Significant changes in the rules on infringement fines for violation of consumer protection rules as of 14 February 2023
On 14 February 2023, a regulation on measuring of compulsory fines and infringement fines for violations of the Marketing Act, the Consumer Purchases Cancellation Act, the Package Tours Act, and the Transparency Act came into force. The regulation can be found here.
The new rules are part of the implementation of the EU’s Omnibus Directive in Norway, which we have previously written an account of here. The rest of the proposed rule changes for implementing the Omnibus Directive in Norway are expected to be passed in 2023.
According to the regulation, an infringement fine of up to four percent of a business’ annual turnover may be issued, or up to NOK 25 million, whichever is higher. From now on, these upper limits will apply where there are grounds for issuing infringement fines for violations of the Marketing Act, the Consumer Purchases Cancellation Act, the Package Tours Act, and the Transparency Act.
Some key aspects that are considered when deciding the amount of an infringement fine are the nature, the severity, extent and duration of the violation, the possibility of preventing the violation through guidelines, instructions, training or control, any financial gain resulting from the violation, earlier violations, and the business’ financial position. We expect that from now on, we may see cases of substantial infringement fines being issued if companies with a high turnover are deemed to be operating in gross or repeated violations of any of the aforementioned consumer protection laws.
As a background, we note that infringement fines issued during the 10-year period leading up to 2022 typically amounted to between NOK 50,000 – 500,000, and the highest infringement fine issued during that period was NOK 1.2 million. However, the Consumer Authority took a significantly stricter approach in 2022, by issuing fines of in total NOK 7 million to three online traders (4+2+1) for violating the Marketing Act’s provisions on misleading marketing. In connection with this, the Consumer Authority issued the following statement:
“Traders are expected to be well versed in the regulatory framework. However, the Consumer Authority sees that earlier decisions, both relating to prices and violations of the Marketing Act in general, have not had sufficient general preventive effect. (…). In order for businesses (…) to take the rules seriously, we therefore see the need for increasing the fines compared to earlier practice.”
It is also particularly worth noting that the regulation has now established a fixed frame for the level of fines for violations of the rules of the new Transparency Act which came into force on the 1st of July 2022. The Transparency Act places strict demands on businesses covered by the Act to demonstrate due care in their operations, and i.a. imposes a reporting and information obligation for how the business handles actual and potential negative consequences for basic human rights and decent working conditions. CLP has previously summarised which measures that should be initiated in this article.
Since the regulation gives room for a potentially high ceiling for infringement fines, the importance of implementing good routines for fulfilling the legal requirements is emphasized. Feel free to contact us if you have any questions.
