Distance selling of alcoholic beverages to Sweden: Who may pour the wine?

Sweden has in modern time maintained a strict approach when it comes to the sale of alcohol. A cornerstone of this approach has been the maintenance of trade monopolies. The one remaining monopoly, – the retail monopoly or “Systembolaget” as it is called – is now considered
by itself, the Swedish government and its other staunch supporters – to be under siege by operators engaging in distance selling from other EU countries. The Swedish government regards this development as a threat to Swedish consumers’ health, to the Swedish alcohol policy,
not to mention the Systembolaget. Here’s why:

In 2007, the European Court of Justice (ECJ) issued a ruling concerning the private import of alcoholic beverages to Sweden(1). A Swedish citizen, Mr. Rosengren, and compatriots had ordered wine from a vendor in Spain and had contracted someone to arrange the transport of said wine to Mr. Rosengren et al. in Sweden. This was, at the time, in violation of the Swedish Alcohol Act. In order to import alcohol, you had to carry the goods across the Swedish border yourself. The wine was consequently impounded by Swedish Customs, and Mr. Rosengren and his fellow importers were prosecuted for violation of the Alcohol Act. The Swedish Supreme Court asked the ECJ to examine the provisions of Swedish law on alcoholic beverages to verify their compatibility with Community law, in particular the principle of the free movement of goods.

The ECJ initially stated that the Swedish provisions on the import of alcoholic beverages were separable from the operations of the retail monopoly and must be examined with reference to Article 28 EC as a quantitative restriction to trade and not Article 31 EC (now articles 34 and 37)
on national commercial monopolies. The prohibition of private imports is therefore not a rule that relates to the very existence or operation of the retail monopoly.

The ECJ then pointed out that the fact that private individuals were prohibited from importing such beverages directly into Sweden, without personally transporting them, constituted a quantitative restriction on imports. The ECJ further concluded that this ban on the import of alcoholic beverages could not be justified on the grounds of protecting the health and life of humans according to Article 30 (now Article 36). Consequently, the Swedish ban on private imports was found to be non-compliant with Community law.

To add insult to injury, the Commission brought a case against Sweden for failing to fulfil its obligations under the Treaty by prohibiting individuals from importing alcoholic beverages by independent intermediary or professional transport (2).

The ECJ decisions led to a change in Swedish applicable legislation. Since these decisions and the changes to the Swedish Alcohol Act, distance selling and consequently private imports of alcohol has increased. In particular, there are a growing number of distance sellers and services that promote distance sales and sellers. Some of them are Swedish companies co-operating with companies based in other EU member states that are the actual sellers. The products are sold and packaged in the other member state and transported to the consumer in Sweden. Consumers may have the goods transported to their home or can pick up the goods at a transport hub of some sort. Some claim that this setup is compliant with current legislation, while others claim it is a misinterpretation due to lack of clarity in the legislation. Attempts have been made to get Swedish prosecutors to try the companies involved in this practice for violation of the Alcohol Act, so far without success. To date, prosecutors have not found the practice to be in violation of the Alcohol Act.

This may change, however. In 2013, a Swedish grocery chain began collaborating with a Danish distance seller of wine, offering customers the opportunity to purchase wine from the Danish company in conjunction with purchasing groceries online, and the groceries and wine are then delivered together to the customers’ home addresses or made available for pickup at the nearest grocery store. The orders for the wine and the groceries are made by the consumer in one go, on-line, but are then separated so that the grocery chain receives the order for the groceries and the wine company receives the order for the wine. The same applies with regard to payment. Thus the grocery chain does not receive or handle any orders or payments for the wine – this goes directly to the wine company. The consumer’s order is coordinated when the wine has reached Sweden and the groceries and the wine are then delivered to the consumer at the same time.

The idea of buying food and wine together in Sweden (other than in a restaurant) is highly controversial. For this reason, it is not possible to buy wine at a grocery store in Sweden. You have to go to the Systembolaget’s store, which, by the way, is often located next door to major grocery retail stores. If you don’t have a Systembolaget store nearby, you can order the alcoholic beverages from the Systembolaget online and pick them up in the nearest grocery store, which acts as an agent for the Systembolaget. Alternatively you can collect the items from a post office, which these days are often located in a grocery store… But importing goods from a distance seller and not from the Systembolaget is a different story. It should be said that Swedish alcohol tax also applies to private imports, as do age restrictions and the prohibition against giving alcoholic beverages to intoxicated individuals.

Until now, private imports has not been on the top of the government’s legislative agenda. It’s been considered too insignificant. Last year, private imports accounted for 2% of total alcohol sales in Sweden, so now the government feels that something has to be done.

This spring, the Swedish government established an inquiry, which presented its conclusions in the summer, including a proposal on how to restrict distance selling and the purchase of alcohol. This inquiry proposes an exception for private import, which specifies that a private individual can import these products for personal use, either by themselves or through a vendor, if the products come from a country within the European Economic Area, provided the transport of the goods is organised by a professional or private carrier that must be independent of the vendor. No intermediation service other than the actual transportation service is permitted. Moreover, commercial promotion of private imports of alcoholic beverages will be prohibited. This ban is supposedly to highlight the fact that it is against the law to commercially facilitate the sale of alcoholic beverages from abroad or other-wise contribute to such sales. Businesses that initiate various types of business relationships and co-operations with other companies which role is to act as intermediary between buyer and vendor to promote private import of spirits, fall under this prohibition.

An interesting point made by the inquiry, much to the Systembolaget’s dismay, is that foreign sellers may, notwithstanding the prohibition on promotion, conduct marketing activities. These activities include advertising in “normal” advertising media, whatever that is these days.

So, everything’s crystal clear? Hardly!

There is a further requirement proposed: the goods have to be transported to the consumer’s home address. It is not permissible to arrange to pick up the goods elsewhere, such as parking lots, grocery stores or any other venues deemed suspicious. One reason for this is that the inquiry sees a danger that deliveries to places other than consumers’ homes may induce complimentary offers of more alcohol and so on. The inquiry claims that the above measures are necessary if  Sweden is to uphold its restrictive policy concerning alcohol and maintain the retail monopoly, i.e. Systembolaget. The inquiry claims that there is support in EU legislation and the Court of Justice’s case law for both its concerns in this regard, as well as for its proposals for further restrictions. It holds the measures to be both necessary and proportionate to safeguard the purpose of the Swedish alcohol policy, i.e. to protect consumers, public health and order. In this context, it should be noted that Sweden has so far been successful in the Court of Justice in defending a prohibition against the promotion of foreign gambling services(3) (4).

On the other hand, Systembolaget’s sales are increasing year after year and it generates a rate of return well above that stipulated by its owner, the Swedish state. It continuously takes steps to make itself more available to consumers, improving its services as well as developing new ones, and one of its latest innovations is home delivery. Annual Swedish alcohol consumption measured in terms of pure ethanol per capita is 9.9 litres compared to 11.1 in Denmark, which has no retail monopoly. Distance selling cannot compete with retail stores when it comes to availability. While the former requires planning, the latter does not, provided you have a Systembolaget store nearby. The tax applied to privately imported products means distance selling prices are equal to those of Systembolaget. Checks on identity, level of inebriation and age can be handled as efficiently by the transport companies involved in distance sales as by Systembolaget.

One might question what effect promotional schemes or partnerships between Swedish and foreign companies on the distance selling of alcoholic beverages really have on total alcohol sales. Or indeed why Swedish consumers should be restricted to sellers that do not have in-house distribution resources. How does the requirement to use an independent transporter really benefit Swedish health? Does the banning of cooperation between operators – one established in Sweden to provide a technical platform for e-commerce and marketing, and the other contractually being the seller, corrupt the pure Swedish people? Is it really a threat to Sweden’s public health to be able to combine delivery of food and wine ordered online from two different sources? And even if you put all the measures together, what benefits do they really have on the Swedish consumer’s health? If availability is an issue, on-line orders which have to be planned, and which deliveries you have to wait several days for, will always take “a back seat” to the availability provided by physical stores open Monday through Saturday. In addition to controlling the retail monopoly stores the Swedish state also have other significant protective measures to apply in the interest of preserving public health – none of which are affected by the occurrence of distance selling and private imports.

So, one might wonder if these proposals aren’t merely covert protective measures not of health, but of the Swedish retail monopoly’s own import, online sales and home delivery services? Services through which you can order alcoholic beverages of all kinds for which the limit is eight parcels, equivalent to ninety-six (96) 70 cl bottles per delivery? The positive public health effects of the proposals, if any, are not at all clear, and neither is it apparent how they will save the vulnerable Swedish people from the detrimental effects of alcohol in general. It is clear, however, that the Swedish government is still adamantly defending its policies on alcohol in general and Systembolaget in particular (and the annual return it yields).

Adult citizens in Sweden may be of legal age in most social respects, but with regard to alcohol, we appear to remain wards of the state. In other words, apart from in restaurants and bars, Swedes have to plan their consumption of alcohol carefully if someone other than the Swedish government is to pour the wine.

(1) C-170/04
(2) Translation from C-186/05. The decision is only available in Swedish and French.
(3) C-447/08 and C-448/08
(4) However, it should also be noted that the EU-Commission has recently decided to bring Sweden before the ECJ for non-compliance with the Treaty with regard to the Swedish gaming monopoly including the promotion of foreign gambling services. Many of the Commissions arguments concerning the Swedish gaming laws are ap-plicable on the alcohol legislation and the monopoly held by the Systembolaget. So, who will have the last word is still anybody’s guess.