Idris Abdelkhalek explains how the agreements between the EU and Switzerland work in practice and how they affect Swiss businesses and consumers.
The Switzerland – EU relationship is a never-ending story. The first bilateral agreements of 1999 and the second of 2004 enabled partial access to the EU market for Swiss citizens and economic actors. The development of these sectoral agreements continues with the so-called Bilaterals III, signed on 2 March 2026, that will have to be voted on by the Swiss people in the coming year.
The domestic political debate in Switzerland raises numerous discussions touching on both sovereignty and social protection. Nevertheless, day-to-day legal practice with companies on the ground is often far removed from political concerns and reveals that such concerns are sometimes outdated. Switzerland is not legally integrated but functionally integrated in the EU. The Swiss experience offers useful insights for countries seeking regulatory autonomy while maintaining close economic integration with the EU.
Competition rules
In terms of market rules, European law already significantly shapes Swiss legislation, even where no specific bilateral agreement requires such alignment. When a Swiss company establishes its distribution network to sell its products on the Swiss and EU markets, it applies the rules set out under EU law. Such harmonisation is a prerequisite for business. Regulatory differences are not an expression of sovereignty for companies; rather, they create friction. The rules governing who may sell a product on the market and under what conditions must be identical from Lisbon to Warsaw and from Naples to Stockholm. In this respect, the Swiss market is no exception.
The same applies to the policy when companies merge. In future, the Swiss competition authority will not have to be notified of a merger if it covers the European Economic Area, includes Switzerland and the European Commission is notified. Contrary to what is provided in the merger regulation for EU member states, the Swiss competition authority will not possess a referral mechanism to review a merger taking place within the EEA that could have harmful effects on the Swiss market. Granting this broad de facto jurisdiction to the European Commission for a non-EU Member State reflects a choice favouring efficiency over formal sovereignty, despite potential consequences for Swiss consumers.
Marketing of products
The same applies to the marketing of certain products in Switzerland. Switzerland has unilaterally decided that certain decisions by its regulatory authorities, for example based on consumer protection considerations, may constitute technical barriers to trade. Swiss legislation therefore allows these national considerations to be set aside so that a product which complies with EU technical requirements and is lawfully marketed in the EU can equally be marketed in Switzerland. This Swiss version of the ‘Cassis de Dijon’ principle reflects a pragmatic and unilateral alignment of Swiss law with European legal principles. Compliance is, in practice, a business necessity rather than a political debate. The opportunities offered to companies in this regard transcend the political question of sovereignty.
Regulated markets
Swiss political debates on the EU relationship regularly focus on issues of social policy or immigration. However, most of the negotiations with the EU concern the opening of certain Swiss markets. Switzerland is an export-oriented country with a flexible economy and liberal labour law. Yet access to some of its domestic markets remains complex and subject to high barriers to entry for potential European companies. This is compounded by the absence of rules governing state aid, unlike in the EU. The Swiss market also features multiple oligopolies in sectors such as telecommunications and retail, further complicating the entry of foreign actors.
In fact, when people living in Switzerland turn on their lights in the morning, they may not necessarily remember that they have no choice over their electricity supplier. When adding milk to their coffee, they may not know that milk prices are set on an indicative basis. Passenger transport, meanwhile, is a highly organised federal monopoly. In other words, rules and market structure shape business activities and consumers’ daily lives. Faced with these stable particularities, Switzerland may not be keen to open certain markets to competition. The point is not to call for the liberalisation of all markets, but rather to remember that every economic choice in this regard comes at a price. As shown by Brexit, it is possible not to be a member of the EU, but this may come with a higher price for consumers because of reduced dynamism or stronger protection of certain markets.
The “island of high prices”
This relative segmentation of the Swiss market — with its own particularities, actors and requirements — helps to explain the phenomenon known as the ‘island of high prices”, where costs are often higher than in neighbouring countries. Because of these particularities of the Swiss market, certain European suppliers may be compelled to or seek to raise prices in Switzerland or may attempt to limit the ability of Swiss companies to engage in parallel imports from foreign distributors. However, since 1 January 2022, a legal provision allows a Swiss company dependent on its supplier to obtain products or services directly abroad at the price and under the commercial conditions applied abroad. This measure aims to combat the “island of high prices” phenomenon and to lower prices. It illustrates the Swiss legislature’s effort to recreate, on a case-by-case basis, what the EU internal market provides by default.
In sum, being located outside the EU does not imply an absence of European legal influence on the daily activities of companies and legal practitioners. On the contrary, the Swiss situation requires expertise and constant adaptation. Like the UK, Switzerland has sought to preserve formal sovereignty while maintaining privileged access to the EU market. However, market access often entails alignment, whether formalised or not. Sovereignty outside the EU does not eliminate interdependence; it reshapes it.
By Idris Abdelkhalek, Board member, Foraus and Practising Attorney-at-Law, LL.M. (College of Europe).