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European Court of Justice hands down tobacco judgment

06/05/16

On 4 May 2016 the Court of Justice of the European Union (CJEU) handed down its keenly awaited judgment in a preliminary reference concerning the Second Tobacco Products Directive (TPD2).

TPD2 imposes new requirements on manufacturers of tobacco products operating within the EU. In particular, it expands the percentage of the surface area of tobacco packaging that must be devoted to health warnings, bans specified features and statements on tobacco packaging and products (whether factually accurate or not) and precludes the marketing of flavoured tobacco products throughout the EU.

Philip Morris Ltd and British American Tobacco UK Ltd, supported by JT International SA, Gallaher Ltd and Imperial Tobacco Ltd as interested parties, challenged the UK Government’s intention to transpose the Directive into UK law. A number of other companies within the tobacco supply chain intervened in support, including flavouring and tipping paper producers.  The grounds of challenge raised by the claimants, which focused on TPD2 itself, were referred to the CJEU by Turner J following a hearing in 2014.  

The Court, unlike the Advocate General, found many of the key questions referred to be admissible.  While the Court declined to answer questions relating to the delegation of powers to the Commission, and certain referred questions on subsidiarity, it went on to consider the substance of the claimants’ remaining challenges.

These grounds of challenge included (i) a challenge to the validity of the Directive both in whole and in part on the basis that Article 114 of the Treaty of the Functioning of the European Union (TFEU) was an inadequate legal basis; (ii) challenges to the proportionality of provisions of TPD2, including on the basis of interference with the claimants fundamental rights; and (iii) compliance with the principle of subsidiarity.

Each of these claims was ultimately rejected by the CJEU. 

The long-term significance of the judgment may lie in the Court’s consideration of the Claimants’ challenges arising out of Article 114 TFEU. The CJEU clarified that a harmonising measure only needs to achieve some measure of harmonisation, even if it leaves open the possibility that Member States might introduce further provisions that prevent products from moving freely on the internal market. The Claimants’ submission that TPD2 was invalid because it would not result in any real harmonisation of the market was not accepted.  

The judgment also offers a brief consideration of the principle of subsidiarity. The Court was clear that EU legislation does not need to demonstrate compliance with the principle of subsidiarity, on its face, as long as the appropriate subsidiarity analysis can be identified within the travaux préparatoires to the legislation itself.

The judgment appears here.

Marie Demetriou QC and Daniel Piccinin appeared for Philip Morris Brands SARL and Philip Morris Ltd, instructed by Skadden, Arps, Meagher and Flom LLP. Michael Bolding was instructed for earlier stages of the proceedings.

David Scannell appeared for British American Tobacco Ltd, instructed by Herbert Smith Freehills LLP. Sarah Ford was instructed  for earlier stages of the proceedings.

James Flynn QC and  Jennifer MacLeod appeared for JT International SA and Gallaher Ltd, instructed by Freshfields Bruckhaus Deringer LLP. David Anderson QC and Victoria Wakefield were instructed for earlier stages of the proceedings. 

Tim Johnston appeared for Tann UK and Tannpapier GmbH, instructed by Singletons Solicitors.

Martin Chamberlain QC appeared for V. Mane Fils, instructed by Hill Dickinson LLP. Zahra Al-Rikabi was instructed for earlier stages of the proceedings.

Andrew Henshaw QC appeared for Deutsche Benkert GmbH & Co. KG and Benkert UK Ltd, instructed by Jones Day. Daniel Jowell QC was instructed for earlier stages of the proceedings.

Mark Hoskins QC and Sarah Abram were instructed for the UK Government by the Government Legal Department, for earlier stages of the proceedings.