Systembolaget intends to remove certain V&S products from its range – a process known in the Swedish judicial system as ‘partial revocation’ – as it deems V&S to have contravened the terms of its supplier’s contract. The products being de-listed represent an arbitrary selection by Systembolaget.

Systembolaget – the Swedish Alcohol Retailing Monopoly – claims that V&S is guilty of breach of contract, as nine V&S employees have been prosecuted for bribing Systembolaget store managers. The fact that the alleged breach of contract presupposes Systembolaget’s involvement has had no effect on Systembolaget’s judgement. In Systembolaget’s view, Systembolaget can impose a financial penalty on V&S. This penalty is levied according to a sanction system developed by Systembolaget itself. V&S has opposed the penalty.

V&S wishes the sanction issue to be examined in arbitration to clarify whether Systembolaget is entitled to unilaterally de-list a number of V&S products due to alleged breach of contract. Systembolaget has chosen not to await arbitration, but has already contacted V&S’s business partners in order to de-list a number of products from the V&S range. The products Systembolaget wants to de-list include products from one of the suppliers that have decided to work with V&S on a pan-Nordic basis. This supplier chose V&S to streamline its Nordic product flow, and is now being obliged against its will to change distribution for one of its products in Sweden.

Such an action would entail immediate and irreparable financial damage for V&S. If Systembolaget is allowed to carry out its plans, the damage to V&S could run into hundreds of millions of Swedish kronor.

To prevent Systembolaget from de-listing products before due arbitration, V&S has applied to the Swedish Court of Appeal for a temporary injunction. If such an injunction is granted, Systembolaget will not be able to de-list products until arbitration has taken place.

V&S is requesting the temporary injunction because Systembolaget has unilaterally introduced procurement conditions that have not been accepted by V&S. Systembolaget chose not to complete negotiations for an industry-wide agreement when one was on the table a few years ago. So in fact, V&S has not signed the contract to which Systembolaget is referring.

V&S’s request for arbitration to resolve the dispute is fully in line with Systembolaget’s unilateral agreement. Nevertheless, Systembolaget intends to forestall arbitration. Arbitration is a means for V&S to examine whether Systembolaget as a monopoly has the right to unilaterally apply contract clauses and sanction proceedings. An arbitration process could help clarify the different parties’ roles in the Swedish monopoly market.

V&S’s view is that the punishment Systembolaget is imposing in the form of de-listing has no connection to the alleged ‘infringement’, and is disproportionate to said ‘infringement’. In addition, the actions to which Systembolaget is referring took place in 2001-2003, i.e. before Systembolaget introduced its unilateral agreement with scope for sanctions.

Partial revocation entails a penalty on V&S as a company, even though the company has not been prosecuted. Systembolaget is therefore collectivizing the liability even though no one, Systembolaget included, is claiming that the V&S management has in any way been involved in the alleged bribery. V&S would also like to point out that no one has been convicted in this matter, and that it has not yet been possible to examine the issue of breach of contract in a due legal process.

V&S is of the opinion that Systembolaget should not carry out any de-listing of products until arbitration has taken place. Systembolaget has nothing to lose from such a solution.

Further information
Jacob Broberg, Senior Vice President Corporate Affairs & Communications, V&S, tel +46 (0)8-744 70 33, mobile +46 (0)70-190 00 33, e-mail . The V&S press hotline can be reached on +46 (0)8-744 73 80.