Jonathan Griffiths, Reader in
Intellectual Property Law, Queen Mary University of London
The Tobacco
Products Directive (Directive 2014/40/EU, revising Directive 2001/37/EC) imposes stringent controls on the marketing of
tobacco products. It introduces, inter
alia, a requirement for cigarettes and hand-rolling tobacco to carry more
prominent picture and text health warning, further regulatory controls on the
marketing of tobacco products (including e-cigarettes) and a prohibition on the
marketing of tobacco products with “characterising flavours” (including menthol
cigarettes).
On
23rd December, Advocate General Kokott delivered her Opinions in
three cases concerning the validity of various provisions of the Directive. In (C-358/14)
Republic of Poland v Parliament &Council, Poland seeks annulment of the Union-wide prohibition on menthol cigarettes.
Both other cases are requests for a preliminary ruling made in judicial review
proceedings by the High Court of England and Wales. (C-477/14) Pillbox 38 (UK) Ltd was referred in a case concerning the domestic implementation of the
Directive’s rules concerning e-cigarettes. In the national proceedings in (C-547/14)
Philip Morris Brands SARL,
in a challenge described by the Advocate General as “a kind of general
onslaught”, tobacco companies call
into question the domestic implementation of several of the Directive’s provisions.
In all three Opinions, the Advocate General advises the Court comprehensively
to reject the challenges to the Directive’s validity.
This
blogpost focuses on the Opinion in Philip
Morris Brands SARL. It outlines the Advocate General’s conclusions on the
various questions referred by the High Court and then move on to reflect on that
Opinion’s potential implications for current disputes concerning the
introduction of legislation requiring fully standardised packaging for tobacco
products by some Member States (notably, the United Kingdom, Ireland and
France).
(C-547/14) Philip Morris Brands SARL
Phillip
Morris (and British American Tobacco) (“the tobacco companies”) brought a claim
for judicial review against the Secretary of State for Health, seeking to
prevent the implementation of the Directive.
They challenge the Directive on a variety of grounds. They claim, first,
that Art 114 does not provide an adequate legal basis for several provisions of
the Directive. Secondly, they argue that the Directive violates the principle
of proportionality, particularly when viewed in the light of the Union
legislature’s obligation to respect their fundamental rights under the EU
Charter of Fundamental Rights. Thirdly, they argue that the Directive improperly
delegates certain powers to the Commission and, as a result, violates Arts 290
and 291 TFEU. Finally, they claim that the Directive breached the principle of
subsidiarity.
While
the Secretary of State considers the Directive to be valid, he took the view
that the Court of Justice had exclusive jurisdiction to assess its validity. In
such circumstances, the High Court simply referred a list of questions
concerning the companies’ challenge to the Court of Justice for a preliminary
ruling.
Admissibility
Palpably
irritated by some aspects of the reference, Advocate General Kokott advised the
Court that, in her view, several of the referred questions are inadmissible. A
number of the referred questions concern the companies’ challenges to those
provisions of the Directive which provide latitude for Member States to adopt more stringent national tobacco control measures than those set
out under the Directive (including “standardised packaging” under Art 24(2)). In
the absence of the actual adoption of any national measures, the Advocate
General considered that, such questions are hypothetical. [37]-[43]. Secondly, several of the referred
questions relate to powers delegated to the Commission under the Directive. However,
the proceedings before the national court concern only the United Kingdom’s
intention and duty to implement the Directive and therefore any questions
concerning the Commission’s role are also inadmissible at this stage. [44]-[47].
Thirdly, the national court had raised certain questions about the compatibility
of the Directive with the principle of subsidiarity. However, the nature of any
such alleged incompatibility was not explained at an adequate level of detail and
such questions were therefore, save in one limited respect, also inadmissible. [48]-[51].
Despite the fact that the Advocate General considered these referred
questions to be inadmissible, she went on to provide her views on their
substance in the alternative (see below).
Even where admissible,
the referred questions did not escape criticism. The Advocate General was particularly
concerned that the High Court had generally provided a very limited description
of the relevant arguments relating to the questions referred [32]-[34].
In effect, the national court appears to have had done little more than convey
the text of the tobacco companies’ challenge without making any significant attempt
to come to its own view on the various questions. In noting that the companies’
claims were “reasonably arguable”, the national court had done the “absolute
minimum” necessary to render the remaining questions admissible [21]-[30].
Art 114 TFEU as legal basis for provisions
of the Directive
In a
well-established formula, the Advocate General initially noted that recourse to Article 114 TFEU as the legal basis for Directive
2014/40 could not be called into question simply because, in addition to
improving the functioning of the internal market for tobacco and related
products, the Directive also pursued a high level of health protection as a goal.
[56] She then went on to assess each challenge under Art 114 TFEU in turn. They
focused on provisions of the Directive which (i) prohibit the marketing of tobacco
products with a characterising flavour (Art 7); (ii) regulate the labelling and
packaging of tobacco products (Arts 8-16); (iii) grant Member States freedom to introduce
further standardisation of the packaging of tobacco products (Art 24(2)) and to
prohibit certain categories of tobacco product for reasons relating to the
specific situation in a Member State (Art 24(3)); (iv) give Member States the
option to prohibit cross-border distance sales of tobacco products to consumers
(Art 18(1)); and (v) authorise the Commission to implement certain
internationally agreed standards on a continuing basis (Arts 3(4) & 4(5)).
The Advocate General considered that, if these provisions are
interpreted appropriately, Art 114 TFEU provides an adequate legal basis for
the Union legislature’s activity. Relevant current and future obstacles to
trade exist and the contested provisions will improve the functioning of
the internal market. Undoubtedly, where tobacco products are prohibited, the Directive is not capable of improving the
functioning of the internal market for those products.
However, it is recognised in the Court’s jurisprudence that Article 114
TFEU grants the Union legislature the power to prohibit the placing on the
market of a certain product if this helps to improve trading conditions for a
class of other products [54]-[144].
Proportionality
In
the national judicial review proceedings, the tobacco companies challenged the proportionality
of two aspects of the Directive - the prohibition on the marketing of tobacco
products with characterising flavours and the regulation of the labelling and
packaging of such products. In accordance with established jurisprudence, the
Advocate General noted that the principle of proportionality:
“..requires that acts of
the EU institutions be appropriate for attaining the legitimate objectives
pursued by the legislation at issue and do not go beyond what is necessary in
order to achieve those objectives;… when there is a choice between several
appropriate measures, recourse must be had to the least onerous, and the
disadvantages caused must not be disproportionate to the aims pursued…” [146]
In
assessing proportionality, the Court is obliged to take fundamental rights into
account wherever relevant.
In
the national court, the tobacco companies claimed that many of the contested
provisions of the Directive interfere disproportionately with their freedom to
conduct a business (Art 16, EU Charter). In examining these claims, the Advocate General noted that the Union legislature has a broad discretion to interfere
with the right to conduct a business where it acts in an area, such as that of
tobacco control, which involves political, economic and social choices and in
which it is called upon to undertake complex assessments and evaluations. This
was particularly so where the Union legislature acted to achieve a high level of health protection in the European internal
market. In such circumstances, legislative activity will only be invalid if it is
manifestly inappropriate for attaining the legitimate objectives pursued, goes
manifestly beyond what is necessary to achieve those objectives or entails
disadvantages which are manifestly disproportionate to its objectives. [149]-[150]
In this light, and in view of the precautionary principle [155]-[160],
the Advocate General did not consider that the contested measures constitute a
disproportionate interference with the tobacco companies’ freedom to conduct a business.
A number of less intrusive means of satisfying the legislature’s health goals
had been suggested by the tobacco companies. These included the imposition of
age limits on the sale of cigarettes with characterising flavours and the
launching of information campaigns about the dangers of tobacco products. However,
in the Advocate General’s view, these would clearly be less effective than the
measures adopted under the Directive. In considering proportionality in the
strict sense, she acknowledged that the contested provisions would have an
adverse economic impact on some undertakings. However, she noted that transitional
periods were available under the Directive and, in any event:
“It should be borne in mind…that
the protection of human health has considerably greater importance in the value
system under EU law than such essentially economic interests (see
Articles 9 TFEU, 114(3) TFEU and 168(1) TFEU and the second sentence of
Article 35 of the Charter of Fundamental Rights), with the result that
health protection may justify even substantial negative economic consequences
for certain economic operators.” [179][204]
This being so, the contested provisions did not interfere
disproportionately with the companies’ freedom to conduct a business.
The national court also referred a question concerning the
proportionality of Art 13 of the Directive with the tobacco companies’ right
of freedom of expression under Art 11 of the Charter. Art 13 prohibits elements of labelling on the packaging of tobacco
products that give rise to a number of specified effects, including those that (i)
promote a tobacco product or encourage its consumption by creating an erroneous
impression about its characteristics, health effects, risks or emissions; (ii) those
that suggest that a particular tobacco product is less harmful
than others or aims to reduce the effect of some harmful components of smoke or
has vitalising, energetic, healing, rejuvenating, natural, organic properties
or has other health or lifestyle benefits and (iii) those
that suggest economic advantage. The Advocate General interpreted this
provision as prohibiting both true and false statements on product packaging
where those statements, viewed objectively, are capable of producing one or
more of the designated effects:
“An ‘organic
cigarette’ is still a product that is extremely harmful to health. Information
on the product packaging should not suggest even to consumers who are aware of
the health risks of smoking — even merely subconsciously — that it is
desirable for them or beneficial to the environment to smoke ‘organic
cigarettes’. In addition, any poor conscience on the part of smokers on account
of the health risks associated with the consumption of tobacco products should
not be appeased by the fact they are doing something good for themselves or for
the planet by turning to ‘organic cigarettes’ rather than conventional cigarettes.”
[222]
Nevertheless, even when interpreted expansively
in this way, Art 13 does not constitute a disproportionate interference with
the tobacco companies’ right of freedom of expression. The Union legislature
has less freedom of manoeuvre in restricting freedom of expression than it has
in interfering with the right to conduct a business. The European Court of Human
Rights has for some time subjected restrictions to commercial communications to
a detailed proportionality enquiry and the Court of Justice should do likewise.
However, according to the Advocate General, the constraints imposed by
Article 13(1) were not disproportionate to the health protection
objectives pursued, particularly as the products at issue entail considerable
health risks [211]- [237].
Improper
delegation of powers to the Commission
Under Art 290(1) TFEU, the Union legislature may
delegate the power to adopt non-legislative acts of general application to
supplement or amend a basic legislative act to the Commission and, under Art
291TFEU, the legislature may delegate the power to adopt measures that
implement legislation to the Commission. The referring court asked whether, in
passing provisions of the Directive, the Union legislature had exceeded the
limits of these powers of delegation; in particular, because a number of the
powers delegated were either legislative in nature or were unreasonably vague.
The Advocate General considered any such criticisms to be ill-founded [238]-[269].
The
principle of subsidiarity
Under the principle of subsidiarity, as enshrined in Art 5(1)
TEU in conjunction with Article 5(3) TEU, in areas which do not fall
within its exclusive competence, the Union may act only if and in so far as the
objectives of the proposed action cannot be sufficiently achieved by the Member
States, but can rather, by reason of the scale or effects of the proposed
action, be better achieved at Union level [271]. As noted above, in large part,
the questions referred by the national court on the application of the
subsidiarity principle were considered to be inadmissible by the Advocate
General because they had not been presented in sufficient detail. The only admissible
question on subsidiarity was given short shrift by the Advocate General, who
was strongly of the view that action to control tobacco products with
characterising flavours could not be achieved at national level and that the Directive’s
objectives in this regard could be better achieved at Union level.
In addition to this challenge on substance, the national court had
asked whether the Union legislature had provided an adequate statement of
reasons for the Directive in the light of the principle of subsidiarity,
suggesting that the legislature had simply asserted compliance with the
principle of subsidiarity in a formulaic manner. That being the case, a
question arose as to whether the Directive was vitiated by a defective
statement of reasons. In considering this question, the Advocate General noted
that:
“Where compliance
with the principle of subsidiarity is under examination, it must be clear from
the statement of reasons for the EU measure whether the Union legislature gave
sufficient consideration to questions relevant to the principle of subsidiarity
and, if so, what conclusions it reached with regard to subsidiarity.”
She agreed that Recital 60 of the Directive was
an “empty formula”. However, this did not necessarily
mean that the measure was invalid because aspects relevant to the issue of
subsidiarity were also to be found in other recitals, even if those recitals do
not themselves make express reference to the principle of subsidiarity .
Furthermore, it was not necessary for the justification for a Union measure in
the face of the principle of proportionality to be completely evident in the
contested legislative measure itself. Here, for example, justification for the
Union’s legislative action could be found in the Explanatory Memorandum for the Commission’s
Proposal for a Directive and in the comprehensive preparatory work by the
Commission staff in connection with the impact assessment
for the Directive. As a result, the legislative institutions had adequate material
on which to base their evaluation of compliance with the principle of
subsidiarity [270]-[301]. Nevertheless, according
to the Advocate General:
“...it is strongly
advisable that in future the Union legislature avoids set formulas like the one
contained in recital 60 in the preamble to the Directive and instead enhances
the preamble to the EU measure in question with sufficiently substantial
statements regarding the principle of subsidiarity which are tailored to the
measures in question. [301]
Implications for standard
packaging legislation in the Member States
If the Court follows Advocate General Kokott’s guidance, the most
controversial provisions of the Tobacco Products Directive will comprehensively
withstand the tobacco industry’s “general onslaught”. However, the industry’s
legal challenge to tobacco control legislation in Europe will certainly not end
there. As explained above, Art 24(2) of the Directive provides that:
“This Directive shall not affect the
right of a Member State to maintain or introduce further requirements,
applicable to all products placed on its market, in relation to the
standardisation of the packaging of tobacco products, where it is justified on
grounds of public health, taking into account the high level of protection of
human health achieved through this Directive. Such measures shall be
proportionate and may not constitute a means of arbitrary discrimination or a
disguised restriction on trade between Member States...”
The United Kingdom and Ireland have already taken advantage of
this freedom to enact comprehensive standardised packaging legislation (see the
Standardised Packaging of Tobacco Products Regulations2015 and the Public Health (Standardised Packaging of Tobacco) Act 2015
respectively). France has committed to follow suit.
Under such laws, tobacco products must be sold in drab-coloured
packaging without any branding other than a written indication of the brand and
variant under which the product is sold. While the UK and Irish provisions are
not set to come into force until May, they have already been challenged by the
tobacco industry in judicial review proceedings. In the United Kingdom, the
High Court heard the industry’s challenge in December and judgment is expected soon.
The industry argues, amongst other things, that the domestic legislation
interferes with the principle of freedom of movement of goods, breaches European
trade mark law and violates a number of their fundamental rights.
(C-547/14)
Philip Morris Brands SARL does not
concern Member State standardised packaging legislation and, indeed, as we have
seen, the national court’s questions on the validity of Art 24(2) have been considered
inadmissibly hypothetical. Nevertheless, if endorsed
by the Court, the views of the Advocate General may have important implications
for the outcome of the domestic challenges to the legality of the UK and Irish
legislation.
National court not simply to refer tobacco
companies’ challenges without attempting to reach its own view
The
tobacco industry has deep pockets and resists tobacco control measures by all
means possible. In the domestic proceedings in (C-547/14) Philip Morris Brands SARL, the industry clearly threw the kitchen
sink at the Directive. In such circumstances, it is perhaps not surprising that
the domestic judge largely satisfied himself with establishing that the claims
were arguable before passing them swiftly on to the Court of Justice. Nevertheless,
the Advocate General’s strongly-worded criticism must make it more likely that the
High Court judge currently considering the challenge to the UK’s standardised
packaging regulations will attempt resolve the industry’s multiple claims himself
rather than simply referring them to the Court.
Free movement of goods
In (C-547/14)
Philip Morris Brands SARL, the
tobacco companies suggested that Art 24(2) could not properly be based on Article 114 TFEU because it allows Member States
to undermine the free movement of goods by introducing more stringent rules than
those laid down at Union level. As has been indicated above, the national
court’s question on this issue was considered inadmissible. Nevertheless, in the
alternative, the Advocate General suggested that Art 114 TFEU provided an
appropriate legal basis for Art 24(2). Properly interpreted, this provision permitted Member
States to adopt “further requirements” only in so far as the Union legislature
itself has not carried out harmonisation. As such, Art 24(2) simply made it
clear that the Directive was only partially harmonising. [105]-[120]. On this
basis, the Advocate General indicated that it ought to be possible for Member
States to introduce fully standardised packaging legislation at national level:
“…[T]he Member States
remain free, in particular, to lay down their own requirements as to colours of
all parts of the packaging which are not reserved for warnings, extending as
far as the standardisation of packaging….Colouring is regulated —
indirectly — in the Directive at most in so far as Article 13
prohibits tobacco products being given a misleading or deceptively positive
presentation.” [113]
Such national legislation would, of course, introduce new
obstacles to trade and the question of proportionality would be crucial in
determining whether the interference with the principle of free movement of
goods which they create can be justified. Again, on this issue, the Advocate
General’s Opinion offers interesting insight.
Proportionality and fundamental rights
Formally
at least, the proportionality of national
legislation must, be examined against a stricter standard than that applied generally
by the Advocate General in (C-547/14) Philip
Morris Brands SARL (“manifest disproportionality”). There are also
differences in the factual and policy contexts of the two disputes. Nevertheless,
there are many indications in the Opinion that suggest that, in principle, national
standardised packaging legislation will survive review for compatibility with the
proportionality principle in Union law.
Logically,
a Member State legislature ought also to benefit from discretion to legislate
in an area, such as tobacco control, which involves political, economic and social
choices and in which complex assessments and evaluations must be undertaken and
the “precautionary principle” ought to apply where national legislation aims to
achieve important public health objectives against a background of scientific
evidence that is, to some degree, uncertain. More particularly, however, the
Advocate General’s Opinion indicates considerable scepticism about some of the arguments
upon which the industry has relied heavily in the judicial review of the standardised
packaging regulations in the United Kingdom.
She was clearly not persuaded
by claims that an alleged increase in the trade in counterfeit tobacco products
resulting from standardised packaging legislation renders such legislation disproportionate.
[84]-[85]; [182]. Perhaps even more importantly, she rejected, with some
disdain, the argument that standardised packaging legislation will be
ineffective in dissuading people (and particularly young people) from smoking;
noting that plainer packaging will remove some of the “coolness or fun factor
that may be associated with unusual or particularly striking packaging and the
curiosity that may be inherent in new or unusual packaging…” [191].
Conclusion – the role of fundamental rights
In lobbying on, and
litigating against, standardised packaging legislation, the tobacco industry
has placed considerable reliance on its fundamental rights. However, the
Opinion in (C-547/14) Philip
Morris Brands SARL suggests that the presentation of its arguments within
the framework of the Charter is unlikely to have a conclusive impact on the
outcome of its challenge to standardised packaging legislation. The right to
conduct a business is clearly very readily outweighed in the public interest
and, even if the restriction of the industry’s right to apply its trade marks is
framed as an interference with property under Art 17 of the Charter, little
significant difference would appear to be made to the assessment of proportionality
in this instance (see (C-477/14) Pillbox
38 (UK) Ltd [194]-[201]). Even arguments based upon the more potent right
of freedom of expression are unlikely to prevail. Ultimately (and perhaps
unsurprisingly), all such claims face the same obstacle. In the Advocate
General’s words:
“Certainly, the standardisation of the shape, size and minimum
content of cigarette packets brought about by the Directive means a loss of
diversity, marketing opportunities and competitive potential for manufacturers
of tobacco products. However, the purely economic interest in the greatest
possible inter-product and inter-brand competition must be secondary to the
protection of human health, which, as has already been stated, has considerably
greater importance in the value system under EU law…” [193]-[204].
This,
however, is not the only interesting point to be made about the Union’s
fundamental rights framework. More generally, there are also a couple of
features of the Opinion which indicate that the Court’s jurisprudence on the application
of the Charter may not yet be fully established. First, while the Advocate
General referred to the right to health care protected under Art 35 of the
Charter as designating a public interest of very high importance, she did not
examine the legitimacy of the various contested provisions by reference to the
need to establish a “fair balance” between competing rights of equivalent
status. Instead, she sought strictly to determine the proportionality of the
Union legislature’s interference with the tobacco companies’ protected rights.
This approach might have been employed as a result of the manner in which the
national court had referred its questions. However, in other cases, the Court
has employed a “fair balance” framework and this diversity of approach indicates
a significant ambiguity at the heart of its fundamental rights jurisprudence.
Another
interesting feature of the Opinion relates to the concept of the “essence” of
protected fundamental rights. Under Art 52(1):
Any
limitation on the exercise of the rights and freedoms recognised by this
Charter must…respect the essence of those rights and freedoms.
In
this context, “essence” appears to indicate an irreducible minimum of
protection. However, the exact function of this concept has yet to be explained
clearly by the Court. This uncertainty seems apparent in the Opinion. Following
a thorough assessment of the proportionality of the Directive’s interference
with the right of freedom of expression, the Advocate General provides only the
following briefest of afterthoughts:
“The essence of
freedom of expression (first sentence of Article 52(1) of the Charter of
Fundamental Rights) is likewise not affected if commercial communications by
undertakings which are intended solely to promote sales are restricted by an EU
legislative act” [236].
The
lack of further explanation here perhaps again indicates another aspect of the
Court’s fundamental rights jurisprudence awaiting further elaboration.
Barnard
& Peers: chapter 5, chapter 11, chapter 12
Photo
credit: snus-news.blogspot.com
