Snus is snus
even if packed
in golden boxes
A company with a dominant position in its market may not abuse their position to distort or restrict competition. This can involve pricing and discounts but can also relate to the way companies use established infrastructure or sales methods.
In February 2017, the Swedish Patent and Market Court ruled that Swedish Match North Europe AB (Swedish Match) abused its dominant position in the snus market by using their coolers in ways that favoured their own products over those of their competitors.
So here’s what happened: Swedish Match had placed coolers with a large number of snus retailers. The coolers stored not only Swedish Match products but also snus manufactured by their competitors.
For a number of months in 2012–2013, Swedish Match introduced a new system for shelf edge labelling in the coolers, which meant that competitors no longer were allowed to design their own labels but forced to use a detailed template, designed by Swedish Match. If they didn’t, they had to accept that Swedish Match would replace their existing labels with generic grey-white and less visible labels, many of which lacked prices for the competitors’ products.
In some cases, Swedish Match themselves used the different labels to promote their own low-priced snus, Kaliber. Their actions greatly disadvantaged both competing manufacturers as well as consumers.
The competitions authority investigated
The Swedish Competition Authority launched an investigation following a complaint from the three biggest competitors and proceeded to sue Swedish Match. Swedish Match has now been convicted by the Patent and Market Court to pay more than SEK 38 million in administrative fines for abuse of its dominant position.
The Court has held that the actions of Swedish Match were not normal commercial behaviour and that the market-leading company had a strategy that constricted price and brand competition.
Prohibition to harm competition
Chapter 2 Article 7 of the Swedish Competition Act and Article 102 of the Treaty on the Functioning of the European Union prohibit the abuse of a dominant position in the market. A dominant position in itself is not prohibited. A dominant company is however prohibited from acting on the market in a way that harms or could harm competition. This includes using methods that restrict competing companies’ opportunities in the market or imposing restrictive measures detrimental to consumers.
In other words, if you’re a big player, you have to be restrained in your competitive strategies.