to stress that several members today are fully independent and we are starting to see a shift, taking into account the OECD recommendations. But there are still too many members whose salary or part of their income depends on outside interests."

Bovet added that the government's response last month had not been "fully satisfactory". However, he did point out that during consultations on the cartel law of 2003, the government had proposed a trimmed down Comco comprising seven members and eliminating representatives of interest groups. This was blocked by political parties.

Question marks

Walter Stoffel, the commission's president, agreed that the composition of the body had raised question marks among the public in the past and needed to be looked at.

He insisted that this did not create problems for the commission's daily work because of the strict rules on conflicts of interest. But Stoffel acknowledged that the situation often arose when several members were unable to sit in on cases.

"I think the main problem is one of the credibility that we have in certain areas within Switzerland – not in the area of the economy but among the wider public and also abroad, which clearly came out in the OECD report," he said.

"So together with the procedural reform, which is necessary, I think this whole question should be thought over by the legislator."

swissinfo, Adam Beaumont in Geneva

In brief

The Competition Commission consists of 15 members who are elected by the seven-strong cabinet.

The presidency is made up of three members. The federal cartel law demands that the majority of the members of the Competition Commission are independent experts – usually law and economics professors. Deputies of business associations and consumer organisations take the other seats.

Comco is supported by a full-time secretariat, which examines suspected cartels and prepares decisions for the commission.

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Comco members with interests:

1. Roger Zäch – board member of five firms, including Denner, Switzerland's third-largest retailer.
2. Rudolf Horber – executive committee member of the Swiss Association of Small- and Medium-Sized Enterprises.
3. Klaus Hug – board member of more than a dozen firms and organisations, including a casino group, telecoms giant Cablecom and the Swiss business federation, economiesuisse. Hug is also a committee member of the Swiss Lubricant Industry and the Swiss Central Office for the Import of Liquid Fuels.
4. Martial Pasquier – board member of two firms, plus a committee member of the Swiss Marketing Association.
5. Daniel Lampart – board member of a Zurich publishing group.
6. Jürg Niklaus – board member of one firm and lawyer for the Swiss Farmers Association.
7. Thomas Pletscher – committee member of economiesuisse.

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