Swisscom, the country's largest telecommunications provider, is facing accusations of abusing its dominant market position in supplying broadband services.
The company said on Thursday it had been notified that the Competition Commission had received an application to fine it SFr237 million ($198 million) for allegedly overpricing ADSL set-up services.
The Commission has asked Swisscom to respond.
In its application to issue sanctions, the Secretariat of the Competition Commission wrote there was too narrow a margin between the price at which Swisscom rented out its network to other providers and the end bills for customers.
The high network rental price also resulted in elevated broadband prices in Switzerland, it argued.
In a statement on Thursday, the telecom giant rejected the allegations and said it regarded the sanctions as unjustified.
"Swisscom does not perceive a case for market dominance," it wrote. "More than 80 per cent of households in Switzerland have the choice between cable internet and ADSL. Some smaller cable network operators have higher market shares in their local markets than Swisscom."
The firm added that it was "surprised by the content and timing of the application", as there was a currently a case before the Federal Court that is evaluating the question of possible market dominance.
Swisscom can contest any sanctions by the Commission by lodging an objection with the Federal Court.