For the second time, Germany has challenged an EU Directive aimed at restricting the advertising of Tobacco products. How did it fare this time?
Who: Federal Republic of Germany, the European Parliament and the European Council
Where: European Court of Justice (ECJ), Luxembourg
When: June 2006
The European Council has adopted EU Directive 2003/33/EC (the "Directive"), which restricts the advertising and sponsorship of tobacco products in print publications, on the radio and via the Internet. The Directive was supposed to be adopted by all Member States by July 31, 2005. Some Member States have only recently received letters of formal notice from the European Commission for not implementing the Directive correctly.
Against this background, Germany has challenged the advertising restrictions contained in the Directive and is seeking an annulment of two of the related provisions.
This is the second time Germany has challenged an EU Directive restricting tobacco advertising. The previous EU Directive (the "98 Directive") prohibited all forms of tobacco advertising, with some minor exceptions. Following Germany's objection, the ECJ annulled the 98 Directive in its entirety in 2000. In its decision the ECJ explained that the legislative rights of the EU legislative bodies were intended to facilitate the establishment and functioning of the internal market. However, the restriction of all forms of tobacco advertising went beyond the intended jurisdiction of the EU legislators. Moreover, the ECJ held that there were no appreciable distortions of trade that needed to be addressed by the 98 Directive. The ECJ clarified that, in principle, an EU Directive relating only to certain forms of advertising, for example, periodicals and newspapers, could have been adopted.
It is worth bearing in mind that the EC entities have not been conferred the rights to regulate health issues on an EU-wide basis. In terms of the 98 Directive, health concerns appeared to be the main objective. Generally, EU legislation, which is designed to enhance the internal market, can have an ancillary effect on other areas, such as health.
In spite of the fact that the Directive only restricts certain forms of tobacco advertising, Germany has argued that the EC legislature has, once again, stepped outside the boundaries of its jurisdiction. Germany's main challenge is based on the argument that the Directive in not in line with the ECJ's previous decision. In Germany's opinion, the Directive is almost exclusively concerned with situations that have no discernable cross-border effect and, therefore, the Directive does not address the distortion of competition. The reasoning here is that the media covered by the Directive predominantly relates to local markets and, consequently, has no cross-border relevance.
On 13 June 2006, the ECJ's Advocate General (AG) delivered an opinion on this case.
The AG rejected Germany's arguments and recommended the dismissal of Germany's case. He concluded that, as print publications are circulated between Member States, the activities related to print media contain a cross-border element, which is influenced by the effects of globalisation. He further clarified that this cross-border element is present in the context of both online and offline media. In addressing Germany's argument that, in practical terms, the Directive would largely only regulate local media, the AG reasoned that any regulation designed to address cross-border circulation alone would be ineffective and create uncertainty. He also explained that the different national regimes on tobacco advertising create distortions of competition within the tobacco industry. In the AG's opinion, one of the aims of the Directive is the elimination of these distortions of competition. Although the Advocate General's opinion is not binding, it is often followed by the ECJ.
Why this matters:
The outcome of this case will have a significant effect on advertisers and the EU Member States. It is an important test as to how far the EU has the competence to regulate domestic advertising. More specifically, it will be interesting to see the reasoning that will be used in order to drag the regulation of domestic advertising within the intended ambit of the EU legislators.