The Finnish Consumer Ombudsman (the “CO”) filed an application for summons with the Market Court claiming that a conditional fine for violation of an injunction should be enforced and a new injunction issued on our client, NaturaMed Pharma AB (“NaturaMed”). NaturaMed is a leading dietary supplement company in the Nordic countries, which sells different kinds of supplements, such as vitamins and fish oil, to consumers as subscriptions.
In its application for summons the CO claimed that our client had violated the prohibition of misleading marketing under the Finnish Consumer Protection Act and the injunction imposed on our client by the CO in 2010. The CO referred to three marketing campaigns during 2019 and 2020 concerning a subscription of a magnesium supplement. In its campaigns, NaturaMed offered consumers a gift and a free 30-day dose of MagnesiMed as an introductory offer in connection with a subscription order of the magnesium supplement.
According to the CO’s application and its injunction order of 2010, it would be prohibited to market an introductory offer or product as “free” or otherwise express it to be gratuitous if, in fact, a consumer has to make a subscription of that product. In other words, the CO deemed that NaturaMed violated the Consumer Protection Act by marketing the 30-day trial period of MagnesiMed for “0€” while consumers had to make a continuous subscription of the product, which became subject to a charge after the trial period. Our client contested the CO’s view and claimed that the CO’s interpretation of the prohibition of misleading marketing is against the Consumer Protection Act and relevant EU regulation.
The key question at the Market Court was whether the described marketing by NaturaMed would constitute a prohibited marketing conduct belonging to the “black list” under the EU Directive concerning unfair commercial practices (2005/29/EC), which is implemented into Finnish law by Government Decree 601/2008. Should the marketing conduct belong to the black list of unfair commercial practices set out in the Directive, it would directly be deemed in violation of the prohibition of misleading marketing under the Consumer Protection Act without further assessment. According to point No 20 of the black list, it is prohibited to describe a product as “free” or similar if the consumer has to pay anything more than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item. In the CO’s view, this means that a trial period of a product may not be marketed as free, if the consumer simultaneously has to make a subscription of the product.
The Market Court concluded that such interpretation could not be made from the black list. According to the Market Court, point No 20 of the black list does not categorically prohibit the use of the word “free” or similar. This point only concerns situations where the consumer in order to get the product which is marketed as free, has to pay other than necessary postal or other costs to respond to the offer, which was not the case here. The Market Court further noted that the crucial criteria is that the additional benefit is separate and additional to the main product (here the subscription) and that the main product is offered to its normal quality and price. In such case, it is not prohibited or misleading to describe an additional product or trial period as free even if the consumer will have to pay for the subscription after the trial period. Consequently, the Market Court rejected the CO’s application in favor of NaturaMed.
The decision by the Market Court is very significant as point No 20 of the black list had never been interpreted in Finnish case law before. It is very common in the market place to offer a trial period during which customers may try a subscription of a product or service for free using expressions such as “try 30 days for 0 €” or “30 days for free” and after which the subscription automatically continues. Now, the Market Court confirmed in its decision that this kind of marketing is not deemed prohibited under the black list, provided that the quality or composition of the product is not reduced, or the price of the product increased, in order to cover the costs for the free product.