One Year with the Swedish Unfair Trading Practices Act (the UTP Act)

It is now a year since the Swedish Act on the Prohibition of Unfair Trading Practices in the Purchase of Agricultural and Food Products (the so-called UTP Act, Sw. ”lagen om förbud mot otillbörliga handelsmetoder vid köp av jordbruks- och livsmedelsprodukter”) entered into force on 1 November 2021. During this time the Swedish Competition Authority has, among other things adopted several position papers, provided general guidance and decided on a number of supervisory matters. In this blog post, we briefly reflect on the Swedish Competition Authority’s activities during the past year and looking forward. You can read more about this in our newsletters from June and November this year.

The Swedish Competition Authority’s activities

The Swedish Competition Authority has during the past year focused on educating and informing regarding the UTP Act. This is not only evident from the guidance provided in the form of position papers and general advice. Despite the fact that in several enforcement cases the Swedish Competition Authority has found violations of the prohibitions of the legislation no injunctions or fines have been imposed. Instead, the cases have been closed without supervisory measures on the grounds that the behavior in question has been rectified or that the purchaser has announced that it will do so. It is however fair to assume that other types of measures, such as fines and injunctions, will be imposed by the Swedish Competition Authority in the future. Not least in case of repeated violations or if the authority perceives that the approach does not have the desired effect among buyers. The Swedish Competition Authority’s approach may also be influenced by the stated ambition to cooperate with other Member States’ supervisory authorities.

It may be somewhat of a surprise that only one of eight supervisory matters decided on so far concerned a retailer (the others concern municipalities and potato buyers). We believe this is due to a lack of complaints against grocery retailers, with few suppliers willing to engage in an open conflict with their buyers. At the same time, we hope that the rules have at least had some deterrent effect on buyers within the grocery industry. The many supervisory matters initiated against municipalities is due to the Swedish Competition Authority’s special review of how the public buyers apply the rules on cancellations.

Reflections and outlook

The shared experience of many suppliers we have been in contact with is that buyers have embraced the straightforward rules of the UTP Act (such as the rules on payment times and cancellations) but they tend to disagree on other issues. Further guidance in the form of position papers and case law from the Swedish Competition Authority would be welcome. We believe that many suppliers would be particularly interested in guidance on how to interpret the prohibition against commercial retaliation. It seems like the Swedish Competition Authority have taken note of this. However,
the authority relies partly on complaints to investigate possible violations of the UTP Act and, in extension, to create case law (most of the authorities’ supervisory matters have this far been initiated following anonymous complaints). It is certainly possible to provide anonymous complaints but without the active participation in the investigation of suppliers, we unfortunately believe that it may be some time before we learn more about the proper interpretation of the prohibition against commercial retaliation.

We urge suppliers to continue enforcing their rights by reviewing contracts (especially when existing contracts are being re-negotiated), monitor actions taken by their buyers and seek to reach commercially viable solutions with them. If necessary, with the assistance of a lawyer. Buyers on the other hand need to ensure that they comply with the requirements to avoid sanctions. Although no fines have yet been imposed, it will certainly occur in the future. We continue monitoring developments and will return with further updates.