The European Network Against Racism (ENAR), based in Brussels, argued that the "slave auction" constituted racism and urged for the incident to be taken seriously.
"ENAR expresses its utter outrage that such actions remain unpunished and are not being condemned. Such proliferation of crude racism and incitement to hatred is totally unacceptable and needs to be treated with all the seriousness it deserves," the group wrote in a statement.
ENAR, who previously has expressed their disgust at the incident in an open letter to democracy minster Birgitta Ohlsson, has now slammed Sweden for not meeting its obligations in the UN Declaration of Human Rights.
"In Sweden, the legislation that is meant to protect the human rights of every individual only exists in theory but not in practice when it comes to protecting minority rights," the group argued.
The incident, where three people with blackened faces and ropes around their necks were led into the hall by a "slave trader" and later sold, occurred at student association Halland Nation in April.
It was reported to the police by the Afro-Swedish Association.
While the artist responsible for the posters, Dan Park, was charged on Thursday with both hate speech and defamation, the association argued that the decision not to prosecute the students exposed a situation where Afro-Swedes do not enjoy the same protection before the law in Sweden as other groups.
"The prosecutor's decision to not press charges... reveals that in Sweden this protection exists only in legal terms and in a false Swedish self-picture of tolerance and openness," the association wrote in a statement.
The district prosecutor Mattias Larsson explained his decision on Friday by saying that the students' intent to "show contempt for a people" couldn't be proved and thus did not constitute hate speech.
"It was a costume party really, and that has to be considered in this case," he said to the local Sydsvenskan daily on Friday.
The Afro-Swedish Association however argued in a separate statement that the ruling indicates that anyone is free to "ridicule black people - as long as you dress up" and argued that slavery is not treated as seriously as crimes such as the Holocaust.