Farmer's Voice

Updates on EU TPD and PP

On December 23rd, the case brought by Philip Morris International and British American Tobacco against the EU Tobacco Products Directive was rejected by Advocate General Juliane Kokott of the European Court of Justice (ECJ) in Luxembourg, who issued a non-binding opinion stating that the TPD allows EU nations to introduce additional pack standards including plain packaging, EU-wide rules on e-cig advertising and a ban on menthol cigarettes, noting that the court's final, binding ruling can be expected in 4-6 months after the December 23rd Advocate General opinion. Kokott said the TPD, which was revised in 2014, helps improve the visibility of health warnings and maximize their effectiveness, and "the curiosity that may be inherent in new or unusual packaging then has a lesser influence on the decision to purchase." EU member nations are free to take the TPD rules further, such as requiring plain packaging, she said. On EU rules on e-cigs, she said they are a "still relatively little known product for which there is a rapidly developing market." On the ban no menthol cigarettes, she said it is necessary because the flavor can "reduce or camouflage the generally very bitter and even pungent taste of tobacco smoke" and facilitate smoking initiation. EU nations are required to apply the measures in the revised TPD. Bloomberg Intelligence analyst Duncan Fox said Kokott's decision is "a blow for the tobacco companies but isn't a massive surprise," adding that if the ECJ issues a final ruling that follows Kokott's opinion, "it gives a nice get-out clause for European countries that want to implement PP." Exane BNP Paribas analysts said Kokott's opinion makes it "increasingly unlikely that the UK, France or Ireland will either delay or abandon their PP implementations" and is a "negative for sector sentiment in 2016" (Bloomberg News 12/23).

Commenting on the ruling, Fraser Cropper, managing director at Blackburn, UK-based e-cig company Totally Wicked, said the limits on the size of e-liquid bottles, restrictions on nicotine strengths and curbs on advertising and sponsorship would damage an emerging industry by subjecting it to more stringent regulation than some tobacco products, although he added that "[t]his is not a formal decision, nor a legal judgment on the questions we raised in our challenge... It is not binding on the judges." Although Kokott's opinion does not mean that the court will automatically dismiss the legal challenge headed by Totally Wicked, most judgments later endorse the position of advocate generals. Kokott's opinion emphasized that e-cigs are, at least for large parts of the population, "still relatively little known products for which there is a rapidly developing market." Ian Gregory, a leader of the 100K group, representing several independent e-cig companies, claimed that if the court endorsed Kokott's opinion, e-cig users would start playing "a game of 'Brexit poker'" by threatening to vote to leave the EU in the forthcoming referendum unless there was a British opt-out on the issue (London Guardian 12/23).

Welcoming the court's decision, Ireland's Minister for Children James Reilly said the government will press forward with its plans to introduce PP from May 2016. It will become illegal to manufacture cigarettes for the Irish market in packs other than PP starting May 2016. It will become illegal to sell cigarettes that are not in PP starting May 2017 (Irish Times 12/23).

Irish Times said the ruling makes it highly likely that the cigarette plain packaging law would be introduced in the Republic as planned in May 2016, although Irish cigarette companies could launch new proceedings against the measure. The Republic was first in the world to introduce a workplace smoking ban, and successive governments adopted measures such as restrictions at the point of sale and a smoking ban in cars carrying children to further curtail the smoking rate. However, Irish Times criticized the ECJ for not adopting a minimum pricing for alcohol products. "Alcohol's harm reaches far wider than that of tobacco: 150,000 Irish people are dependent drinkers and more than 1.35 million people are harmful drinkers. It's also linked to a wider range of problems than tobacco, such as mental health issues, antisocial activity and violence," Irish Times said. Compared to the progress made on tobacco control in the Republic, "attempts to legislate for this reality [alcohol] have been beset by delays and disagreements," it said (Irish Times 12/24).

According to Reuters, AG Kokott's opinion stating that she "considers the EU tobacco directive of 2014 to be valid," and that the "EU legislature did not exceed the considerable latitude to be given to it in ensuring that tobacco and related products may be placed on the market under uniform conditions throughout the EU without losing sight of the fundamental objective of a high level of health protection," though PMI said the TPD "encourages a patchwork of regulations and disregards important limits on the scope of EU legislation," while BAT maintained that the TPD "represents an unlawful and disproportionate incursion into the autonomy of the Member States" and said it "remain[s] hopeful that the Court of Justice will uphold our challenge" in its final ruling. New packaging rules, a ban on menthol cigarettes by 2020 and new e-cig rules are among the key provisions in the revised TPD. Health warnings must include images and cover 65% of the packaging, and member nations can introduce their own stricter rules. On an effort to annul the menthol cigarette ban by Poland, the EU's top producer and consumer of menthol cigarettes, Kokott's opinion said "none of its arguments … is well founded." On e-cig rules, which include a requirement to notify regulators six months before the product goes on sale, advertising bans, and a maximum nicotine content of 20 mg/ml for e-liquids, the opinion said they are "relatively moderate." PMI, BAT, JTI and ITG are challenging the legality of the UK's plain packaging law in separate legal proceedings, with a verdict expected in the coming months (Reuters 12/23).