Unfair Trading Practices (UTP) – the first Swedish decision on sanctions
Following two years after the entry into force of the Unfair Trading Practices Act in Sweden the supervisory authority, the Swedish Competition Authority (“the SCA”), has issued its first decision imposing fines. The fines amounts to SEK 5 million (approximately EUR 425 000).
Fines of SEK 5 million (appox. 425 000 EU) due to large number of late payments
The decision, which was issued on the 26 October 2023, concerns the fruit and vegetable wholesaler Everfresh, part of the Dole Group. Everfresh’s unfair trading practice centers around it failing to pay its suppliers within the 30 days provided in the legislation (which applies to all kinds of food, both perishable and non-perishable). This is the SCA’s first decision on an administrative fine under the Act on Prohibition of Unfair Trading Practices.
The SCA took into account that the company had paid its suppliers late on a large number of occasions and that some of the late payments amounted to relatively high amounts. The investigation showed that on hundreds of occasions, Everfresh had paid at least six of its suppliers 4-23 days later than 30 days after the invoice date. Furthermore, the investigation showed that Everfresh had contractual terms with a total of 290 suppliers that stipulated payment periods of more than 30 days. The SCA did not find it necessary to determine how many additional late payments that had been made because of the contractual terms.
Despite Everfresh’s efforts to change its business system to address the late payments, its efforts to amend the contractual terms regarding payment times were incomplete at the time of the decision.
Everfresh’s arguments for not imposing a fine were rejected
Everfresh argued that the infringement was minor, that a transitional period should apply and that a fine was unjustified since no previous fines had been imposed on other undertakings. The SCA found all such arguments to be invalid.
Determining the fine
The SCA assessed the nature, duration and extent of the infringement when determining the fine. Given the nature of the infringement, the infringement was considered serious. The extended duration and extent of the infringement confirmed this conclusion. There was no aggravating or mitigating circumstances that should be taken into account when determining the penalty.
In an overall assessment of the circumstances described above, the SCA finds that a fine of SEK 5,000,000 is effective, dissuasive and proportionate to the purpose of the fine.
The SCA’s decision can be appealed to the Administrative Court in Stockholm.
While this is the first decision where the SCA has imposed a fine, there will most certainly follow other decisions on fines for breaches of the rules regarding unfair trading practices. However, considering the fairly low number of complaints, our assessment is that many suppliers are afraid of actually reporting buyers to the SCA due to the risk of retaliation on a concentrated market. At the same time our impression is that the legislation has had a certain deterrent effect. The SCA is currently assessing the effects of the legislation according to an assignment from the Government and will shortly report its conclusions and we will continue to monitor any new developments.