Minister granted power to ban entire product categories

Viðskiptaráð has submitted a consultation response on the draft bill on nicotine and tobacco control. The Chamber submitted a response on the matter together with Samtök atvinnulífsins at the proposal stage in 2025, and again on an earlier draft of the bill in August of the same year, and refers to these as relevant.[1]

The draft bill involves sweeping changes to the operating environment of companies that manufacture, import and sell legal nicotine products. Under the bill, nicotine products would be brought under new comprehensive legislation on tobacco and nicotine control, whereas they are currently governed by Act No. 87/2018. Among other things, the draft bill provides for the manufacture of nicotine products to become subject to licensing and for sales through online shops to be restricted. It also provides for the Minister to be granted extensive powers to decide on restrictions on the flavourings and packaging of nicotine products.

Restricting freedom to conduct business requires proportionality

Viðskiptaráð points out that, were the draft bill to be passed, it would entail a further restriction on the freedom to conduct business, which is protected under Article 75 of the Constitution. Restrictions on the freedom to conduct business must always be based on objective and reasoned grounds, and proportionality must be observed. For this reason alone, Viðskiptaráð is wary of the changes proposed in the draft bill. In light of the fact that numerous measures have already been taken in the interest of public health – such as age limits, visibility and advertising bans, localised restrictions on use, and a substantial increase in the nicotine levy – Viðskiptaráð considers it premature to embark on such far-reaching and burdensome measures at this time.

As regards the bill's aim of preventing children and young people from using nicotine, it should be reiterated that nicotine is already prohibited for those under the age of 18, and the Chamber fully supports that ban being enforced through robust monitoring, but opposes the approach of responding to nicotine use among young people by restricting the freedom of choice of those who are of age to use the same products.

Nor does it appear justifiable to place nicotine products that do not contain tobacco under the same legislation as traditional tobacco products. As tobacco-free nicotine products are generally considered a less harmful alternative to traditional tobacco products, Viðskiptaráð believes the legislation should reflect that distinction. Treating these products as equivalent could reduce consumers' incentive to switch to less harmful alternatives, thereby undermining genuine public health objectives.

Excessive delegation of power to the Minister

Article 39 of the bill lists 38 regulatory powers, with the total number of powers running to over forty. The most substantively significant decisions are thus transferred from the legislature to the Minister. Under Article 14(2) of the draft bill, the Minister may restrict the sale and import of nicotine products on the basis of flavourings, without the legislation containing adequate criteria for which flavourings fall within its scope. It is also proposed that the Minister be authorised to lower the permitted maximum nicotine strength by regulation, without any floor, and the maximum strength of nicotine pouches is left entirely to be determined by regulation, cf. Article 11(1) and (3). The explanatory notes further state that, under the general regulatory power in Article 16(8), the Minister may prescribe plain packaging for nicotine products, even though the requirement for such packaging was removed from the statutory text itself following consultation.

Were the bill to be passed in its current form, the Minister would in effect be granted the power to ban entire product categories, wipe out the value of brands, and deprive retailers and wholesalers of their basis for operation by regulation alone. This sits poorly with the principle of legality in administrative law and with the requirement under Article 75 of the Constitution that restrictions on the freedom to conduct business be determined by law.

Ban on online sales ill-targeted

Under Article 24(2), delivery by a third party to a purchaser, such as home delivery, would be prohibited; cross-border distance selling is banned under paragraph 3, and domestic online sales may be further restricted under paragraph 7 by regulation. Viðskiptaráð opposes the above restrictions and points out that a ban on online sales would restrict commercial freedom and consumers' ability to conduct lawful trade in legal products. Such restrictions reduce competition, push up prices and encourage attempts to seek out informal or even illegal online retail.

Conflicts of interest and onerous sanctions

Under the bill, ÁTVR is set to be given a sweeping supervisory and licensing role, and would be able to impose administrative fines on legal entities of up to ISK 25 million, regardless of whether the breach is committed intentionally or through negligence, cf. Article 36(2) and (6). Daily fines could amount to up to ISK 500,000 per day under Article 29(2), and breaches could carry a prison sentence of up to two years under Article 34. At the same time, ÁTVR holds a statutory monopoly on the wholesale of tobacco under Article 7 of Act No. 86/2011 and itself manufactures snuff. Under the bill, the same institution would grant and revoke retail licences, carry out supervision, impose daily and administrative fines, and receive sensitive commercial information from manufacturers and importers under Articles 12 and 13, including on products that compete with the activities from which the institution itself derives benefit. As such an integration of commercial interests and supervisory power within a single state institution is inadvisable, Viðskiptaráð proposes that supervision be placed with another state institution instead.

The draft bill needs an impact assessment and revision

It is also worth noting that almost all of the cost of implementing the legislation is placed on businesses through various charging powers, and that the transitional periods included in the earlier draft have largely been removed following consultation. Such an approach is consistent neither with the principle of proportionality nor with the reasonable expectations of those conducting lawful business.

In this context, it is a matter for criticism that the section of the bill's explanatory notes dealing with the impact assessment is still marked as being in progress, for the second year running, given that Viðskiptaráð raised the same point in its response to the earlier draft of the bill. A bill that involves such far-reaching restrictions on the freedom to conduct business and property rights, without an adequate assessment of its impact on businesses, consumers and the Treasury, does not meet the standards required of sound legislation.

In light of all the above, Viðskiptaráð opposes the passage of the bill in its current form. The Chamber urges the authorities to revise the draft in light of the above points and to prioritise a thorough assessment of the impact of the laws and measures already in force, before proceeding with further burdensome legislation.

This article was automatically translated from the Icelandic original.