The Patent and Market Court of Appeal has overturned a Patent and Market Court judgment and found Swedish Match's conduct, while aimed at limiting competition, to be objectively justified due to restrictions in the Tobacco Act on how snus can be marketed.
In 2012 Swedish Match introduced a uniform labelling system for products in the company's fridges. Under agreements between Swedish Match and retailers, the fridges were placed in retailers' shops.
Swedish Match allowed the retailers to stock snus from its competitors in the fridges. The labelling system applied to all of the snus stored in the fridges. Swedish Match's competitors were encouraged to use the labelling system, which had instructions on font, text size, background colour and logo placement. If the competitors did not manufacture labels according to this template, Swedish Match would manufacture and place generic (ie, grey and white) labels in the fridges.
In February 2017 the Patent and Market Court fined Swedish Match Skr38 million for abusing its dominant position on the Swedish snus market.
The Patent and Market Court of Appeal found that Swedish Match was dominant in the Swedish snus market.
The court held that Swedish Match's labelling system aimed to limit competition by restricting its competitors' freedom to design fridge labels. Compared to the previous practice where competitors could independently design labels, this system put them in a less-favourable position. The court found that it was not part of normal price and brand competition to impose rules for competitors' price and brand communication.
However, the court found that this conduct was objectively justified. The Tobacco Act restricts the way in which snus may be marketed (eg, marketing may not invite the use of tobacco or be intrusive). Therefore, the court found that Swedish Match had objective reasons that were also proportionate when introducing the labelling system.
The ruling is final.
The Competition Authority has no decision-making power with regard to fines, but has to go to court to impose fines.
The court assessed whether the conduct had been objectively justified. The court noted that the parties had not elaborated its positions on whether the limitations on marketing in the Tobacco Act can constitute such an objective justification, but that the question had been brought forward in the case. The court went on to say that, in proceedings on administrative fines, the court has a duty to enquire in its own right. The court stated that when a company refers to mandatory public law, the court must try the question – as it did in this instance – no matter how the parties have brought forward their case.
For further information on this topic please contact Ulrica Salomon, Hanna Lekås or Johanna Svantesson at Advokatfirman Lindahl by telephone (+46 8 527 70 800) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Advokatfirman Lindahl KB website can be accessed at www.lindahl.se.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.