Firms go for damage limitation

| May 5, 2016

Major European tobacco manufacturers have expressed disappointment that the Court of Justice of the European Union (CJEU) yesterday rejected a number of claims brought by them and others against the EU’s revised Tobacco Products Directive.

One of the main objections remains that certain of the directive’s provisions distort the internal market rather than facilitate its smooth operation as is claimed.

But manufacturers are also keen to make the point that the court’s ruling is not an invitation for member states to go beyond the directive’s recommendations and introduce standardized packaging for tobacco products.

Japan Tobacco International made the point also that the court’s ruling comes almost at the 11th hour. Just two weeks before the revised TPD was due to come into force in the 28 EU member states, the CJEU had rejected tobacco manufacturers’ claims against the directive, the company said in a note posted on its website.

“It is regrettable that the court has decided to endorse the proliferation of different regulations for the same product across the European Union”, Vassilis Vovos, JTI’s Western Europe regional president, was quoted as saying. “This ruling goes against a fundamental purpose of the EU treaty which is to further improve the functioning of the internal market by way of harmonized legislation. Instead, we are left with an inexplicable decision which may lead member states to believe that they can infringe the principle of free movement of goods within the EU.

“There are only 16 days left before TPD2 comes into force. Yet the legislation is still not transposed in the majority of member states. This leaves the industry with little clarity from the Commission and member states on many issues. The CJEU rulings bring additional confusion”, Vovos said.

In a note at the end of its statement, JTI said, in part, that it had announced on July 18, 2014, its formal participation in the judicial review process launched by Philip Morris International in the UK’s Administrative Court against the EU TPD. The claims asserted that the directive did not meet the required standard of improving the functioning of the internal market. Then, on November 3, 2014, the UK’s Administrative Court had agreed to reference the claims filed by the ‘four major tobacco manufacturers’ to the CJEU.

Meanwhile, a British American Tobacco spokesperson said that, despite the decision by the CJEU, it stood by its belief that the TPD was a clear example of the EU overstepping the limits of its authority. “The reality is that many elements of the directive are disproportionate, distort competition and fail to respect the autonomy of the member states,” a spokesman was quoted as saying in a note posted on its website.

“It’s also important to remember that this decision does not endorse claims by some that the directive authorizes member states to adopt plain packaging.

“In particular, what is clear from the directive and the judgment is that measures that go beyond the requirements of the directive, such as plain packaging, must still comply with the wider principles of EU and international law. Whether plain packaging meets these requirements is currently the subject of ongoing litigation before the English courts and the World Trade Organization.

“We urge the governments in all member states to carefully consider how they will now interpret the directive in to their own national law, and take in to account all of the implementation costs.

“Governments who are considering plain packaging should ask themselves – can they really justify introducing a policy that has no hard data to prove that it actually works to reduce smoking?”

In a note posted on the PMI website, Marc Firestone, the company’s senior vice president and general counsel, was quoted as saying that the court’s judgment was specific to detailed aspects of EU law, and reflected the substantial deference that the CJEU often showed to the EU institutions when reviewing EU legislation.

The court’s opinion clarified that the TPD did not necessarily preclude a member state from adopting plain packaging, providing it could show that the measure respected private property, a competitive marketplace, and consumer access to information, and that it complied with domestic, European, and international law.

PMI and member states participating in the case were seeking clarity on certain provisions of the TPD that appeared to disrupt the balance of authority that the EU treaties established between the EU and the member states, and violated the internal market principles upon which the EU was established.

“The court has not considered whether plain packaging is legal or is capable of reducing smoking rates,” said Firestone. “Those questions are currently under review by the English High Court and the World Trade Organization. We look forward to the outcome of those proceedings, as well as the timely implementation of the directive in each of the 28 member states.”

Category: Breaking News

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