Euro shows pricey Swiss goods, raising consumer issues

Electronic equipment in Switzerland is expensive because of unfair trading practices, according to consumer advocates Keystone Archive

The euro is revealing just how much more expensive things are in Switzerland than in neighbouring countries.

Switzerland, which is not a member of the European Union, has long had a reputation as a high-price country. Experts blame this on cosy arrangements between multinational manufacturers and Swiss importers and distributors.

Consumer advocates believe that customers and retailers are spending billions of francs more than is necessary, because of unfair trading practices. Some of the main products cited with high prices are electronic equipment, domestic appliances and medicines, although brand-name products in general are affected.

But it is only since the euro invaded people’s pockets on January 1 that the size of the price differences is becoming apparent.

Werner Marti, Switzerland’s price supervisor, believes the introduction of the single European currency is promoting price competition in Switzerland by making comparison easier.

“The discussion over price differences between Switzerland and other countries are directly linked to the euro, because transparency will be increased,” he told swissinfo.

His statement is echoed by Jacqueline Bachmann of Switzerland’s main consumer organisation, the Foundation for Consumer Protection.

“It is getting easier for consumers in Switzerland to compare prices since the introduction of the euro. Pressure on Swiss prices will therefore increase,” she told swissinfo.

Parallel imports

Another factor keeping Swiss prices high is a ban on parallel imports – branded goods that were manufactured abroad for a cheaper price than in Switzerland.

One of the most prominent cases in point is the sale in Switzerland of Kodak films below the price set by the company. A ruling by the Swiss supreme court in 1999 upheld the parallel import ban.

The Swiss authorities have pledged to call for a reassessment of the Kodak case.

But while the parallel import ban may protect industry, it does little to aid consumers looking for a better price.

Ban eased

Marti said the ban has been under discussion for some time.

He pointed out that following a recent decision in parliament parallel imports are now allowed for medicines that are no longer protected by a patent, under certain conditions.

However, Marti believes price differences between Switzerland and other countries will remain as long as the law on intellectual property can be used to ban parallel imports.

Tougher legislation

Bachmann told swissinfo that introducing fines would encourage parallel imports and this would allow retailers to buy their supplies wherever they wanted.

She welcomed a statement by the Competition Commission, another federal watchdog body, to crack down on agreements between importers and retailers under what is known as vertical price fixing. This forces retailers to buy goods from agreed distributors at a fixed price.

Bachmann deplores that the Competition Commission only has limited powers. What is really needed is a complete overhaul of the laws to bring Switzerland in line with other countries, she added.

Parliament will continue discussions on this issue later this year, but Bachmann is concerned that the revision will not go far enough.

No sanctions

Roger Zäch, a leading member of the Federal Competition Commission, confirmed the limited scope of commission: It cannot impose fines and other sanctions if a company refuses to change its unfair trading practices, he said.

“All we can do is to formally forbid a company to continue a certain trading practice if our investigation finds that it is obstructing competition in an inadmissible manner”, Zäch told swissinfo.

Nevertheless, Zäch is confident that parliament will agree to tighten the law and give the Competition Commission more powers to deal with offenders.

by Urs Geiser and Hansjörg Bolliger