Court ruling: Delivery of cosmetic products that do not comply with labelling requirements constitutes an unfair marketing practice

Swedish regulations applicable to cosmetic products require labelling in Swedish, including details of specific precautions. In a recent ruling (2025-03-12, Case no. PMT 12383-21), the Swedish Patent and Market Court of Appeal (Patent- och marknadsöverdomstolen) examined Sweden’s implementation of the EU E-commerce Directive and its interaction with Swedish marketing law and regulations concerning cosmetic products. This article delves into the Court’s findings, focusing on the implications for cosmetics businesses operating within the EU.

Background

The Swedish Association of Chemical Products Suppliers (KTF) is an association of five industry organisations, including a trade association for companies that import, manufacture or market inter alia cosmetics and hygiene products. KTF filed a legal action against a German-based cosmetics company, claiming that the company was marketing and selling its products to the Swedish market through its website without complying with Swedish labelling requirements.

The EU Cosmetic Products Regulation mandates that cosmetic products must be safe for human health when used under normal or reasonably foreseeable conditions. This includes proper labelling to inform consumers adequately on, for example, specific precautions to be observed in use. However, the Swedish implementation of these regulations, as seen inter alia in the Swedish Regulation (2013:413) on Cosmetic Products, further requires this labelling to be in Swedish when products are sold to end-users on the Swedish market. KTF thus considered that the cosmetics company violated these requirements by marketing products without the necessary Swedish language labelling.

The E-commerce Directive vs Swedish marketing law in relation to online marketing claims

The core issue of the case was whether the Swedish E-commerce Act (implementing the E-commerce Directive) was applicable to the company’s marketing and, if so, how this affected the applicability of Swedish marketing law in the matter.

The E-commerce Directive aims to remove obstacles to cross-border online services. The internal market clause is a key principle of the E-commerce Directive. It ensures that providers of online services are subject to the law of the Member State in which they are established, and not the law of the Member States where the service is accessible. Hence, in accordance with the Act, the “country of origin” principle (ursprungslandsprincipen) is to be applied, meaning that the rules of the country where the marketing originates from apply.

However, in Swedish marketing law, the primary principle applied is “the country of effect” principle (effektlandsprincipen). According to this principle, Swedish marketing law applies to marketing directed at the Swedish market. While not part of any formal piece of Swedish marketing legislation, the country of effect principle has been acknowledged in preparatory works of Swedish legislation and consistently applied by Swedish courts for decades. In this matter, a particular issue was thus how the principle of the country of effect relates to the country of origin principle.

The Court thus examined both the Swedish implementation of the E-commerce Directive and its compatibility with EU law, as well as the scope of the coordinated field according to the Directive. The Court also submitted a request for a preliminary ruling to the Court of Justice of the European Union (CJEU).

The Swedish Court asserted that online marketing is part of the coordinated field under the E-commerce Directive. Hence, the conclusion was that the country of origin principle (ursprungslandsprincipen) applies, and that Swedish marketing law rules cannot, as a general rule, be applied in relation to the online marketing for which the cosmetics company was responsible and which originated in Germany.  Based on this conclusion the Swedish Court found that the Swedish Marketing Act did not apply to the cosmetics company’s online marketing claims even though they were directed at Swedish consumers. This aspect of KTF’s claim was therefore dismissed.

The E-commerce Directive vs Swedish marketing law in relation to delivery of products

The Swedish Court thereafter examined whether the deliveries of cosmetic products that did not meet Swedish labelling requirements was unfair and could be prohibited under Swedish marketing law. According to the E-commerce Directive, requirements applicable to goods as such are not part of the coordinated field. This means that safety standards, labelling requirements and product liability fall outside the scope of the E-commerce Directive. Thus, the principle of the country of effect (effektlandsprincipen) is applicable to labelling requirements.

Considering the broad scope of application given to the term “marketing” in the underlying EU law, the Swedish Court came to the conclusion that the delivery of a product constitutes a marketing measure within the meaning of the Swedish Marketing Act. The Court found that the delivery of a product that does not comply with labelling requirements is contrary to the principle of legality and therefore not in accordance with good marketing practice under the Swedish Marketing Act. As the marketing has significantly affected, or is likely to affect, the recipient’s ability to make an informed business decision, the marketing was also considered unfair.

The cosmetics company’s unfair marketing was prohibited, and each prohibition was accompanied by a substantial fine of SEK 1,000,000.

Concluding remarks

The Court’s decision has implications for businesses, such as the cosmetic businesses, operating across borders within the EU. They must be aware that while the E-commerce Directive (and the Swedish E-commerce Act) facilitates the free movement of online services, it does not exempt them from complying with local requirements applicable to the goods as such (such as safety standards, labelling requirements and product requirements).

This case underscores the importance of understanding and navigating the complex interplay between e-commerce laws and product regulations in, for example, the cosmetics industry. Setterwalls is happy to help you navigate these rules.