Price watchdog shows his teeth

Strahm (left) talking to the president of the main consumer protection group, two years ago. Keystone

Swiss consumers are starting to benefit from lower prices, due in part to the introduction exactly 20 years ago of a law on price supervision.

Economics Minister Doris Leuthard praised the office of the federal price regulator, which she said had become an important state institution.

Leuthard said on Friday that the price regulator, a position currently held by Rudolf Strahm, a former parliamentarian for the centre-left Social Democratic Party, had repeatedly sounded the alarm about unjustifiably high prices.

She indicated her ministry would support Strahm’s work by introducing reforms to open up protected markets which keep prices artificially high.

Strahm took on the job two years ago, at a time when the government was on the verge of giving in to pressure from critics and scrapping the post.

But the regulator’s office under Strahm is well regarded by both the public and politicians.

“He has shown that the price regulator has to be intrepid, courageous and competent,” said Simonetta Sommaruga, president of a leading consumer protection group and a senator for the Social Democrats.

“This is the way to win not only the trust of consumers but also that of the business community and politicians,” Sommaruga told swissinfo.

Praise for Strahm comes from circles far beyond his own party. “He’s doing an excellent job,” said economics professor Franz Jaeger from St Gallen University. Jaeger was a member of the camp wanting to do away with or at least muzzle the position.

It’s generally acknowledged that Strahm’s good reputation is partly due to the fact that he not only takes on private companies but also targets the prices set by state institutions.

Beer and coffee

Strahm has also taken a wider approach to his mandate than his predecessors. He has criticised not only beer and coffee prices but also pointed the finger at structural obstacles to competition.

He has slammed the fixed prices of seed and fertiliser in the farming industry and keeps demanding that the authorities allow importers to buy products abroad – thereby undercutting domestic prices and leading to a general 20 per cent drop in prices.

Strahm’s calls for drug prices to be cut have not fallen on deaf ears. At the beginning of the year the interior ministry announced an agreement between the federal authorities and the pharmaceutical companies which will lead to estimated savings of up to SFr400 million ($319 million) this year.

He might have more difficulty in forcing an opening up of the country’s electricity market. Strahm notably wants further cuts in electricity tariffs that have already been reduced by 11 per cent.

Observers say Strahm’s move to step down as parliamentarian when he was elected price regulator gave him more independence, allowed him to widen the scope of his work and made him more popular.

Some of his predecessors went the opposite way. They used the post as a springboard for their political careers, notably Leon Schlumpf and Joseph Deiss, who later joined the government as cabinet ministers.

swissinfo, Renat Künzi

Key facts

The post of price regulator was introduced in 1972.
The law on price surveillance took effect in 1986.
Complaints from the general public: 2005: 1,395 – 50% up on 2004 and 100% up on 2003.

In brief

The post of federal price regulator stems from the law on price surveillance that came into force in 1986. The legislation came about as a result of a people’s initiative.

The task of the civil servant is to monitor the level of prices of goods and services fixed by cartels and companies. An abuse results when prices are not determined by proper competition.

He can make recommendations to the authorities. As far as companies are concerned, if he cannot find an amicable solution, he can forbid all or part of a rise or decrease in price levels.

The sectors that have come under most scrutiny in recent years have been telecommunications, electricity and health.

Despite monitoring, prices are between 25% and 40% higher in Switzerland than in neighbouring countries.