The Community legislature had no power to adopt that directive on the basis of the provisions relating to establishment of the internal market, freedom of establishment and freedom to provide services
On 6 July 1998 the European Parliament and the Council adopted, on the basis of the abovementioned provisions, a directive on the approximation of the laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products. That directive, which lays down a general prohibition of advertising and sponsorship relating to those products, was adopted with a view to eliminating obstacles to the functioning of the internal market deriving from barriers to the movement of products and the freedom to provide services and distortions of competition resulting from differences in the relevant national rules.
Two cases came before the Court concerning the validity of that directive: the first was an action for annulment brought by the Federal Republic of Germany and the second was a request for a preliminary ruling from the High Court of Justice arising from proceedings in the United Kingdom brought by a number of manufacturers of tobacco products (Imperial Tobacco and Others).
The Federal Republic of Germany and the tobacco producers contended, inter alia, first, that the directive was in reality a measure designed to protect public health whose effects on the internal market, if any, were purely incidental and, second, that the directive did not in any event constitute a measure pursuing attainment of the internal market.
The Court of Justice has today annulled the directive on the ground that the Community legislature was not empowered to adopt it on the basis of the provisions relating to establishment of the internal market, freedom of establishment and freedom to provide services.
The Court pointed out that the Treaty excludes any harmonisation of laws and regulations of the Member States designed to protect and improve human health but considered that that exclusion did not mean that harmonising measures adopted on the basis of other provisions of the Treaty could not have any impact on the protection of human health.
The Community legislature may rely on the provisions on the establishment of the internal market, the right of establishment and the freedom to provide services even if protection of human health is a decisive factor in the choice to be made, provided that the conditions for recourse to that provision are fulfilled, namely that the measures taken must in fact seek to improve the conditions for establishment and functioning of the internal market.
It was therefore necessary for the Court to verify whether the directive actually contributed to the elimination of obstacles to the free movement of goods and the freedom to provide services and to the elimination of distortions of competition.
The Court considered that the general prohibition of numerous types of advertising of tobacco products (on posters, parasols, ashtrays and other articles used in hotels, and advertising spots in cinemas) in no way helped to facilitate trade in the products concerned. The Court also pointed out that the directive did not ensure the free movement of products that were in conformity with its provisions.
As regards the elimination of distortions of competition, the Court considered that the effects of the advantages accruing to agencies and manufacturers of advertising products established in Member States whose legislation was not restrictive were not appreciable. Those effects were not comparable to the distortions of competition caused by differences in production costs. Moreover, the imposition of a wide-ranging prohibition on the advertising of tobacco products was tantamount, in the Court's view, to limiting, in all the Member States, the means available for economic operators to enter or remain in the market.
The Court considered, however, that the Treaty provisions on the internal market would have allowed the adoption of measures imposing a partial prohibition on certain forms of advertising and sponsorship of tobacco products. As far as sponsorship was concerned, it observed that differences between certain national regulations on tobacco advertising, such as the fact that sponsorship is prohibited in some Member States and authorised in others, gave rise to certain sports events being relocated, with considerable repercussions on the conditions of competition for undertakings associated with such events.