New Marketing Practices Act comes into force

The new Marketing Practices Act came into force in Sweden on 1st July 2008. To a large extent, the new law is based on the previous law, but a few amendments and novelties should be highlighted.

The act implements the EU Unfair Commercial Practices Directive (2005/29/EC) and regulates all marketing practices, as well as contact between businesses and consumers, and covers all forms of media. It is therefore a vital piece of legislation for every company that wishes to market its products, trademarks or other IP rights. Perhaps the most important change in relation to the old law is the scope of application, which has been widened to cover unfair marketing practices that occur after a commercial transaction has been completed.

The purpose of the act coincides with the aim of the directive, which is “to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices harming consumers’ economic interests”, although the act also aims to protect businesses from other businesses’ unfair commercial practices.

The implementation of the directive has not necessitated a great number of amendments to Swedish legislation in the area of marketing practices, which is unsurprising given that the directive was to some extent inspired by the former Swedish Marketing Act. Thus, the new law is rather similar to the old. For example, the structure of the new act is basically the same, with various general clauses followed by a number of explicit marketing practices that are always prohibited.

The act contains three general clauses. The first is very similar to the (only) general clause in the old act, stating in principle that all marketing practices should be coherent with good marketing customs. However, the new act also contains two additional general clauses: one that prohibits aggressive marketing practices (including harassment, compulsion, physical violence or other aggressive means of pressure, such as unwanted and repeated phone calls), and one that prohibits misleading marketing practices.

As mentioned above, the new act still contains a number of explicitly prohibited marketing practices, now gathered together in a blacklist by reference to an exhibit of the directive. The blacklist has been extended slightly in the new act – for example, it now expressly prohibits ‘bait advertising’ (the practice of marketing a product for a certain price where it is not feasible for a business to deliver a reasonable amount of the product at that price in due time).

In order for a marketing practice to be prohibited under the general clauses, the legislature has introduced an express threshold which varies slightly depending on which of the three general clauses the practice falls under. However, generally a marketing practice needs to have an effect on the consumer in order to be prohibited - the marketing practice in question should influence the receiver to make a different decision than he or she would have done if the particular marketing practice had not existed - whereas any marketing practice included on the blacklist will be deemed unlawful, regardless of the effect it has on consumers.

One of the most noteworthy changes in the act is the scope of application, which has been widened so that it also encompasses unfair commercial practices that occur after the transaction between the business and the consumer has been completed. The old law covered only marketing practices that took place prior to and during the transaction. This will obviously have implications for businesses in their marketing, as the regulations and prohibitions in the law now apply to all contact with consumers. Among other things, it will prevent businesses from giving consumers false information about their rights to make complaints about a product.

The act makes some distinctive changes for marketers in Sweden, some of which are fundamental, such as extending the scope of application to include actions after a transaction has been completed, and the additions to the blacklist.

It remains to be seen what effect the new act will have on marketing practices and whether it will succeed in harmonising Swedish marketing practices with the rest of Europe.