of fault. The dependency should not have been created by the fault of the dependent undertaking. As already mentioned, the establishment of a franchise is connected to adherence to a franchise model or network, which goes far beyond simply acquiring goods or services from a supplier. Evaluating the choice of the franchisee to put themselves in a situation where they depend on the franchisor – dependence which, by the way, is inherent to any franchise system- will depend on “all the circumstances”, as the Supreme Court often states.. In a jurisdiction where franchise law does not exist per-say and where the franchise relationships are governed by the general provisions of contractual law, unfair competition, competition law or other sectorial or specific regulations, a peculiar attention should be given by both parties, but specially by the franchisor to pre-contractual obligations and talks. The fact that no disclosure is required does not mean that no disclosure should take place. Conclusion Assuming a franchisor based in France or Germany supplies its Swiss franchisee with a significant mark-up compared to those based in France or Germany. Assuming such mark-up cannot not be objectively justified. Assuming that the franchisor is not facing significant buying power from its franchisee. This franchisor can avoid being condemned by the Swiss authorities for restricting the buyers’ opportunityto purchase goods or services at the market prices and conditions customary in the industry in the foreign country concerned, only if it can demonstrate that the franchisee knowingly put itself in that bind. This will only be possible through a very well documented and transparent disclosure of information during the pre-contractual discussion. Christophe Rapin Christophe Rapin is a partner and co-head of Kellerhals Carrard’s Competition, Trade and Regulatory group. He is admitted to the bars of Geneva and Brussels and is recognized for his specific experience in the legal and economic aspects of business relations between Switzerland and the EU. Christophe assists and represents clients with regards to antitrust matters as well as competition law matters and competition law procedure (cartel investigations, abuse of dominance, national and international merger control filings, counselling & compliance). He also has wide ranging experience in international distribution, including franchising. He is also a member of Kellerhals Carrard’s M&A and corporate team and he is active in M&A transactions, particularly in connection to regulated industries. Christophe has been chairman of the Swiss Association for Competition Law (ASAS) for eight years and is currently President of the International League for Competition Law (LIDC). Kellerhals Carrard Kellerhals Carrard has equally strong local roots in all three language regions and all Swiss economic centres. We work in all national languages and many foreign languages and have global connections with leading law firms, economic centers, and professional organizations in all areas of business. Our team advises domestic and foreign clients on antitrust proceedings at the Competition Commission and at civil courts, both under Swiss and European law. Many of our clients are market leaders and are therefore aware of the legal and economic implications of competition law. We also regularly represent our clients in merger control proceedings before the Swiss and European Competition Commission. In addition, our team has extensive experience in advising clients on proceedings relating to sectorspecific regulations in the energy and telecommunications market. Considering the size of Switzerland and its geographical location within Europe, this example is certainly not a theoretical example. This is a very critical point while considering the abuse of relative market power within a franchise network. Indeed, as mentioned above, it is a reality that the prices for goods and services are significantly lower in the surrounding countries of Switzerland, including within many most the well reknown franchise networks. Additionally it is also a reality that the levels of salaries, rental costs and others are significantly higher in Switzerland than in the surrounding countries. But if the conditions offered to the franchisee in Switzerland by the franchisor abroad are not similar to the conditions the franchisors offered to franchise in its own country, there is potentially an abuse of relative market power. The principle mentioned above regarding the lack of protection granted to the entrepreneur which established an objectively unreasonable business has something to do with the concept Neither the market shares of the concerned undertakings nor their size is relevant regarding the determination of a relative market power. WWW.LAWYER-MONTHLY.COM 21
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