Clarity on price transparency: New guidance on price indication in Sweden

Key takeaways

On average, 7 out of 10 traders do not comply with the rules on price indication during sales and promotions. A precise application of the rules is particularly important given the Swedish Consumer Agency’s focus on price indication, having recently conducted a sweep of the sector and provided new guidelines. So, what are the key points for traders and how does it impact future sales- and promotion signage? Here are our key takeaways:

• When lowering the price on a product, traders must always indicate the lowest 30-day price in a clear and concise manner in immediate vicinity to the discounted price.
• Price reductions must be calculated based on the 30-day price and it may be unlawful to indicate additional reference prices besides the 30-day price.
• Breaching the Swedish Price Indication Act can be a costly mistake for traders, as the supervisory authority gains additional tools to ensure compliance.

High consumer protection – the focus in new guidance

The EU has actively been working towards enhancing price transparency since the adoption of the EU Omnibus Directive . Despite the adoption of national provisions on price indications of reduced prices in Sweden, these provisions are deemed too vague by themselves. To address this, the Swedish Government instructed the Swedish Consumer Agency to provide guidance and conduct a compliance sweep of traders in Sweden.

On October 9, 2023, the agency issued an opinion on the interpretation of the new provisions. This was followed by the agency published binding guidance on price indication addressing the new provisions on the indication of the 30-day price on October 28, 2023.

The provisions require traders to inform consumers of the lowest price in the previous 30-day period for products which are indicated as being reduced in price, in the following referred to as “the 30-day price”. Price transparency in conjunction with reduced prices has clearly been a prioritised area for the Swedish Consumer Agency, as it faces the challenge of price transparency head on.

The guidance released by the agency focuses on high consumer protection and addresses four primary areas:

1. When to indicate the 30-day price: Traders are obligated to provide the 30-day price when expressions like “Clearance sale”, “sale”, “promotion”, “offer” or other expressions that give the impression that price has been reduced are used. Other expressions that give the impression that price has been reduced are when prices are crossed out or indicated in brackets and central to this assessment is the impression it gives to the average consumer. The obligation is activated even if a price reduction has not actually occurred; an impression is sufficient. General rules on marketing practices must also be considered.
   
   
2. Where to indicate the 30-day price: The 30-day price must be displayed in the immediate vicinity of the discounted price in a style and size that is easy to read. This applies every time a price is indicated. The 30-day price may be crossed out or indicated within brackets. However, the reduced price may not be presented in such way.
   
   
3. Basis of calculation for % discounts: Traders may be tempted to use a figure other than the 30-day price as the basis of calculation for discounts e.g. by referencing an “original price” of some sort. The guidance from the Swedish Consumer Agency is clear that this is not permitted, regardless of how the referenced price is labelled. Reduced prices and any % indicated for such prices must be calculated using the 30-day price.
   
   
4. The use of additional reference prices: Traders are discouraged from providing reference prices in addition to the 30-day price, with the Swedish Consumer Agency stating that such practices are generally not permitted. This is different from the European Commission, which has provided an example on when this marketing method may be allowed. While this general prohibition is not established in Swedish law, the Swedish Consumer agency considers the indication of additional reference prices to be misleading, even if indicated in compliance with the example presented by the European Commission. Overall, the Swedish Consumer Agency seems unwilling to reach a standpoint that is applicable in all cases, leaving it open to interpretation in each individual case.

In conjunction with the publishing of this new guidance, the Swedish consumer Agency also conducted a sweep to investigate compliance finding that, on average, 7 of 10 companies did not comply with the new rules on price indication (read the full report in Swedish here). The festive period is filled with promotions and sales, and also occurs in close conjunction with Black Friday sales requiring companies to pay attention to the particularities of the rules on price indication.

Sanctions in case of non-compliance

In addition to the new provision on price transparency, new provision on sanctions in case of non-compliance were also implemented following the Omnibus Directive. As such, non-compliance with price transparency is now subject to marketing practices sanctions and may result in a fine of minimum SEK 10,000 and maximum 4% of the traders’ annual turnover.

Some exceptions do however apply, in which case the 30 day-price is not required to be provided.

1. If the price has been gradually reduced during the 30-day period, the price applicable before the first price reduction shall be indicated instead;
2. If the product has not been on the market for thirty days, the lowest price applicable during the time the product has been available on the market shall be indicated; and
3. For products that can quickly deteriorate or become outdated, such as dairy.

The growing focus on price transparency and increased legal scrutiny also comes with increased legal, reputational and financial risks for traders. Therefore, traders need to act now and adopt routines to ensure compliance with price transparency obligations in Sweden and the EU, not least when sales and promotions come right after each other. Bird & Bird’s international Retail & Consumer group is well placed to advise on this increasing legislation, with deep expertise in the sector across international markets. From navigating price transparency obligations to marketing compliance, our experts can advise on these issues in this rapidly changing space.