Ref. Ares(2020)3579761 - 07/07/2020
Ref. Ares(2020)3968922 - 28/07/2020
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HAYPP GROUP'S COMMENTS ON THE SWEDISH CONSUMER AGENCY'S GENERAL ADVICE ON THE
MARKETING OF TOBACCO (KOVFS 2019:3) TO THE NATIONAL BOARD OF TRADE SWEDEN
1.
THE SWEDISH CONSUMER AGENCY'S GENERAL ADVICE (KOVFS 2019:3)
In December 2019, the Swedish Consumer Agency adopted new general advice on the marketing of
tobacco products to consumers. The general advice is notified as a technical regulation as the advice
comprises of proposed rules that may affect trade between Member States under directive
2015/1535. The notification procedure for technical regulations is intended to ensure that Member
States do not adopt regulations which constitute barriers to trade and, if such regulations lead to
barriers to trade, that the barriers are necessary to protect objectives of general interest, but also that
they are proportionate. Restricting marketing can constitute both a barrier to the free movement of
goods and the free movement of services. The Swedish Consumer Agency's general advice KOVFS
2019:3 has been notified to the Commission as a technical regulation in relation to the Services
Directive, Directive 2006/123, and articles 15.7 and 39.5 thereof. According to article 15.3 of the
Services Directive, the requirements set out in the technical regulations must comply with the
requirements of non-discrimination, necessity and proportionality. Below we explain why the Swedish
Consumer Agency's general advice does not meet these requirements.
2.
THE SWEDISH CONSUMER AGENCY'S GENERAL ADVICE HINDRERS THE FREE MOVEMENT OF
GOODS
2.1
Introduction
Sweden has legal obligation according to EU law not to introduce anti-competitive rules. According to
article 3.3 of the Treaty of the European Union (the "Treaty")
"The Union shall establish an internal
market". Protocol 27 to the Treaty is linked to this provision, which provides that
"the European Union
includes a system ensuring that competition is not distorted". Article 4 of the Treaty provides a general
duty of loyalty for the Member States vis-à-vis the EU. The article states,
inter alia, that Member States
should
"refrain from any measure which could jeopardise the attainment of the Union's objectives".
One of the Union's objectives is to introduce an internal market in which competition is not to be
distorted. The general advice, and in particular section 3.1, leads to that the competition between e-
commerce and physical sales is distorted, as marketing of tobacco products on the Internet is more
restricted than sales in physical stores. As a result, it will be harder for operators from other Member
States to turn to Swedish customers compared to domestic operators. In addition, e-commerce
operators are discriminated in comparison to operators who conduct physical sales, without there
being a substantive reason for this and without the support of law for such an arrangement.
2.2
The requirement of non-discrimination
According to article 15.3 (a) of the Services Directive, non-discrimination means that
"the requirements
must be neither directly nor indirectly discriminatory according to nationality nor, with regard to
companies, according to the location of the registered office".
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The Swedish Parliament rejected the Swedish Government's proposal for changed marketing rules for
tobacco, as the proposal entailed a distinction between marketing in physical stores versus e-
commerce stores. Since e-commerce is the simplest way for a new entrant to establish itself in the
market today, operators from other Member States that sell tobacco and who want to establish
themselves in Sweden will have a hard time establishing themselves in the market. A direct application
of the Swedish Consumer Agency's general advice would lead to that the right of e-commerce
operators to conduct business is restricted without the Swedish Consumer Agency being authorized to
restrict this right. By limiting the ability of e-commerce operators to market their products, the right
to conduct business can also be regarded as erroneously reduced, since the restriction means that
other operators, in particular those who sell only tobacco products in physical stores, will benefit
financially.
2.3
The requirement of necessity
According to article 15.3 (b) of the Services Directive, the requirement of necessity means that "
the
requirements must be justified by an overriding reason relating to the public interest". The strict
regulations regarding the marketing of tobacco products to consumers on the Internet, which the
Swedish Consumer Agency introduces through the general advice, are not supported by law and are,
in addition to this, allowed for the operators who conduct sales in physical stores. Thus, the
requirement of necessity can not be considered to be fulfilled, since it has not been deemed justified
on the grounds of compelling public interest to introduce these restrictions in Swedish legislation and
since, in any case, such restrictions do not apply to sales in physical stores. Today, most of the tobacco
is still sold in traditional physical stores, hence the restriction of internet marketing does not cater for
a general interest, e.g. public health or consumer protection.
2.4
The requirement of proportionality
According to article 15.3 (c) of the Services Directive, the requirement of proportionality means that
"requirements must be suitable for securing the attainment of the objective pursed; they must not go
beyond what is necessary to attain the objective and it must not be possible to replace those
requirement with other less restrictive measures which attain the same result". The purpose of tobacco
legislation, both at EU level and in Sweden, is to protect public health by setting certain requirements,
for example regarding labelling and restrictions on marketing. The tobacco legislation's rules on the
marketing of tobacco products are comprehensive and include all operators in the market.
Consequently, it cannot be considered proportionate to impose stricter requirements on e-commerce
operators through general advice, since such a special regulation does not ensure that the desired
goal, the protection of public health, is achieved. This is especially the case in light of the fact that most
of all tobacco is still sold in physical stores. A higher public health protection would then be achieved
if the stricter requirements solely applied to the dominant form of sales (in physical stores) or in any
case that all forms of sale be treated equally, which is not the case. In addition, the special regulation
regarding e-commerce operators leads to distortion of competition in the market.
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3.
LEGAL IMPACT OF THE SWEDISH CONSUMER AGENCY'S GENERAL ADVICE
The Swedish Consumer Agency's general advice involves a misinterpretation of the rules on the
marketing of tobacco, and a risk of incorrect application of the law, in contravention of the legislation
which the Swedish Parliament has stated shall apply. In addition, the general advice leads to a
restriction of the freedom of trade for operators active in the market.
3.1
The general advice contributes to the misinterpretation and application of the rules
As the regulatory authority supervising the rules on the marketing of tobacco products, the Swedish
Consumer Agency has the task of supervising the operators' marketing, but also to give advice on how
the marketing can be designed to be compatible with applicable legislation. The adopted general
advices are intended to make recommendations to the market participants on the basis of current
legislation and practices of the courts. The legislative rules themselves are not detailed, which is why
many market participants seek guidance from the general advices issued as they aim to provide
practical recommendations on e.g. the design of commercial messages. In general, the general advices
are good for market participants as they provide practical guidance, but there are obvious difficulties
when the general advices issued do not reflect the legal situation correctly. With regard to the Swedish
Consumer Agency's general advice for marketing tobacco products to consumers, KOVFS 2019:3, the
Swedish Consumer Agency has taken obvious liberties to restrict the possibility of using commercial
messages by law and to narrowly define the concept of "place of sale". The Consumer Agency's general
advice, KOVFS 2019:3, reflects the Agency's view and recommendation on how applicable legislation
should be interpreted and applied. Various parties turn to the authorities' general advice for guidance
on the interpretation and application of the legislation. Therefore, there is an obvious risk that market
participants will comply with the general advice, even when they do not correctly reflect the applicable
rules, and thereby incorrectly hinder in their marketing on the Internet. This also means that the
Swedish Consumer Agency's general advice lead to a disproportionate restriction on the freedom of
trade for the operators who sell tobacco products on the Internet.
3.2
Restriction of freedom of trade
Freedom of trade means that the right to conduct a business can only be limited for the purpose of
protecting "
urgent public interests" (in accordance with chapter 2, section 17 of the Swedish
Government Form (
Swe. Regeringsformen)). Restrictions on freedom of trade must not be
implemented for the sole benefit of other certain persons or companies financially. The freedom of
trade is also codified in article 16 of the EU Charter of Rights and forms part of the protection of
property in article 1 of the First Additional Protocol of the European Convention on Human Rights. In
accordance with the main rule in chapter 8, section 2 of the Government Form, restrictions on freedom
of trade shall be decided by law, but it is possible to delegate the normative competence to e.g. the
Government. There has been no delegation of competence to decide on these issues to the Swedish
Consumer Agency. On the contrary, the Swedish Parliament, which is the highest decision-making
assembly in Sweden, has commissioned the Government to propose rules on internet marketing. Thus,
the Consumer Agency does not have the power to issue rules that restrict the operators' freedom of
trade. Only in cases where the Swedish Consumer Agency has been delegated the normative
competence in accordance with chapter effect 8 of the Government Form may the Agency issue
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regulations which have binding effect. By issuing the general advice, the Swedish Consumer Agency
can be considered to have introduced a ban on the marketing of tobacco products on the Internet that
is not supported by law. Hence, the Swedish Consumer Agency must be considered to exceed its
competence, since the Agency does not have the authority to amend a law and thus impose such a
ban. As an authority, the Swedish Consumer Agency can also be considered to exceed its powers, since
the Agency may not formally do so either. The Swedish Parliament is the body that establishes laws in
Sweden. The Swedish Parliament can delegate normative competence but in this case no power has
been delegated to the Swedish Consumer Agency. The Swedish Consumer Agency thus lacks the
normative competence to restrict the freedom of trade.
4.
CONCLUSION
The Swedish Consumer Agency's general advice on marketing tobacco to consumers, KOVFS 2019:3,
does not fulfil the formal requirements of non-discrimination, necessity and proportionality provided
in the Services Directive. In addition, the adoption and, in particular, the application of the general
advice means that the competition in the market is distorted and that the free movement of both
goods and services is hindered. In summary, this means that the general advice should not be accepted
as a technical regulation.