Switzerland has an official price watchdog – someone who fights unfair prices that hurt consumers. Who is he, and where does he see potential for savings?This content was published on April 4, 2018 - 11:00
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Stefan Meierhans gets a lot of mail – about 2,500 letters or emails a year from concerned or angry consumers. He’s even received diapers.
That sounds horrid, but he’s so matter-of-fact when he says his office has “experienced everything” that I have to double-check. Used diapers?
“Oh, no. No, never, thank goodness,” he replies, shuddering and then chuckling at the idea. What he means is that people sometimes send him products purchased abroad to show the discrepancy in prices – often for the very same item, or at least of equal quality.
He goes on to explain why incontinence products are so expensive in Switzerland.
“The regulations here are too explicit. Only special shops can sell them, so the competition is limited and this results in higher prices,” Meierhans says, adding that there’s a systemic problem in terms of what Swiss health insurance companies will reimburse patients for, and what not.
Yet in the ten years that Meierhans has been in office – longer than any of his predecessors – he’s seen a significant drop in prices for domestic and imported consumer goods, partly thanks to the strong Swiss franc in relation to the euro and the dollar.
But there are many situations where consumers can’t shop around for the best deal. For example, which company provides train service from Zurich to Bern.
“In our constitution it says that when there is dominance on the market, and the price is not the result of an effective competition, the consumer has a right to be protected,” explains Meierhans. “My role is to protect the consumer when competition is not working.”
Though not quite an ivory tower, there’s a lot of white in the State Secretariat for Education, Research and InnovationExternal link building in Bern, which is also the home of the federal cost oversight officeExternal link – where the Swiss price watchdog leads a 17-member team.
Chatty and warm, 49-year-old Meierhans seems to enjoy having a visitor in his bright office, which is dominated by an enormous abstract painting in shades of green, blue and red. He pours us some sparkling Swiss mineral water from a green bottle with an Alpine ibex on it.
Asked about his first negative memories as a consumer, he recalls being disappointed as a child when his pocket money didn’t seem like enough to buy sweets. During his studies in Norway, he nicknamed the local convenience store the “round-the-clock-rip-off” shop.
These days, he raises an eyebrow at the price of organic food in Switzerland.
“Everything was organic decades ago. Now it’s always a special label and you have to pay a lot of money, and sometimes I think it’s very much overpriced. But as long as there is enough demand, that’s the rules of the market,” points out Meierhans.
When he is out shopping or riding the tram, people often recognize him. The bolder ones approach him for a chat.
“People tell me that I should take a closer look at this or that price. But it’s not overwhelming; the Swiss are quite discreet people.” As for the 2,500 letter writers, each gets a one- or two-page response.
“We try to show people possible escape routes – to tell them if there is competition, and ask whether they’ve tried this or that. We really try to support the consumers and the citizens.”
In sectors like healthcare and transportation, Meierhans says a lack of transparency makes it hard to figure out whether the price is right.
“When people don’t know what their choices are, they can’t really make up their minds. Transparency is an essential ingredient of a working competition. For me, that's a very important part of my job – to create transparency where there is none, and give consumers access to this information.”
For example, in February, he unveiled a website outlining the cost of 20 common proceduresExternal link performed in Swiss hospitals. Users can sort the data by location and health insurance provider.
Even if individuals don’t necessarily “shop around” for procedures covered by health insurance, Meierhans said the public should be aware of how costs vary because the overall burden is shouldered by society in general.
According to the price watchdog, about 13% of the Swiss GDP goes towards healthcare, with spending rising five times faster than salaries.
“It’s a time bomb. It’s going to explode in our faces if we don’t do anything about it.”
While his office can’t regulate premium or procedure prices, its input carries weight. Last year, Meierhans served on a commission that put forward 38 concrete proposals for curbing healthcare expenditures.
“The government is going to decide this spring on which of those measures are to be followed and how. I hope that we can at least not have any more substantial increase in that spending.”
Swiss price watchdog
The role of the Swiss price watchdog was established in 1973. In office since 2008, Stefan Meierhans is Switzerland’s seventh and longest-serving one. It’s a unique role with no true peers around the globe, except for Italy’s similarly nicknamed Mister Prezzi, a position created a decade ago. Other countries have monopoly or trade commissions, cartel offices or consumer protection ombudsmen performing similar functions.
The Swiss price watchdog keeps a constant eye on how prices develop, with a view towards preventing abuse by public or private monopolies. He takes action based on his own observations as well as the public’s. Through mutual agreements, he tries to set fair prices, but if that doesn’t work out, he can issue a directive that can be challenged at the Federal Administrative Court.
When it comes to prices set by the state, the Swiss price watchdog has a “recommendation right”. The authorities must consult him before raising prices, and he can suggest alternatives to prevent a price hike. Upon announcing higher prices, the authorities must cite the watchdog’s recommendation and explain why they decided not to follow it.
In 2017, Meierhans and his team looked into various issues such as hospital expenses, generic drugs, water and sewage, rubbish removal, and TV and radio fees.End of insertion
The cost of public transport is a perennial target for Meierhans, who is dissatisfied with the distribution of money generated from annual rail passes. He points out that while railway expenses are on the rise, bus services are profiting from lower diesel costs. Ideally, then, the providers in need should get a higher share of fares.
But figuring out what’s fair is not so straightforward. At the same time, precise statistics on how many people use which services don’t exist yet.
“New systems are being developed with GPS and automatic ticketing and mobile phones that will calculate the ticket price at the end of the journey. And that will come, I have no doubt about that,” Meierhans says.
Like anyone, the Swiss price watchdog appreciates a bargain when travelling.
“I’m going to a wedding in France this summer, and I got a great deal on the airfare,” he crows. “Airfare pricing is an enigma nobody really understands, but there’s one simple rule: book well in advance if possible.” In his case, about nine months ahead.
He doesn’t bother collecting air miles, but he does rack up Cumulus points as part of the customer loyalty scheme run by Swiss supermarket chain Migros. He has just two credit cards, one of them being the free one offered by Migros.
“Then I have a different one for using abroad with better exchange rates, so I don’t have the fees I’d have with a domestic credit card,” Meierhans explains before offering more advice.
“You have to watch closely what you use because you can have very unpleasant surprises. For example, the interest rate if you pay too late. Sometimes you only have 15 days to pay, and then on the 16th day a 50% interest rate kicks in. You have to be very careful,” he warns.
Hair and savings
The topic of his kicky side-swept hairstyle doesn’t come up until the end of the interview, when it’s time to take a picture.
“Let me check my hair because otherwise – I usually get a letter a week regarding my haircut,” he jokes, flinging open a cupboard that conceals a mirror. We agree that the style suits him, and it would be boring if all men wore the “boys’ regular” style.
He remains modest about his contribution to savings he’s helped generate for the population of Switzerland over the past decade.
“I keep stats, but I don’t usually publish them because when I make a proposal or a suggestion for a revision of the law, basically I’m not taking the decision – I’m just making a recommendation,” Meierhans says.
However, his office saves about CHF300 million ($318 million) per year in the areas where it has a direct influence, like public transportation, postal services, utilities and rubbish disposal.
There’s also been the sinking of hospital tariffs, which have gone down by about a tenth since 2012, when a new system came into effect. That makes another billion per year.
“But I can't take the credit for that myself. I've contributed to many millions in savings, but I can't take all the credit.”
So no bonus based on these savings?
“I suggested this to the economics minister, but he wasn’t really that enthusiastic,” laughs Meierhans heartily.
You can contact the author of this story on Twitter @SMisickaExternal link.
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