article / 23 May 2022
New regulations in the field of marketing and consumer law – how companies in the life sciences sector are affected
The advance of digitalised platforms has driven a paradigm shift in trade, with more consumers and companies purchasing goods and services digitally, instead of in physical stores. Against that background, the Swedish government has proposed a series of amendments in the field of marketing and consumer law, all of which are expected to enter into force on 1 September 2022. In addition, a new Consumer Sales Act entered into force on 1 May 2022. The new legislation aims not only to modernise Swedish consumer law, but also to strengthen consumer protection in relation to digital purchases. The following is a summary of what life sciences companies needs to know in regards to the new regulations.
Stricter requirements for e-retailers
On the 22 March 2022, the Swedish government published a new bill proposing a range of measures and amendments aimed at adapting Swedish consumer law to the advance of digitalisation. The proposed amendments stem from updated versions of various EU directives. The laws affected by the measures – relevant to life sciences companies selling products to consumers – are the Consumer Sales Act (1990:932), the Marketing Act (2008:486), the Price Information Act (2004:347), the Act on Distance Contracts and Off-Premises Contracts (2005:59) and the Consumer Contracts Act (1994:1512).
It is proposed that the amendments will enter into force on 1 September 2022. The following changes, among others, are included:
- Companies may be fined 4 percent of their annual turnover: In case of violation of the law concerned, companies risk being imposed with a penalty fee of up to 4 percent of the said company’s annual turnover, through the new provisions introduced in the Marketing Act, the Price Information Act, the Act on Distance Contracts and Off-Premises Contracts and the Contracts Terms Act.
- The scope of the Marketing Act is extended: A company offering products for sale in a digital marketplace must indicate whether it is a trader or not. If a company fails to fulfil the proposed obligation, the marketing in question can be considered unfair.
- Information requirements when presenting search results: Under the new bill, companies will be required to state the criteria that determine the ranking of offers presented when searching in a digital marketplace.
- Transparency requirements when marketing price reductions: The proposed amendments impose obligations on traders to provide certain information to consumers with regard to price reductions. In particular, should a trader decide on price reductions, it must then inform the consumers what the lowest prices for the relevant products were during the 30-day period prior to the price reduction. If the price reduction has been made gradually, the price at which the product was sold before the first price reduction took place must be stated. However, an important exception to the aforementioned rule is that traders must not announce such lowest prior price with regard to products that are likely to deteriorate or age quickly (for example, perishable food products).
- Transparency requirements in relation to customer reviews: Under the proposed additions to the Marketing Act, traders will be required to state how it ensures that consumer reviews (displayed in the marketplace) are genuinely from consumers (if the company ensures this).
A new Consumer Sales Act
In addition to the abovementioned amendments to Swedish consumer law, a new Consumer Sales Act entered into force on the 1 May 2022, replacing the former Consumer Sales Act (1990:932). The new provisions largely focus on sale of digital goods and services, and introduce several new requirements that life sciences companies need to be aware of. For example, the Act contains new rules on warranty and fault liability benefiting consumers. On that basis, defects that appear within two years after a product has been delivered should now – in certain cases – be presumed to have already existed at the time of delivery. This time-frame was previously only six months. Furthermore, if a company provides a digital service or product, the company must, in certain cases, ensure that the service or product is continuously updated, for example with security updates. With regard to certain digital services, a company may solely make changes to such services if such changes might, for example, be effected at no cost to the consumer and if the consumer is informed beforehand.
The aforementioned new regulations will apply directly to companies selling products and digital services in the life sciences sector, such as sales of food and dietary supplements, as well as to the provision of various e-health services. The new regulations will have a major impact on the operations of the life sciences companies concerned.
In particular, the new regulations have far-reaching implications for companies that violate the updated laws. It is therefore in the interests of life sciences companies to adapt their business to the new requirements. For example, the newly introduced regulations regarding how products may be marketed on digital marketplaces will be particularly relevant to life sciences companies, and may ultimately require the marketing and information provided by the companies on digital marketplaces to be reviewed. Finally, life sciences companies should also review existing marketing plans, as well as planned marketing collaborations, to ensure that they are in line with the new regulations.
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