C-376/98

GERMANY V PARLIAMENT AND COUNCIL

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 15 June 2000 *

Table of contents

I — Introduction I - 8424 II — Legislative context and antecedents I - 8426 (i) Relevant Treaty provisions I - 8426 (ii) Other legislation I - 8427 (iii) Legislative antecedents of the Advertising Directive I - 8428 (iv) A summary of the Advertising Directive I - 8431 III — Admissibility I - 8436 IV — Observations before the Court I - 8439 (i) Legal basis and competence I - 8439 (ii) Subsidiarity I - 8443 (iii) Proportionality I - 8444 (iv) Breach of Article 30 I - 8445 (v) The right to property and the right to pursue an economic activity I - 8445 (vi) Freedom of expression I - 8446 (vii) Reasoning I - 8447 V — Analysis I - 8447 (i) Legal basis and competence I - 8447 Introduction I - 8447 The character of Community competence I - 8448 Community competence and national competence: different objectives I - 8450 The 'centre of gravity' of the Advertising Directive I - 8452 The scope of application of Article 129(4) of the Treaty I - 8453 Legislative history of the Directive I - 8454 Misuse of power I - 8456 The significance of the Council voting procedure I - 8457 The internal market I - 8458

* Original language: English.

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I — Introduction manufacture tobacco products initiated proceedings in the United Kingdom, before the High Court of Justice, Queen's Bench Division (Crown Office) (hereinafter 'the national court'). They apply for judicial review of, inter alia, the intention and/or obligation of the United Kingdom Govern- 1. Both of the present cases relate to the ment to give effect to the requirements of validity of European Parliament and Coun- the Directive. The national court consid- cil Directive 98/43/EC of 6 July 1998 on ered that the applicants had raised arguable the approximation of the laws, regulations grounds for a ruling of invalidity and and administrative provisions of the Mem- decided to refer a question to the Court of ber States relating to the advertising and Justice. sponsorship of tobacco products 1(herein- after 'the Directive' or 'the Advertising Directive'). In the first case (hereinafter 'Case C-376/98' or 'Germany'), Germany has brought proceedings for the annulment of the Advertising Directive pursuant to Article 173 of the EC Treaty (now, after amendment, Article 230 EC). In the second (hereinafter 'Case C-74/99' or 'Imperial 2. As the national court observed, there is a Tobacco'), a number of companies which significant (though not complete) overlap between the question referred by it and the grounds for the application in Germany. Its 1 — OJ 1998 L 213, p. 9. question posits concisely the grounds

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invoked by the applicants: 'Is Council Article 30 of the EC Treaty (now, after Directive 98/43 invalid, in whole or in amendment, Article 28 EC). part, by reason of:

4. The legal basis invoked by the Advertis- ing Directive relates to the internal market. (d) infringement of the principle of subsi- The Community's internal-market compe- diarity; tence is not limited, a priori, by any reserved domain of Member State power. It is a horizontal competence, whose exer- cise displaces national regulatory compe- tence in the field addressed. Judicial review (e) infringement of the duty to give rea- of the exercise of such a competence is a sons; delicate and complex matter. On the one hand, unduly restrained judicial review might permit the Community institutions to enjoy, in effect, general or unlimited legislative power, contrary to the principle that the Community only enjoys those (f) infringement of Article 222 [of the] EC limited competences, however extensive, [Treaty] and/or the fundamental right which have been conferred on it by the to property?' Treaty with a view to the attainment of specified objectives. This could permit the Community to encroach impermissibly on the powers of the Member States. On the other hand, the Court cannot, in principle, An additional contention in Germany is restrict the legitimate performance by the that the Advertising Directive is contrary to Community legislator of its task of remov-

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5. The dispute about the legal basis of the Advertising Directive turns on a limited number of Treaty provisions. They princi- pally concern the internal market and the 8. Article 100A(3) of the Treaty states that freedom to provide services. the Commission, 'in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection'. 3Article 100A(4) permits a Member State, after the adoption of har- 6. Article 57(2) of the EC Treaty (now, monisation measures by the Council acting after amendment, Article 47(2) EC), read by a qualified majority, to apply national with Article 66 of the EC Treaty (now Article 55 EC), provides that the Council, acting in accordance with the procedure 2 — In this Opinion, references to Article 57(2) of the Treaty referred to in Article 189B of the EC Treaty should be understood as including reference to its extension to the freedom to provide services by virtue of Article 66 of (now, after amendment, Article 251 EC, the Treaty unless the contrary intention is apparent. commonly known as co-decision), shall 3 — The amended Article 95(3) EC adds: 'Within their respec- tive powers, the European Parliament and the Council snail 'issue directives for the coordination of also seek to achieve this objective'. In my analysis, I treat the provisions laid down by law, regulation this obligation as having been implicit from the outset in Article 100A(3) of the EC Treaty, despite its more limited or administrative action in Member States reference to the Commission's proposals.

provisions on grounds, in particular, of munity had already adopted a number of major needs referred to in Article 36 of the legislative provisions regarding the market- EC Treaty (now, after amendment, Arti- ing of tobacco products on the basis either cle 30 EC), subject to confirmation by the of Article 100A of the Treaty or of Arti- Commission and a special accelerated pro- cle 57(2) of the Treaty read with Arti- cedure for bringing any complaint before cle 66. The most important is Article 13 of the Court. Council Directive 89/552/EEC of 3 Octo- ber 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broad- casting activities. 4It is enough for present 9. The applicants have laid special empha- purposes to recall that it enjoins the sis on Article 129 of the EC Treaty (now, prohibition of all forms of television adver- after amendment, Article 152 EC). Arti- tising and teleshopping for cigarettes and cle 129(1) states that '[t]he Community other tobacco products. Article 2a(1) of shall contribute towards ensuring a high Directive 89/552/EEC provides that, in level of human health protection by general, 'Member States shall ensure free- encouraging cooperation between the dom of reception and shall not restrict Member States and, if necessary, lending retransmissions on their territory of televi- support to their action' and that '[h]ealth sion broadcasts from other Member States protection requirements shall form a con- for reasons which fall within the fields stituent part of the Community's other coordinated by this Directive'. policies'. Article 129(4) provides for the Council to contribute to the achievement of the objectives of that article, acting in accordance with the co-decision procedure and after consulting the Economic and Social Committee and the Committee of the Regions, by adopting incentive mea- sures, excluding any harmonisation of the laws and regulations of the Member States. The Council may also adopt recommenda- 11. Council Directive 89/622/EEC of tions. 13 November 1989 on the approximation of the laws, regulations and administrative provisions of the Member States concern- ing the labelling of tobacco products and the prohibition of the marketing of certain types of tobacco for oral use 5 requires all cigarette packets to carry indications of the tar and nicotine yields of the contents 6 and (ii) Other legislation

both a general and a specific health warn- genuine outlets for all goods and services ing. 7 The sale of products which comply throughout the Community'. may not be restricted by Member States for reasons of labelling. 8Similarly, Member States may not restrict the sale of products which comply with Council Directive 90/239/EEC of 17 May 1990 on the approximation of the laws, regulations 13. Council Directive 92/28/EEC of and administrative provisions of the Mem- 31 March 1992 on the advertising of ber States concerning the maximum tar medicinal products for human use 14 pre- yield of cigarettes 9'for considerations of scribes a number of conditions for adver- limitation of the tar yield of cigarettes'. 10 tising of such products. For example, in Both Directive 89/622/EEC and Directive media destined for the general public, it 90/239/EEC were adopted by the Council forbids the use of certain material or at a meeting which was composed of references to certain therapeutic indications Ministers for Health. and prohibits the advertisement of certain products.

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for the 1987-89 period. The Commission under the age of 18. 19 Article 5 of the first first made a proposal, based on Arti- proposed Directive would have prevented cle 100A of the Treaty, for a Council the Member States from citing tobacco Directive concerning the approximation of advertising as the reason for prohibiting or the laws, regulations and administrative restricting the sale of publications or the provisions of the Member States relating to display of bills which complied with the the advertising of tobacco products in the Directive. press and by means of bills and posters 16 (hereinafter 'the first proposed Directive').

16 — CO.VK89) 163 final, submitted on 7 April 1989, OJ 1989 19 — Article 4 of the first proposed Directive. C 124, p. 5. 20 —OJ 1990 C 96, p. 98. 17 — Article 2 or the first proposed Directive. 21 — COM(90) 147 firul, submitted on 19 April 1990, OJ 1990 18 — Article 3 of the first proposed Directive. C 116, p. 7.

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The second proposed Directive would have prohibited all forms of advertising of 18. The Council adopted a resolution on tobacco products, advertising in other areas 26 November 1996 on the reduction of using brands or trademarks mainly associ- smoking in the European Community 28 in ated with tobacco, the use of other trade- which it considered that it was 'necessary marks or brands for new tobacco products, to evaluate the impact on tobacco con- and any free distribution of such pro- sumption of, on the one hand, measures to ducts. 23 Advertising within tobacco sales promote smoking and other promotional outlets could be authorised by Member activities and, on the other hand, interven- States, 24 but the second proposed Directive tions and measures intended to reduce would not have precluded the adoption of smoking' and called upon the Commission stricter measures by the Member States on 'to carry out surveys of best practices health grounds. 25Despite the expression of conducted in the Member States towards doubts on the issue in several quarters, 26 reducing the prevalence of smoking, and the European Parliament rejected a motion the evaluation of their impact'. to change the legal basis of the proposal from Article 100A to Article 235 of the EC Treaty (now Article 308 EC) and adopted a legislative resolution on 11 February 1992 proposing, inter alia, a new recital justify- ing a ban on health grounds.

A slightly amended version was submitted by the Commission on 30 April 1992, C0M(92) 196 final, OJ 1992 C 129, p. 5. 27 — Speeches to the European Parliament by Commissioner 23 — Article 2 of the second proposed Directive. Papandreou, November 1991 and 16 January 1992; 24 — Article 3 of the second proposed Directive. remarks of Commissioner Flynn at the Council of Health Ministers, 22 December 1994; speech by Commissioner 25 — Article 5 of the second proposed Directive. Flynn to the European Conference on Tobacco and Health, 26 — By a number of delegations in the Council Health Working 3 October 1996; speech by Commissioner Flynn in Group and by the European Parliament's Committee on response to the agreement of a common position by the Economic and Monetary Affairs and Industrial Policy.

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designed to reflect the changed terms of the regarded measures to counter the use of proposed prohibition as regards indirect tobacco as their prime objective; advertising, the somewhat wider scope of the exception for point-of-sale advertising and its application to professional commu- nications, and the extension of the ban to sponsorship of events or activities. 31 It also Whereas tobacco consumption constitutes added recitals referring to other internal- a very important death factor each year in market measures affecting either advertis- the Member States of the European Com- ing or tobacco products — Directives munity.' 89/622/EEC, as amended, 90/239/EEC and 92/28/EEC. Most materially, at least in the view of those challenging the Direc- tive, the common position omitted three recitals from the earlier drafts: 20. The common position was approved by the European Parliament on 13 May 1998 32 and the Directive was adopted at a meeting of the Council composed of research ministers on 22 June 1998. Ger- many voted against its adoption.

'Whereas the European Council held on 28 and 29 June 1985 in Milan stressed the importance of launching a European action programme against cancer; (iv) A summary of the Advertising Direc- tive

21. The following are the first four recitals in the preamble to the Directive, as adopted: Whereas the Council and the representa- tives of the Member States, meeting within the Council, in their resolution of 7 July 1986 on a programme of action of the European Communities against cancer set for this programme the objective of con- '(1) Whereas there are differences between tributing to an improvement in the health the Member States' laws, regulations and quality of life of citizens within the and administrative provisions on the Community by reducing the number of advertising and sponsorship of tobacco illnesses due to cancer and, accordingly, 32 — However, the Committee on Legal Affairs and Citizens' Rights of the European Parliament rejected the legal basis 31 — Sec the discussion immediately below of the terms of the of the second proposed Directive, as revised, on 16 April Directive. 1998.

(4) Whereas this Directive must therefore take due account of the health protec- (9) Whereas all forms of indirect advertis- tion of individuals, in particular in ing and sponsorship, and likewise free relation to young people, for whom distribution, have the same effects as advertising plays an important role in direct advertising, and whereas they tobacco promotion.' should, without prejudice to the funda-

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mental principle of freedom of expres- 22. Article 1 of the Directive states: sion, 33 be regulated, including indirect forms of advertising which, while not mentioning the tobacco product directly, use brand names, trade marks emblems or other distinctive features associated with tobacco products; 'The objective of this Directive is to whereas, however, Member States approximate the laws, regulations and may defer application of these provi- administrative provisions of the Member sions to allow time for commercial States relating to the advertising and spon- practices to be adjusted and sponsor- sorship of tobacco products.' ship of tobacco products to be replaced by other suitable forms of support.'

Article 2 of the Directive contains, inter alia, the following definitions:

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with the aim or the direct or indirect effect of promoting a tobacco product.'

Article 3(1), (2) and (4) of the Directive provides: 4. Any free distribution having the purpose or the direct or indirect effect of promoting a tobacco product shall be banned.'

'1. Without prejudice to Directive 89/552/ EEC, all forms of advertising and sponsor- ship shall be banned in the Community.

23. Like Article 3(2) of the Directive, para- graph 3(b) of that Article is also apparently concerned with the advertising of diversifi- cation products, but it is not a model of clarity. It states that the ban in paragraph 1 may not be circumvented, in respect of any 2. Paragraph 1 shall not prevent the Mem- product or service placed on the market as ber States from allowing a brand name from 30 July 2001, by the use of brand already used in good faith both for tobacco names, trade marks, emblems or other products and for other goods or services distinguishing features already used for a traded or offered by a given undertaking or tobacco product. It seems to be implicit in by different undertakings prior to 30 July the reference to Article 3(1) that the ambig- 1998 to be used for the advertising of those uous term 'use' refers to use of a brand other goods or services. name or other distinguishing feature in the sense of advertising or sponsorship. 'To this end', the distinguishing feature in question 'must be presented in a manner clearly distinct from that used for the tobacco product'. In the absence of further indica- tions, I assume that this part of the provision also relates to advertising and However, this brand name may not be used sponsorship, and not to the presentation of except in a manner clearly distinct from the product or service itself. My initial that used for the tobacco product, without doubts in this regard were resolved by the any further distinguishing mark already responses of the Council and the Parlia- used for a tobacco product. ment at the oral hearing.

'Member States may defer the implementa- tion of Article 3(1) for: — the sale of publications containing advertising for tobacco products which are published and printed in third countries, where those publications are not principally intended for the Community market.' — one year in respect of the press,

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OPINION OF MR FENNELLY — CASES C-376/98 AND C-74/99

— two years in respect of sponsorship.' the view that it could be just and conve- nient, in accordance with Order 53, Rule 1(2) of the Rules of the Supreme Court, to grant declaratory relief in order to remove uncertainty. The case did not concern 'purely abstract questions', but 'future In exceptional cases and for duly justified rights' in respect of which relief could be reasons Member States may, subject to granted in quia timet proceedings. 35 certain conditions which were not debated in these cases, continue to authorise the existing sponsorship of events or activities organised at world level for a further period of three years ending not later than 1 October 2006.

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(supported by France) made similar sub- The central point is that it was for the missions regarding the hypothetical char- national court to determine, in accordance acter of the proceedings 37 and the possibi- with national law, whether an action of the lity that the criteria for standing directly to type in question was maintainable. challenge the validity of Community mea- sures under Article 173 of the EC Treaty (now, after amendment, Article 230 EC) could be evaded through recourse to national proceedings.

40 — A directive has legal effect with respect to the Member States to winch it is addressed from the moment of its 37 — S e c Case C-83/91 Meihcke v ADVIORCA [1992] notification; sec Case C-129/96 Inter-Environnement ECR I-4871, paragraph 25. Wallonie v Regum Wallonne 11997) ECR I-7411, para- 38 — Busman, op. cit.. footnote 36 above, paragraphs 44 and graphs 41 and 44. 64. 41 — See the Opinion of Advocate General Lenz in Bosman, op. 39 — Ibid., paragraph 65. cit., footnote 36 above, paragraph 99.

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44 — Case 216/82 [1983] ECR 2771, paragraph 10. 32. The Court observed in Universität 45 — Case 294/83 [1986] ECR 1339, paragraph 23, emphasis Hamburg v Hauptzollamt Hamburg-Kehr- added. It seems obvious to me from the reference in the previous sentence to direct and individual concern that this wieder that a decision of a national author- requirement did not apply, in the Court's view, to persons who instituted such national proceedings. 46 — Ibid. See further Case C-321/95 P Greenpeace Council and Others v Commission [1998] ECR I-1651, paragraph 33, and my comments thereon at paragraphs 71 to 74 of my 42 — Bosman, ibid., paragraph 59. Opinion in Case C-70/97 Kruidvat v Commission [1998] 43 — See Case C-188/92 TWD Textilwerke Deggendorf [1994] ECR 1-7183; Case T-99/94 Asocarne [1994] ECR II-871, ECR I-833, paragraphs 24 and 25. paragraph 17.

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34. Written observations have been sub- mitted to the Court in both Germany and Imperial Tobacco by the European Parlia- ment, the Council of the European Union, (i) Legal basis and competence

47 — See the judgment of Lord Woolf MR in the Court of Appeal regarding the application for an interim injunction restraining the United Kingdom Government from imple- menting the Directive before the judgment of the Court in Case C-376/98: R v Secretary of State for Health and 36. The applicants submit that the Com- Others, ex parte Imperial Tobacco Ltd and Others [2000] 1 All ER 572, at p. 575 ff. munity was not competent to adopt the

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Directive, and certainly not on the basis of open to manipulation. As Article 129 of the the Treaty provisions actually relied upon Treaty expressly excludes harmonising by the legislator. Germany submits that the measures from the measures whose adop- adoption of the Directive constitutes a tion it envisages, the Community was not misuse of power by the Community legis- competent to adopt the Directive by lator. To find otherwise would ignore the recourse to a legal basis which was merely principle of attribution of powers in Arti- incidental to its true aim and content. cle 3B of the EC Treaty (now Arti- cle 5 EC). This ground is composed of two broad, interrelated arguments, the evidence for which is also relevant to the grounds of breach of the principles of proportionality and subsidiarity, of funda- mental rights and of Article 30 of the Treaty.

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freedom to trade in advertising-related contribute to free movement for tobacco goods and services. Furthermore, tobacco products. It also distorts competition as advertising represents only a very small between Community media and those ori- part of total advertising and widely varying ginating in third countries. Furthermore, it tastes in different countries result in diverse distorts competition, in a separate 'stand- national promotional strategies which are alone' market, between non-tobacco pro- not the subject of trans-frontier provision ducts — clothes, toiletries, etc. — which of services or supply of goods. Thus, there bear tobacco-related brands (diversification are almost no truly international tobacco products) and those which do not. brands in the Community.

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across Member State frontiers. Quantifica- regulation of the market even when it does tion of the extent of the prohibition (for not liberalise. Furthermore, wide-ranging example, at 98%) cannot be undertaken regulation was necessary in order to pre- solely on the basis of the advertising vent avoidance (and distortion of competi- activity formerly permitted in a relatively tion) through deflection of increased adver- liberal Member State such as Germany. tising or sponsorship to media outside the Widely varying restrictions on tobacco scope of the Directive, even if some of these advertising in the different Member States, were not the subject of any appreciable ranging from total prohibitions in Finland, trans-frontier trade. Even purely local Italy and Portugal to relatively liberal media may provide services to non-domes- regimes in Member States such as Ger- tic advertising agencies or tobacco produ- many, constituted barriers both to the cers. There are numerous cases of legisla- provision of advertising services and to tion imposing total prohibitions on certain the free movement of goods. Some parties goods or services or strictly regulating also suggested that these regulatory dispa- certain forms of advertising. None the less, rities affected the free movement of, and the measure did not amount to a total competition between, tobacco products prohibition of tobacco advertising, both themselves. because of the exceptions provided in Article 5, and the option given to Member States not to prohibit advertising for diver- sification products.

response to merely potential threats, even if (ii) Subsidiarity they do not threaten to restrict trade or distort competition to an appreciable degree. Limiting access to certain advertis- ing media does not threaten market pene- tration by new tobacco brands. The ques- tion whether distortions of competition are 46. The applicants contend that, if the appreciable is only relevant to Article 100 Community is competent to act on the of the Treaty. legal bases invoked, quod non, its compe- tence is shared with the Member States. The legislator did not respect the guidelines on subsidiarity adopted by the European Council at Edinburgh in 1992 48 or the inter-institutional agreement of 1993 between the Council, the Parliament and the Commission on procedures for imple- menting the principle of subsidiarity. 49 In particular, it did not refer to the principle of subsidiarity in the recitals in the preamble to the Directive. Furthermore, no qualita- tive or quantitative evidence was offered regarding the need for Community action. In the absence of a significant trans-frontier 45. The Directive is clearly an internal- element and in the light of substantial market measure rather than one primarily national differences, the regulation of concerned with health, so that Arti- advertising should remain entrusted to the cles 57(2) and 66 (regarding services) and Member States. Non-application of the 100A of the Treaty constitute the correct principle of subsidiarity to action adopted legal basis. This emerges from its aim and on the basis of Article 100A of the Treaty content, as revealed, objectively, in its would reduce the significance of the prin- recitals and provisions. This cannot be ciple to almost nothing. contradicted by mere subjective evidence as to the legislators' convictions gleaned from the travaux préparatoires, which are simply part of the Directive's context. Factors such as the composition of the Council or the general brief of working groups are irrelevant. As a result, it cannot 47. The principal argument of the defen- be said that the Directive's centre of gravity dants is that the competence to coordinate is located anywhere other than in the or approximate laws which is conferred on achievement of the internal market, or that the Community by Articles 57(2) and 100A its provisions have a merely incidental or of the Treaty is inherently exclusive in ancillary relationship with its establishment character so that subsidiarity, automati- and functioning. The exclusion of harmo- cally, does not apply. In any event, if the nising measures in Article 129(4) of the Treaty does not affect the scope of Arti- cle 100A, which is subject only to the 48 — Bull. EC, 12/92, p. 9. express limits set out in Article 100A(2). 49 — Bull. EC, 10/93, p. 129.

49. The defendants counter that the legis- lator enjoys a wide margin of discretion. Its legislative choice will not be reviewed in the absence of manifest error or of the 48. As regards the Directive's stated objec- imposition of disadvantages which are tive of serving the internal market, the wholly disproportionate to the advantages applicants argue that the effects of a near- to be derived from a measure. For the total ban will be either minimal or counter- purposes of assessing whether or not the productive for the reasons outlined above. Directive is proportionate, both its princi- The speculative character of the assessment pal internal-market objective and the com- of the market in the recitals failed to plementary public health objective can be provide the evidence necessary to prove taken into account. Having regard to the proportionality. It reduces trade without importance of both objectives and to the removing any real barriers or distortions, level of existing national restrictions, the with the result that it is neither necessary Community legislator achieved an appro- nor appropriate. The legislator erred in priate balance between general and private considering that the Directive would result interests. All traders were now on an equal in a reduction of tobacco consumption, as footing. The loss of information to the advertising serves to establish brand market public on, for example, low-tar cigarettes share rather than to increase the number of was outweighed by the prospect of reduced smokers. In fact, no specialised study was overall consumption. Furthermore, it was conducted regarding the likely effect on implausible to suggest that the Directive smoking of an advertising prohibition, even would not have such an effect, in the light one as regards diversification products, of studies cited by the Council, the United despite a request to this effect by the Kingdom Government and France, as the Council. Claims that a total ban would function of advertising is to encourage

(iv) Breach of Article 30 52. The applicants refer to Article 222 of the EC Treaty (now Article 295 EC) and to Article 1 of the First Protocol to the European Convention on Human Rights. Article 3(1) of the Directive deprives tobacco companies, advertising agencies and media undertakings of existing con- 50. Germany argues that, even when tractual rights. The restrictions imposed on adopting harmonising measures, the Com- the use of trade marks goes to their specific munity legislator is bound by the terms of subject-matter and constitutes an expro- Article 30 of the Treaty. The Directive priation, contrary to Article 20 of the effectively prevents all trans-frontier trade Agreement on Trade-Related Aspects of in advertising media, a disproportionate Intellectual Property Rights (TRIPS) of restriction whose necessity has not been 15 April 1994 as well as to the fundamen- demonstrated scientifically and for which tal rights cited, and is only partially atte- less restrictive alternatives were available. nuated by Article 3(2) of the Directive. Considerable losses will be occasioned to undertakings involved in marketing diver- sification products. These restrictions are disproportionate and, thus, unlawful.

51. The defendants state that Article 30 of the Treaty only applies in the absence of harmonisation measures. Even if that pro- 53. The defendants consider that Arti- vision is applicable, it cannot lead to cle 222 of the Treaty is irrelevant as the

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55. The defendants respond that funda- mental rights are not absolute and must be 54. The applicants rely, in particular, on considered in the context of the Commu- Article 10 of the European Convention on nity legal order, including the securing of Human Rights, which includes protection the fundamental economic freedoms. Arti- of commercial speech such as advertising cle 10(2) of the Convention permits restric- by which undertakings can give the public tions on freedom of expression in the useful information about their products, interests of public health, an objective such as those which are low in tar. Such legitimately pursued by the Directive simul- protection is recognised in Community law. taneously with that relative to the internal Restrictions on speech about products market. Tobacco advertising encourages which are themselves lawful are not accep- smoking, which poses significant health table. The applicants do not consider that risks. Extensive restrictions on commercial the achievement of the internal market is a speech in favour of such products are permissible ground for restricting this right. therefore proportionate, especially where Invocation of the public health benefits of its information content is negligible. A long the prohibition is inconsistent with the transition period is allowed regarding arts legal basis of the Directive. Furthermore, and sports sponsorship in order to permit there is no scientific evidence which con- other sources of funding to be found.

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Introduction

57. The defendants respond that the reci- tals contain the essential elements of the legislator's reasoning regarding the internal market, which is more fully developed in 58. In this section, I examine the appli- the discussion of their defence to the first cants' two broad arguments that the Adver- ground, summarised above, and regarding tising Directive was not validly adopted on the need for a high level of health protec- the basis of Articles 57(2) and 100A of the tion. Community law does not require Treaty either (i) because its 'centre of technical details to be contained in the gravity' lies in health protection rather recitals in the preamble to a general mea- than the internal market — on which its sure. An indication of the general situation effects are, therefore, incidental — or (ii) and of the objectives pursued is sufficient in because it does not, as an essentially

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conferred upon it'. 50 It is the task of the Court is presented with a more or less stark Court, inter alia, to ensure the respect by dispute regarding the respective legislative the Community of the limits of those powers of the Community and the Member powers. States. 55

Thus, the Court normally has occasion to restate the scope of Community competence is this approach in cases involving a dispute defined 'by reference to a criterion of a as to which of two legal bases should be functional nature, extending laterally to all used to adopt a measure, this objective test measures designed to ensure the attainment applies equally in cases where the only of the single market'. 57 It 'leads to Com- alternative potential legal basis is Arti- munity legislation touching the most cle 235 of the EC Treaty 53 and, in my diverse areas of national law', 58 provided view, in those where there is no apparent this is relevant to the establishment and alternative. 54 In such circumstances, including those of the present cases, the 55 — The question whether or not the Directive could have been adopted on the basis of Article 235 is not material to the present challenges to its validity, as Article 235 could not, 50 — Opinion 2/94 European Convention on Human Rights in any event, be employed unless it were considered that [19961 ECR 1-1759, paragraph 23. See also Article 4(1) of the Community was not competent to adopt the Advertis- the EC Treaty (now Article 7(1) EC) and the first ground ing Directive on the basis of Articles 57(2), 66 and 100A of for annulment in Article 173 of the Treaty, second indent, the Treaty; see Opinion 2/94, European Convention on viz. lack of competence. hlunian Rights, op. cit., footnote 50 above, paragraph 29; 51 — Case C-100/89 Commission v C o u n c i l [1991 ] ECR I-2867 Case 45/86 Commission v Comici/ ( 19871 ECR 1494, (hereinafter 'Titanium Dioxide'), paragraph 10. Regarding paragraph 13. the use of evidence of suhjective convictions in the context 56 — Cf. provisions giving the Community varying degrees of of the present cases, see further paragraphs 74 to 7 7 below. competence in helas defined ratione materiae, such as 52 — Case C-2.1.1/94 Germany v Parliament and Council \ 1997| agriculture (Articles 39 (now Article 33 EC), 40 (now,

Opinion of above. Advocate General Tesauro, paragraph 10. 54 — The Court made clear in Opinion 2/94 European Conven- 58 — Case C-350/92 Spam v Council(19951 ECR 1-1985 (here- tion on Human Rights, op. cit., footnote 50 above, inafter 'Spam'), Opinion of Advocate General Jacobs, paragraph 10, that Article 2.15 'cannot serve as a basis paragraph 26. Spain sought the annulment of Council for widening the scope of Community powers beyond the Regulation (EEC) No 1768/92 of 18 June 1992 concern- general framework created by the provisions of the Treaty ing the creation of a supplementary protection certificate as a whole', which action would require an amendment of for medicinal products, OJ 1992 L 182, p. 1, which w-as the Treaty. based on Article 100A of the Treaty.

63. Article 57(2) of the Treaty also creates a functional competence of horizontal application, though of more specific or 64. It is in the nature of competences limited scope than that conferred on the conferred in order to achieve broadly Community by Article 100A: no area of drawn, functional objectives that their Member State competence is excluded a exercise will simultaneously affect matters priori from the reach of measures designed which normally fall within the competence, to address barriers to establishment or the defined ratione materiae, of the Member freedom to provide services. Articles 57(2) States and/or of the Community. If the and 66 of the Treaty are also cited as condition of having as its object the estab- furnishing part of the legal basis of the lishment or functioning of the internal Directive because the first and second market, or that of addressing national recitals in its preamble indicate that it is provisions on the taking up or pursuit of concerned, in part, with barriers to freedom activities as service providers, is satisfied, to provide services. As Articles 57(2) and the content of an approximating or coordi- 100A both concern, with greater or lesser nating measure — the level of regulation, degrees of specificity as regards their field the type of scheme, etc. — must also, in of application, the attainment of internal- principle, be influenced by substantive market objectives, and as the legislative concerns such as public health. Further- more, Article 100A(3) obliges the Commis- sion to 'take as a base a high level of 59 — Two qualifications may be noted here: first, Arti- cle 100A(2) of the Treaty expressly excludes certain matters from the scope of application of the preceding paragraph; secondly, Article 100A(1) applies 'save where 60 — Essentially the same legislative procedure is provided for in otherwise provided in this Treaty'. Among several exam- both provisions, as far as the Directive is concerned. The ples: Article 57(2) of the Treaty, which is expressly additional provision made in Article 100A(1) for consulta- referred to in Article 7A of the Treaty; provisions con- tion of the Economic and Social Committee has been cerned with specific sectoral objectives, such as Arti- respected in the present case and cannot be said to affect cles 129B to 129D of the EC Treaty (now, after the substance of the procedure envisaged by Article 57(2), amendment, Articles 154 EC to 156 EC); more generally, as the Council would have been free to consult it in any the common agricultural policy, governed by Article 43 of event; see Titanium Dioxide, op. cit., footnote 51 above, the Treaty. paragraph 18.

66. Thus, the obvious concern with public health which motivated the initial, dispa- rate national advertising restrictions in some Member States, and the policy chosen by the Community legislator, evidently on the basis of similar concerns, 63 do not pei- se lead to any doubt, to my mind, about the competence of the Community to adopt an internal-market measure. That fact alone does not show either that the Community has invaded a domain reserved exclusively to the Member States or that the objective of the measure is health protection to the 65. Even in the absence of provisions like exclusion of all other aims. 64 The true Articles 100A(3) and 129(1), third indent, point of distinction is whether or not a this would be perfectly natural, as the given measure can be deemed to have as its Community is not acting in a policy object the establishment and functioning of vacuum. In adopting approximating or the internal market or the achievement of coordinating measures, it substitutes Com- munity-level rules for national rules which, whatever their restrictive effect on trade or 62 — On the general obligation of the Community legislator to distorting effect on competition, may have have regard to public health when legislating under legal bases such as Articles 43 and 100 of the Treaty, see Case been motivated by entirely different sub- 68/86 United Kingdom v Council [1988] ECR 855 (here- stantive concerns such as health, consumer inafter 'Hormones'), paragraphs 12 and 14. This case was decided before the insertion of Article 129 in the Treaty. protection, environmental protection, and See also Deposit Guarantees, op. cit., footnote 52 above, so on. 61 Thus, in adopting legislative acts, paragraph 17, and Bovine Labelling, op. cit., footnote 52 above, paragraph 46, although this statement clearly the Community stands in the place of the cannot be interpreted as meaning that Article 100A can be employed to adopt health protection measures without Member States and must give weight to reference to the internal-market criteria expounded below. For a case of judicial review of compliance with a national policy concerns which are not the horizontal public interest provision, viz. Article 129A of the EC Treaty (now, after amendment. Article 153 EC), see Deposit Guarantees, op. cit., paragraphs 46 to 49. 63 — See the third and fourth recitals in the preamble to the 61 — Such national measures might, indeed, have been justified Advertising Directive. by reference to such concerns for the purposes of 64 — See Case C-62/88 Greece v Comici [1990] ECR I-1527 Articles 30 and 59 of the Treaty. (hereinafter 'Greek Chernobyl'), paragraph 20.

freedom to provide services. 65It cannot be contribute to the public health objectives of supposed that a higher level of health that article, but it expressly excludes 'any protection means a lower internal-market harmonisation of the laws and regulations 'content'. Any substantive objective, of the Member States'. regarding health or any other field of regulatory activity, which is also addressed is not so much competing or ancillary as simply of a different order and, thus, capable of being pursued simultaneously, or 'indissociably', 66 with as much intensity as the legislator wishes (or feels obliged) to provide for, provided that the operational objectives of the internal market are served by the measure adopted. 68. It will be apparent from the foregoing discussion that I do not view it as appro- priate to seek to determine the lawfulness of the Directive by reference to the question whether its 'centre of gravity' lies in the pursuit of health protection rather than of internal-market objectives. This approach is only relevant where there is a dispute as to whether a measure should have been The 'centre of gravity' of the Advertising adopted by reference to one or other of two Directive possible legal bases. 67 Normally, where both aspects of a measure are equally essential both legal bases should be employed and the applicable legislative procedures respected. 68 It is only where these procedures are incompatible that a 67. The applicants have argued to the dual legal basis is impossible and a choice contrary and have attached considerable has to be made between them. 69 On the importance to Article 129(4) of the Treaty. other hand, if a measure relates principally They submit, essentially, that the 'centre of to one field of action, having only inciden- gravity' of the Advertising Directive lies in tal effects on other policies, only the first the field of public health rather than the legal basis should be used. 70 The concept internal market, that Article 129 is the only of the 'centre of gravity' is sometimes Treaty provision devoted to that object and referred to in this context, when assessing that Article 129(4) expressly excludes any harmonisation. Article 129(4) empowers the Council and Parliament to adopt by 67 — The principles applicable in such circumstances are co-decision 'incentive measures' in order to succinctly summarised by the Court in Joined Cases C-164/97 and C-165/97 Parliament v Council [1999] ECR I-1139 (hereinafter 'Forestry Protection'), para- graph 14. 65 — Even in cases where there are a number of 'competing' 68 — Case 165/87 Commission v Council [1988] ECR 5545, possible legal bases, it seems better to commence judicial paragraphs 6 to 13; Case 242/87 Commission v Council review by examining whether or not the conditions for [1989] ECR 1425, paragraphs 33 to 37. recourse to the legal basis actually cited were satisfied; see, 69 — Titanium Dioxide, op. cit., footnote 51 above, paragraphs for example, the structure of the judgment in Greek 17 to 21. Chernobyl, ibid., paragraphs 13 to 16. 70 — Case C-70/88 Parliament v Council [1991] ECR 1-2041 66 — Titanium Dioxide, op. cit., footnote 51 above, para- (hereinafter 'Chernobyl'); Case C-271/94 Parliament v graph 13. Council [1996] ECR I-1689, paragraphs 32 and 33.

69. However, in the present cases, we are not presented with a choice between two possible legal bases. It is abundantly clear that Article 129(4) of the Treaty does not constitute an alternative legal basis for the Advertising Directive, by virtue of its The scope of application of Article 129(4) exclusion of harmonising measures. of the Treaty Instead, the situation resembles, in part, that in Titanium Dioxide: 71 if, as in that case, one of two legal bases must necessa- rily be excluded or, as in the present cases, no alternative legal basis exists, the Com- 70. The applicants also cite Article 129(4) munity is competent by virtue of Arti- of the Treaty as limiting the scope of cle 100A (and, by extension of the Court's Community action under Article 100 A reasoning, Article 57(2)) to adopt measures itself. Both rely on a statement of Advocate which serve the internal market and, in General Jacobs in his Opinion in Spain. 73 parallel, another public interest aim, whe- ther it be environmental protection or public health. The issue of competence will be resolved favourably provided the inter- nal-market objective is indeed served; thus, in Titanium Dioxide, the Court examined the objective conditions for legislation on the basis of Article 100A without regard to 71. Although it is not contested that the the relative 'weight' of the internal market Directive could not have been adopted on and environmental aspects of the legislative the basis of Article 129(4), it would be scheme. 72 Similarly, the question whether surprising (and inimical to legal certainty) the effects of a measure on the internal if the authors of the Treaty on European market are merely incidental cannot be Union had, when providing new Treaty resolved, in these circumstances, by asses- powers in respect of public health, so severely restricted existing competence in a different field simply because it some- 71 — Op. cit., footnote 51 above, paragraphs 13, 16 and 21 to 24, especially paragraph 24. 72 — Ibid., paragraphs 14, 15 and 23. 73 — Op. cit., footnote 58 above, paragraph 27.

72. Nor do I think that Advocate General Jacobs said anything different in the pas- sage which has been cited both by the tobacco companies and Germany. He Legislative history of the Directive merely cited Article 129(4), with some other provisions, as examples of exclusions of Community legislative competence, so as to contrast those provisions with the absence of any similar limitation in relation to 'patent law, or... intellectual property law in general'. He neither expressed, nor could he reasonably be taken to have 74. The applicants have also made exten- implied, any view about the scope of that sive reference to the catalogue of events exclusion or, in particular, whether it leading up to the enactment of the Adver- limited legislative competence beyond its tising Directive, much of which I have own specified context. In the context of summarised above (paragraphs 14 to 20). 100A, any such exclusion would have been It is, of course, true that the Court occa- more easily accommodated by expanding sionally has regard to legislative history as the existing list in Article 100A(2) of mat- an aid to the interpretation of Community ters expressly excluded ratione materiae. acts. 75It has even referred to the rejection by the Council of an amendment proposed by the Parliament as confirmation of the 74 — It is clear, for example, from Greek Chernobyl, op. cit., former's wish to maintain the measure's footnote 64 above, paragraphs 19 and 20, that the addi- tion of Article 130R of the EC Treaty (now, after amendment, Article 174 EC) left intact the competences the Community derives from other legal bases; see also Case C-405/92 Mondiet v Armement Islais [1993] 75 — See, for example, Case C-449/93 Rockfon [1995] ECR 1-6133. ECR I-4291; Case C-6/98 ARD [1999] ECR I-7599.

'centre of gravity' as between two legal ised to commit the government of that bases. 76 More generally, however, refer- Member State', 78 the conduct of the Coun- ence to the context in which a measure was cil negotiations preceding the final adop- adopted is irrelevant to determining the tion of the Directive by health ministers appropriate legal basis. 77 proves nothing. The same is true of the discussion of the proposal in a Council working group and a parliamentary com- mittee concerned with public health. Fur- thermore, it is to be expected that those engaged at the political level in the promo- tion or enactment of these measures may be concerned and motivated — even princi- pally motivated — by the second aspect rather than the first. Such priorities are entirely subjective and it is, therefore, inappropriate for the Court to take into account statements of political representa- 75. The applicants cite the legislative his- tives in the course of the legislative process. tory, not in order to construe some unclear provision of the Advertising Directive, but in order to demonstrate that it was in truth — both as to its contents and as to the intentions of its authors — a measure designed primarily to protect public health, by reducing the sales of tobacco products, and by virtue of that fact not truly an internal-market measure. However, it should be clear from my analysis above that it is of the essence of any internal- market measure that it pursues, quite 76. Similarly, even if legal opinions such as legitimately, two objectives — one the that attributed to the Legal Service of the removal of obstacles to trade or distortions Council could be admitted in evidence, 79 of competition; the other (the means of the fact that such views were expressed, the achieving the first) the adoption of harmo- perceived failure to respond to them at the nised Community measures to replace political level and their apparent contra- national measures in the field in question. diction of the Council's stance in the Thus, quite apart from the fact that the present cases are irrelevant to the Court's Treaty envisages only one Council com- objective legal appreciation of the legisla- posed simply of 'a representative of each tion. It remains the case that the Court's Member State at ministerial level, author- review of Community competence to adopt

such measures turns on whether or not the an end other than that stated or evading a first-mentioned objective is served. procedure specifically prescribed by the Treaty for dealing with the circumstances of the case'. 80 As we have already seen, the Treaty prescribes no specific procedure for harmonising rules regarding the protection of public health ratione materiae; rather, 77. As regards legislative history in the such a competence is expressly discounte- narrow sense, the applicants placed con- nanced by Article 129(4), with the result siderable emphasis on the removal from the that the second possible ground for a draft of the Directive at a very late stage of finding of misuse of power is not satisfied. three recitals, quoted above (para- graph 19), which related to the public health concerns of the Community legisla- tor. However, what is really relevant is the question whether the retention of those three draft recitals would have altered the character of the Advertising Directive. I do not see how it could have done so, unless the determination of the objective of Com- munity legislation is to be reduced to a mathematical process of counting the refer- 79. As regards the first possible ground for ences in the preamble to different policies. a finding of misuse of power, the parallel The excised recitals merely amplified points objective of health protection was clearly regarding the legislator's public health referred to in the third and fourth recitals in concerns which are already evident in the the preamble to the Directive and, as I have third and fourth recitals in the preamble already said, the omission of other draft and which were not, as such, illegitimate. recitals in the same vein does not take away from the fact that pursuit of such an objective is not illegitimate in the frame- work of measures adopted on the basis of Articles 57(2) and 100A of the Treaty. Furthermore, I would recall that, rather than the pursuit of health protection and of internal-market objectives being mutually Misuse of power exclusive, the latter must, in appropriate cases, be accompanied by the former. Thus, the manifestations of interest by political representatives in the health benefits of the Advertising Directive are not, as I have 78. I do not think that Germany's plea of already suggested, in any way surprising, misuse of power by the Community legis- or, I would now add, improper. Even their lator is in any way supported by the comparative silence about the claimed legislative history of the Advertising Direc- benefits for the internal market does not tive either. Misuse of power has been tend to establish that these were not, in defined by the Court, in the context of legislative power, as 'the adoption by a Community institution of a measure with 80 —Case C-84/94 United Kingdom v Council [1996] the exclusive or main purpose of achieving ECR I-5755 (hereinafter 'Working Time'), paragraph 69.

fact, envisaged or intended. Germany has The significance of the Council voting furnished no positive evidence to the con- procedure trary. Furthermore, the other material before the Court does not disclose any evidence of misuse of power. Germany's plea of misuse of power should, therefore, be rejected. The question whether the internal-market aims invoked by the Com- munity legislator are actually realised by the Directive is an objective one, going to competence. A negative answer to this question is not sufficient, in my view, to 81. Germany placed considerable empha- establish misuse of power on the part of the sis, especially at the oral hearing, on the legislator. fact that Article 100A involves the use of qualified majority voting and argued that such a horizontal competence could, there- fore, be used to excess, to encroach on areas of Member State competence. This has no bearing on the determination of the appropriate legal basis, if any, for a Com- munity measure, which must follow the same objective principles irrespective of the legislative procedure involved. As I have already noted above, the Community must in every case act within the limits of its powers, including where the Council votes unanimously to enact a measure on the basis of the broad terms of Article 235 of the Treaty. 81 Additional considerations 80. Thus, the real issue in the present relating to the sovereignty of the Member proceedings is not whether health protec- States are irrelevant to the analysis of those tion figured prominently in the motivation powers. 82 In Titanium Dioxide, the Court of those promoting its adoption, but whe- preferred Article 100A as a legal basis to ther the internal market constitutes, on its Article 130S even though the former own, a sustainable legal basis for the entailed qualified majority voting in the Directive. In the absence of an alternative Council and the latter unanimous voting. 83 legal basis, I will, therefore, be concerned in In the light of my analysis of the horizontal the remainder of my analysis of Commu- character of Article 100A, it is difficult to nity competence, first, with identifying the accept that any a priori limits should be objective conditions for recourse to Arti- imposed on the crucially important Com- cles 57(2) and 100A of the Treaty and, munity competence to provide for the secondly, with determining whether or not establishment and functioning of the inter- the Advertising Directive complies with nal market, over and above those inherent these conditions. As a preliminary matter, it is necessary briefly to advert to, and to reject, Germany's argument regarding the 81 — Opinion 2/94 European Convention on Human Rights, significance of the applicable Council vot- op. cit., footnote 50 above, paragraph 30. ing procedure in identifying the conditions 82 — See paragraph 37 or the Opinion of Advocate General Jacobs i n SPAIN, op. cit.. footnote 58 above. for the exercise of Community competence. 83 — Op. cit., footnote 51 above, paragraphs 18 and 19.

83. It is apparent from these provisions '(c) an internal market characterised by the that the internal market is not a value-free abolition, as between Member States, synonym for general economic governance. of obstacles to the free movement of This is a question of some importance in goods, persons, services and capital; the light of the Council's argument that pursuit of internal-market objectives need not necessarily be liberalising but may be 84 — See the remarks of Advocate General Tesauro in Titanium Dioxide, op. cit., footnote 51 above, paragraph 13 of his purely regulatory. I explain below why the Opinion. However, I would add, further to my comments internal market cannot be defined simplis- in the main text, that the possibility of qualified majority voting in the Council under Article 100 Aof the Treaty is tically in terms of liberalisation or dereg- not, in itself, a reason to construe that provision more broadly than would otherwise be the case. ulation. None the less, the conferral of

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84. As regards free movement, this point is borne out by reference to the two Waste cases. 85 In Waste 1, the Court observed that the aim of the contested directive 86 was to implement the principle that waste was to be disposed of as close as possible to the place where it was produced, in order to limit as far as possible the transport of 85. It goes without saying that the fore- waste, 87 and concluded that the directive going case-law does not require Arti- in question could not be regarded as cles 7A, 57(2) and 100A of the Treaty to implementing the free movement of waste be interpreted as a kind of liberal charter, within the Community. 8 8As Advocate entailing harmonisation towards the lowest General Tesauro observed, the contested standard or even towards some sort of measure 'aims to achieve, not a liberal- mean of the pre-existing national stan- isation of trade in waste, but, on the dards. First, I have already referred to the

Community's duty 93 to take into account ous products are subject to appropriate public interest concerns and, thus, the measures in all the Member States.' degree of protection attained or pursued by the Member States.

Thus, a uniform system for responding to dangerous products was properly under- stood as a measure facilitating the free movement of goods in general. The free movement of goods may well be facilitated by measures which prevent, restrict or burden the circulation of particular 86. Secondly, harmonisation measures goods. 95 which impose considerable restrictions in the public interest should not invariably be regarded as seeking to reduce trade in the sector concerned. The entitlement of the Community legislator to impose such restrictions, even to the point of prohibiting In Rewe-Zentrale v Landwirtschaftskam- trade in certain products, in parallel pursuit mer Rheinland,96 the Court held that, of broader free movement goals and of '[a]though ... Articles 30 to 36 of the some other public interest is illustrated by Treaty apply primarily to unilateral mea- the Product Safety case. The Court recon- sures adopted by the Member States, the ciled these apparently competing objectives Community institutions themselves must in relation to a measure enabling the also have due regard to freedom of trade Commission to require Member States to within the Community, which is a funda- take temporary measures to prohibit the mental principle of the common market'. It marketing of dangerous products: 94 concluded, nevertheless, that the inspec- tions required to be carried out by virtue of the directive challenged in that case 97 were 'not intended to hinder intra-Community trade'; the impugned directive sought, '[o]n

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88. Thirdly, Article 100A of the Treaty is not exclusively concerned with removing 100 — Titanium Dioxide, op. cit., footnote 51 ahove, para- graph 15. Article 8A became Article 7A of the EC Treaty, barriers to the exercise of the four free- before becoming, after amendment. Article 14 EC. Although the removal of distortions of competition is stated to he necessary in order to give effect to the four freedoms, it is convenient to address separately, in the analysis which follows, the issues of barriers to, or 98 — Op. cit., paragraph 19, emphasis added. As the reference restrictions on, exercise of those freedoms, on the one to Article 36 of the Treaty makes clear, this case is also hand, and, on the other, distortions of competition. relevant to the point made immediately above abont taking 101 — Council Directive 89/428/EEC of 21 June 1989 on into account public interest concerns when legislating for procedures for harmonising the programmes tor the the internal market. reduction and eventual elimination of pollution caused by 99 — Joined Cases C-34/95to C-36/95 KO v De Agustmi aiul waste from the titanium dioxide industry, OJ 1989 TV-Simp [1997] LCR I-1843 (hereinafter 'De Agostimi') L 201, p. 56. See Titanium Dioxide, op. cit., footnote 51 paragraph 33. above, paragraph 2.

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OPINION OF MR FENNELLY — CASES C-376/98 AND C-74/99

than the sum or the mean of those imposed harmonising measure must be appreci- by the different national rules which pre- able. 102 I would favour such a test, ceded the Community measure. although it is not necessary for the purposes of my analysis below for me to take a definite view on this question.

102 — See Titanium Dioxide, ibid., paragraph 23; Case 91/79 Commission v Italy [1980] ECR 1099, paragraph 8; Case 92/79 Commission v Italy [1980] ECR 1115, paragraph 8. The Court did not expressly state in Titanium Dioxide that Article 100A of the Treaty could only be used to deal with appreciable distortions of competition arising from disparate national regulations, and it was submitted by the defendants in the present cases that, having regard to the earlier cases cited, this condition only related to use of the more narrowly circumscribed Article 100 of the Treaty. It is clear, however, from its application under Article 100 that the defendants' argument that this test is relevant only to the 90. One possible test appears to have been application of the Treaty competition rules to under- takings is unfounded. suggested by the Court in Titanium Diox- 103 — Waste I, op. cit., footnote 85 above, paragraph 19; see ide, in the nature of a precondition for also Case C-426/93 Germany v Council [1995] ECR I-3723, paragraph 33. recourse to Article 100A: that the distor- 104 — Op. cit., footnote 85 above, paragraphs 17 to 20, espe- tion of competition to be remedied by a cially paragraph 19.

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Internal-market objectives — concrete assessment

92. The applicants referred to another possible limit — that recourse to Arti- cle 100A of the Treaty to remedy distor- tions of competition should be confined to fields where the Community also enjoys express competence ratione materiae, such as environmental protection. I am not 93. In order to determine whether a Com- convinced by this argument. There is no munity measure pursues internal-market apparent support for it in Article 100A or objectives, a two-stage enquiry is necessary. in the general provisions of the Treaty First, it must be ascertained whether the preconditions for harmonisation exist, that is, disparate national laws which either constitute barriers to the exercise of the 105 — Op. cit., footnote 51 above, paragraph 20, emphasis added. four freedoms or distort conditions of

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OPINION OF MR FENNELLY — CASES C-376/98 AND C-74/99

94. It has been suggested, especially by the Commission, that this essentially raises the question whether a measure is appropriate, 95. The Court has undertaken a concrete or opportune, which is a question of review of this type in cases where Member proportionality rather than of competence. States have challenged the Community's The Court should not, therefore, intervene competence to act pursuant to Arti- at this stage. I do not agree. If the exercise cle 100A and Article 57(2), respectively, of Community competence is to be amen- in Spain and Deposit Guarantees. 107 In able to judicial review, it is not enough to Spain, the Court examined and rejected the verify satisfaction of the conditions prece- argument that Regulation No 1768/92 108 dent to harmonisation, because Arti- compartmentalised the Community market cles 57(2) and 100A of the Treaty do not beyond the duration of basic national confer a universal competence to harmo- patents and prevented free competition nise for its own sake once those conditions with patent-holding undertakings by the are satisfied. The need for concrete review generic medicines industry. 109 It held that of the harmonising measure actually the harmonised extension of the period of adopted is acknowledged in the Court's patent protection by the regulation fore- repeated statement that enquiries regarding stalled the fragmentation of the market for competence should have regard, 'in parti- cular, [to] the aim and content of the 107 — Such a concrete review is also typical of the Court's inquiries into the applicability of one legal basis rather than another, as in Titanium Dioxide, op. cit., foot- 106 — These are the two grounds invoked in defence of the note 51 above, and the two Waste cases, discussed above. Advertising Directive in the present cases. I take no position on the question whether there are other grounds 108 — Op. cit., footnote 58 above. for action pursuant to the provisions at issue. 109 — Spain, op. cit., footnote 58 above, paragraphs 30 and 31.

medicines by preventing the heterogeneous tion by the contested measure 115 of pro- development of national laws, 110 even motion by bank branches in other Member though such extended protection was States of the benefit of national deposit unknown in most Member States. 111 The guarantee schemes which were more pro- Court also examined the balance struck tective of consumers than those provided between the interests of patent-holding for in the directive was inconsistent with undertakings and those which manufacture the objective of Article 57(2) of the Treaty. generic medicines. 112 Although this is The Court concluded that the maximum clearly relevant under the rubric of propor- limit imposed on the deposit protection tionality, the Court appears to have con- offered by branches in other Member States sidered it in this case as a matter relating to 'is much less onerous than the obligation to competence, required by 'the objectives set comply with different bodies of legislation out in [Article 7 A of the Treaty]', 113 thus on deposit-guarantee schemes in the var- implying that the existence or severity of ious host Member States', with the result restrictions imposed upon economic activ- that even the establishment in other Mem- ity (here, that of manufacturers of generic ber States of branches of German credit medicines) is potentially relevant to the institutions could be said to have been question whether a harmonising measure facilitated by the directive at issue. 116 can be said to pursue internal-market objectives. 114 My general approach in the present cases is also reinforced by the fact that, having satisfied itself regarding the internal-market objective of the contested regulation, the Court at no point referred to the relative weight in the legislative scheme of the complementary objective of promot- ing pharmaceutical research in the Com- 97. This type of assessment is distinct from munity. the assessment of proportionality. The question asked, with a view to establishing fulfilment of the conditions for recourse to a competence conferred for functional ends, is whether the measure pursues the internal-market objectives invoked, not whether it goes further than is necessary to achieve it. Furthermore, as I stated above, we are, at this stage, exclusively concerned with the achievement of those objectives, as this is the purpose for which the competence was conferred. When asses- 96. In Deposit Guarantees, the Court sing proportionality, on the other hand, addressed the submission that the prohibi- account must also be taken of the addi- tional substantive objectives which must be pursued through internal-market measures, 110 — Ibid., paragraphs 35 and 36. 111 — Ibid., paragraph 34. 112 — Ibid., paragraphs 37 to 39. 113 — Ibid., paragraph 37. 115 — European Parliament and Council Directive 94/19/EC of 114 — See the discussion above at paragraphs 83 to 87 or 30 May 1994 on deposit-guarantee schemes, OJ 1994 whether the adoption of iraae-recliiang measures is I. 135,'p. 5. consistent with the pursuit of internal-market objectives. 116 — Ibid., paragraph 44.

including that of achieving a high level of 99. None the less, the Court's task is easier health protection. in the case of legislation whose effects in the relevant sector are extreme, as in the case of a prohibition. There can be no presumption that the effective prohibition by the Community legislator of a particular economic activity is contrary to the objec- tives of the internal market. At the same time, the effects of such a prohibition, and the legal conclusions to be drawn from 98. It is clear that, when engaging in concrete review of complex legislative them, will be more easily identified by a choices affecting diverse economic and judicial body, which would be much more other interests, the Court must normally deferential towards delicate balances struck accept the assessment of the legislator that by the legislator between different material the effectiveness of a measure as regards the interests. 120 This facilitates the assessment establishment or functioning of the internal of whether there is the necessary concor- market will justify the constraints created dance of the content of the measure impos- by it. 117 The Court may not substitute its ing a prohibition with its internal-market judgment for that of the legislator, or aim, as set out, in particular, in the question the expediency of a particular preamble to the measure and in any policy initiative. 118 Even though we are substantive provision (such as Article 1 of concerned with establishing the limits of the Advertising Directive) which refers, Community legislative competence, the expressly or by necessary implication, to necessary concrete assessment of the rela- its objectives. This concordance must ulti- tionship of the measure adopted with its mately be judged by reference to the professed objectives entails, in my view, discernible effects of the impugned mea- recourse to the standard of review applied sure. The precise internal-market objective by the Court to the exercise by the institu- pursued should be apparent from the tions of broad legislative discretion. Where measure itself and it cannot, in my view, the institutions enjoy 'a wide measure of be supplemented by reference to wider or discretion, particularly as to the nature and different objectives at a later stage. 1 2 1If extent of the measures which [they adopt], the effects of the measure are not consistent the Community judicature must, when with the internal-market objectives served reviewing such measures, restrict itself to by the legal bases employed and actually examining whether the exercise of such invoked by the legislator, then it must be discretion is vitiated by a manifest error or concluded that the Community legislator a misuse of powers or whether [the institu- tions] did not clearly exceed the bounds of [their] discretion'. 119

101. The first recital may be understood as seeking to satisfy the condition precedent for Community harmonisation on the basis of Articles 57(2) and 100A of the Treaty. The second recital contains the most expli- 100. Article 1 of the Directive states that cit statement of the linkage between the its objective is 'to approximate the laws, existing situation, the achievement of the regulations and administrative provisions objectives of the internal market — the of the Member States relating to the ostensible aim of a measure adopted on the advertising and sponsorship of tobacco basis of Articles 57(2) and 100A — and products'. The first recital in the preamble the measure actually adopted — its con- postulates that the pre-existing differences tent: 122 between national rules in this field were likely to give rise to barriers not just to the provision of services as regards the adver- tising and sponsorship of tobacco products but also to the movement between Member States of products which serve as the media 'Whereas those barriers should be elimi- for such advertising and sponsorship. These nated and, to this end, the rules relating to differences also distorted competition. This the advertising and sponsoring of tobacco statement can only be understood as relat- products should be approximated ... .' ing to competition between providers of the aforementioned services — advertising and sponsorship for tobacco products — and between producers and suppliers of the media for such advertising and sponsor- ship. In its context, it clearly does not relate Imperial Tobacco submitted that the Direc- to competition in the advertising and tive does not include among its aims sponsorship sectors in general, which are combating any distortion of competition nowhere mentioned in the Directive. Fur- thermore, nothing in this recital or else- where in the Advertising Directive suggests 122 — I do not, of course, wish to make a rigid distinction that it is concerned with barriers to trade in between aim and content. It is possible to deduce the aim of a measure from its substantive provisions as well as its either tobacco or diversification products preamble — see, for example, Forestry Protection, op. or with distortions of competition as cit., footnote 67 above, paragraph 13. In the present cases, however, no additional guidance is furnished by the between producers or distributors of such other provisions of the Advertising Directive.

distinct from the trade barriers referred to from disparate national laws: in the context in the second recital. I regard this reading of the free movement of goods, for exam- as over-strict. The eighth recital refers to ple, a national measure is deemed to the interdependence between the various constitute a restriction if it is capable of forms of advertising and states that the hindering directly or indirectly, actually or Directive must cover all forms of advertis- potentially, intra-Community trade, 'even ing (apart from television advertising) 'in though the hindrance is slight and even order to prevent any risk of distorting though it is possible for imported products competition'. to be marketed in other ways'. 123 The fact that a national rule affects a tiny market, whether defined geographically or by refer- ence to the amount of trans-frontier trade affected by the rule, is also irrelevant to the application of Article 30 of the Treaty. 124

It does not follow that action of that sort is automa- tically justified by trivial ('de minimis') trade barriers. It is at least arguable that harmonising action should relate to national rules which have more than trivial effects on trade. This issue does not arise in this case, because disparate national rules, Barriers to trade in goods and services some of them highly restrictive, can clearly relating to tobacco promotion have direct and significant effects on trade in tobacco advertising services and media. The question whether levels of trans-fron- tier trade in the goods or services affected

It is obvious from the decision of the Court in Blluhme, ibid., paragraph 22, that the exclusion from the scope of application of the relevant Treaty provisions by cases such as Case C-379/92 Peralta [1994] 104. The Court has made clear that there is ECR I-3453 of merely indirect or aleatory obstacles to no de minimis rule regarding the Treaty trade in goods or services relates to the remoteness of their effects on trade, rather than the scale of those prohibition of obstacles to trade arising effects.

126 — The promotion of diversification products governed by Article 3(3)(b) of the Directive — non-tobacco products which bear brand names, trade marks, emblems or other 128 — A service provided in Member State B by an agency distinguishing features used for tobacco products — is established in Member State A on behalf of a client regarded as an indirect form of tobacco promotion and is, established anywhere in the Community, including Mem- therefore, included in the examination below of the ber State A, comes within the scope of the Treaty promotion of tobacco products, save to the extent that it provisions on services. See, for example. Case C-154/89 is singled out for special discussion. Commission v France [1991] LCR I-659, paragraph 9, regarding the activities of tourist guides. 127 — Regarding non-discriminatory restrictions on the provi- sion of services, see Case C-275/92 Schindler [1994] 129 — Schindler, op. cit., footnote 127 above, paragraph 32. ECR I-1039, paragraph 4 3 ; Case C-76/90 Säger v Den- 130 — Sec Joined Cases C-51/96 and C-191/97 Deliege [2000] nemeyer [1991] ECR I-4221, paragraph 12. LCR I-2594, paragraph 57.

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Directive. First, recourse to Article 100A(4) thereby facilitating, trade in services whose is subject to a special confirmatory proce- content is exclusively devoted to the adver- dure, controlled by the Commission, whose tising or sponsorship of tobacco products, decision is judicially reviewable at the suit including both those services which find of other Member States. 134 Member States tangible expression in goods such as cannot act unilaterally without Commis- printed brochures, leaflets or posters and sion approval. 135 Refusal of confirmation the service elements of free distribution of by the Commission obliges the notifying tobacco products. The Directive's sole Member State to seek the annulment of the effect, within its extensive sphere of appli- Commission's decision before it can act. 136 cation, is to prohibit trade in the services in If, in the absence of such confirmation, they question. There are no compensating gains do not implement a harmonising directive for undertakings active in the production or in time, it can have direct effect before the provision of such services.

As a matter of law, a measure whose sole effect is to prohibit an economic activity cannot, in my view, be said to constitute the 134 — See Case C-41/93 France v Commission [1994] removal of barriers to trade affecting that ECR 1-1829. activity. I would conclude, therefore, that 135 — Case C-319/97 Kortas [1999] ECR 1-3143, paragraphs the Community legislator was manifestly in

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error, or manifestly exceeded its discretion, or potential restrictions arising from dis- regarding its assessment of the benefits parate national regimes. 139 likely to accrue in fact to undertakings active in the affected field and to the establishment and functioning of the inter- nal market.

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116. The case of Article 3(3)(a) of the Advertising Directive also requires special attention. This provision requires Member States to ensure that no tobacco product bears the brand name, trade mark, emblem or other distinctive feature of any other product or service unless the tobacco 141 — It also constitutes a harmonised product rule regarding product presentation which might be relevant to the free product was already traded on that basis movement of tobacco products in the Community but, as we have seen, this does not feature among the Directive's before 30 July 2001, the date on which the objectives. Given the parallel public health objective of period for implementation of the Directive the Directive, as expressed, in particular, in the fourth recital, it is difficult to believe that it is designed to expires. The objective of this provision is facilitate trade in tobacco products.

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118. I would recall once more my conclu- 142 — See the discussion of Titanium Dioxide, op. cit., foot- note 51 above and Waste 1, op. cit., footnote 85 above, sions, stated above, that Community com- at paragraph 91 above. petence under Article 100A of the Treaty to 143 — See paragraphs 99 to 102 above.

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145 — Op. cit., footnote 80 above, paragraph 37. 147 — Joined Cases 56/64 and 58/64 [1966] LCR 299, at p. 344. 146 —OJ 1993 1. 307, p. 18. 148 — Cast· 17/74 [ 1974] ECR 1063, paragraph 21.

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declare laws invalid having regard to within the legislative power may be provisions of a written constitution. allowed to stand if it is separable from the bad. But no provision, however unobjec- tionable in itself, can stand unless it appears both that, standing alone, the provision can be given legal effect and that 126. The Irish Supreme Court has said: the legislature intended the unobjectionable provision to stand in case other provisions held bad should fall.' 150

'It is true that a statute bad in part is not 150 — 292 US 571 (1934). It appears that the US courts do not necessarily void in its entirety. A provision observe the first condition stated above, that is, that they may annul a generally applicable statute or statutory provision as regards some applications and not others. Their commitment to respecting the legislative intent applies a fortiori where a stricter approach is taken to the 149 — Maker v Attorney General [1973] IR 140. severability of legislative provisions.

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151 — Lor a similar, though nor identical, analysis, see the Opinion of Advocate General Léger i n Working Time, op. cit., footnote 80 above, paragraphs 126 and 127. 152 —Article 130R(4) of the EEC Treaty provided that the 'Community shall take action ... to the extent that the 129. As a result, I recommend that the objectives ... can he attained better at Community level Court annul the Advertising Directive in its than at the level of the individual Member States'. This provision was removed by the Treaty on European Union entirety. upon its entry into force on 1 November 1993.

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Treaty by the Treaty on European Union. and higher association what lesser and The second indent of Article 3B states: subordinate organisations can do'. 154 For these, and for one additional reason, my discussion of the principle of subsidiarity is quite narrow.

'In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the 134. The present cases concern the legal Member States and can therefore, by rea- scope and applicability of the principle as son of the scale or effects of the proposed expressed in the EC Treaty. This is defined action, be better achieved by the Commu- and limited by the opening expression in nity.' Article 3B, second indent: 'In areas which do not fall within its exclusive compe- tence ...'.

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136. I start by commenting on the char- competences conferred ratione materiae, acter of harmonisation of national rules. I whose objective is to achieve certain results agree with the argument, put with some in the field in question, such as preserving, force by the Parliament at the oral hearing, protecting and improving the quality of the that the Member States simply cannot environment. 157Although the Community harmonise each other's laws, regulations is, in those fields, exclusively competent to or administrative action in fields which adopt harmonising measures, such compe- come within the scope of application of the tence is not conferred with the distinct Treaty. Individual action is excluded as a objective of achieving uniformity. 158 matter of logic and collective action by the Rather, the enactment of uniform Commu- 15 Member States (for example, by way of nity rules is provided for in order to achieve a treaty concluded under public interna- certain material objectives which are also tional law) is excluded, in my view, as a pursued, in the exercise of their own matter of law, having regard, in particular, competences, by the Member States. In this to the terms of Article 5 of the EC Treaty sense, the material competence of the (now Article 10 EC). 155Thus, in Working Community and the Member States is Time, the Court stated, in a dictum which I concurrent. There is a choice between discuss further below, that, once harmoni- Community and Member State action in sation of conditions is necessary under pursuit of the same ends. The principle of Article 118A of the EC Treaty (Arti- subsidiarity is applicable, but it will be cles 117 to 120 of the EC Treaty have been satisfied, it seems, upon the establishment replaced by Articles 136 EC to 143 EC), of the need for the adoption of common this 'necessarily presupposes Community- harmonised measures, an instrument which wide action'. 156 can only be employed at Community level.

national level, was satisfied by the need for and thus did not have to interpret the term Community action. 159 It stated: 'exclusive competence'. The position is different and, in my view, clearer in the case of the exercise of the Community's competence to adopt harmonising mea- sures in pursuit of the objectives of the internal market. I have already explained that Articles 57(2) and 100A of the Treaty create a general Community competence of 'In that respect, it should be noted that it is a horizontal, functional character. 161 the responsibility of the Council, under Where disparate national rules give rise Article 118a, to adopt minimum require- either to obstacles to trade in goods or the ments so as to contribute, through harmo- provision of services or to distortions of nisation, to achieving the objective of competition, the Community has an inter- raising the level of health and safety est in achieving uniformity of trading protection of workers which, in terms of conditions which is quite distinct from its Article 118a(1), is primarily the responsi- interest in the substantive content of the bility of the Member States. Once the uniform rules adopted. The coordination or Council has found that it is necessary to approximation of national rules which improve the existing level of protection as affect economic activity is the very essence regards the health and safety of workers of these competences, provided it serves the and to harmonise the conditions in this area purposes of the internal market, and is not while maintaining the improvements made, merely an instrument for achieving some achievement of that objective through the separate, materially defined objective. It is imposition of minimum requirements clear that only the Community can adopt necessarily presupposes Community-wide measures which satisfy these requirements. action, which otherwise, as in this case, The Member States may attempt to remedy leaves the enactment of the detailed imple- some of the effects of disparate laws, by menting provisions required largely to the enacting mutual recognition provisions, for Member States.' 160 example, but they cannot themselves achieve uniformity as such in the relevant field. The fact that the Member States are competent in a material domain that may be affected by internal-market measures, such as that of health protection, does not imply that the Community's internal-mar- ket competences are concurrent. Just as the 139. The Court, in Working Time, was dealing with an area of shared competence

objectives pursued are of a different not follow the Advocate General on this order, 162 so too are the underlying compe- point. However, this view is based on a tences. 163 misreading of the judgment. The Court was careful to state that Germany's plea in that case was not that the contested directive violated the principle of subsidiarity but 'only that the Community legislature did not set out the grounds to substantiate the 140. Advocate General Léger adopted a compatibility of its actions with that prin- similar approach in Deposit Guarantees. ciple'. 165 In other words, the argument was He observed that Article 57 of the not concerned with substantive observance Treaty — the legal basis of the directive of the principle but with the duty to give challenged in that case — refers at no reasons. It is in this context that the point to the competence of the Member judgment must be interpreted. Further, the States and that that provision 'entrusts the Court prefaced its conclusion that the duty Community alone with the responsibility to give reasons had been observed with the for the coordination of national legislation words 'on any view'. 166 Thus the Court in this field which shows that, from the merely ruled that the reasons given were very outset, the authors of the Treaty sufficient whether or not the principle of considered that, as regards the taking-up subsidiarity was applicable, and not, as is and pursuit of activities as self-employed contended, that the principle was actually persons, coordination was better achieved applicable. It was perfectly appropriate for by action at Community level rather than the Court to abstain from ruling on a national level'. 164 Deposit Guarantees is question of major constitutional signifi- potentially, for this reason, more relevant cance which was raised, at most, tangen- for the present cases than Working Time, tially in the pleadings. Its judgment cannot, which concerned a shared material compe- therefore, be seen as prejudging the matter. tence.

be no test of 'comparative efficiency' in question removes obstacles to the inter- between potential Member State and Com- nal market'. 168 Advocate General Léger munity action. If there were, even more rejected this argument and analysed in difficult questions of principle would arise. some detail the respects in which Member How, in particular, does one weigh the State action continues to be possible. Fur- comparative benefits of Community har- thermore, as the necessity of assuring the monising action in pursuit of the internal establishment and functioning of the inter- market with individual Member State rules nal market is not itself in doubt, I would in respect of entirely different national conclude that the judicial control of satis- preoccupations of a substantive character? faction of the objective criteria for adop- tion of measures using these legal bases will, to some extent, address the concerns regarding unnecessary Community action in fields where the Member States also 143. Nothing in the Protocol on the appli- enjoy competence which prompted the cation of the principles of subsidiarity and insertion of the principle of subsidiarity in proportionality would, if it had been in the Treaty. force at the date of the adoption of the Advertising Directive, have altered the conclusion I have reached. In particular it is made clear that the 'principle of sub- sidiarity does not call into question the 145. Since I have concluded that the prin- powers conferred on the European Com- ciple of subsidiarity does not apply, I do not munity by the Treaty as interpreted by the think it is necessary to analyse whether it Court of Justice'. 167 The Protocol repeats was observed in this case. I would, there- that it 'relate [s] to areas for which the fore, reject this ground of invalidity. Community does not have exclusive com- petence'.

147. Article 3B of the Treaty requires that 'action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty'. The Court set out the following three-part test of proportion- 149. It follows from my analysis above that ality in BSE: it is perfectly legitimate for the Community legislator to pursue simultaneously internal market and public health objectives. Thus, no doubt is cast on the legal basis of the Advertising Directive if health protection plays a part in the analysis of the propor- tionality of that measure. 171 The theoreti- '[T]he principle of proportionality... cal possibility of adopting less restrictive requires that measures adopted by Com- internal-market measures, for example the munity institutions do not exceed the limits obligatory lifting of national restrictions on of what is appropriate and necessary in tobacco promotion, cannot, therefore, be order to attain the objectives legitimately used to show that the Directive is not the pursued by the legislation in question; least restrictive manner of achieving the when there is a choice between several legislator's objectives, because this would appropriate measures recourse must be had ignore its parallel health protection aim. to the least onerous, and the disadvantages On the other hand, it is also clear that caused must not be disproportionate to the health protection cannot function indepen- aims pursued.' 169 dently as an objective. Therefore, however great may be the health benefits of restrict- ing most forms of advertising, even in exclusively domestic contexts, this will only satisfy the first condition of proportionality if the Directive contributes to achieving 148. This test can be employed both to internal-market objectives; otherwise it determine whether the Advertising Direc- must be condemned for failing to meet an tive complies with the general principle of essential objective which is also a condition proportionality under Community law, of the exercise of competence in the first which is my immediate concern in this place. My discussion above of the legal section, and to assess whether it permissibly basis of the Directive turns on what I limits the exercise of fundamental rights 170 — See, for example, the analysis of Advocate General van Gerven i n Case C-159/90 Society for the Protection of 169 — Op. cit., foornote 119 above, paragraph 96; sec also Case Unborn Children Ireland (hereinafter 'Grogan') [1991] C-.131/88 Fedesa and Others |1990] ECU I-4025 (here- ECU I-4685, paragraph 35. inafter 'Fedesa'), paragraph 13. 171 — See paragraph 9 7 above.

regard as the Community legislator's man- add anything to the matters already dis- ifest error regarding the achievement of cussed. I am not wholly convinced of the either free movement of goods and freedom usefulness of the Court judging the com- to provide services or undistorted condi- pliance with Article 30 of individual provi- tions of competition in the tobacco adver- sions of Community internal-market mea- tising and sponsorship sector. By the same sures 174 when, as we have seen, 175 the token, I would regard the Directive as an restrictions imposed by such measures may ineffective means of achieving the objec- be a necessary feature of a trade-facilitating tives pursued, which fails, thus, to satisfy scheme which must, simultaneously, the first element of the test of proportion- respect certain general interest require- ality. 172 Should the Court decide not to ments. 176 None the less, if it is to do so, follow my recommendation on the issue of its judgment in Kieffer and Thill 177 indi- competence, whether it be on the basis of a cates that the analysis of the proportion- different appreciation of the general rules ality of an apparent restriction on trade in governing competence or of their applica- goods in the light of the internal market or tion, I would, none the less, rely upon my other objective of the measure is identical discussion of that issue to demonstrate, in to that outlined above, with the result that the alternative, that the Directive is dis- the Directive should also be annulled on proportionate in the wider sense of that this ground. term, in that it fails to satisfy the first of the three requirements of proportionality. 173It is not useful to speculate further on the different potential approaches on the Court's part to the complex question of competence and on their implications for that of proportionality, as this could simply result in my working on the basis of hypothetical positions which may ulti- mately represent neither my own view of 151. For the same reason, I would recom- the issue of competence nor the Court's. mend to the Court that it annul the Directive for breach of the rights to prop- erty and to pursue a professional activity. Those rights, like all the general principles of Community law, 'are not absolute and

must be viewed in relation to their social services of national rules which regulate function'. 178 This permits the imposition tobacco promotion. of restrictions which correspond to Com- munity objectives of general interest and do not constitute in relation to the aim pur- sued a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed. 179 The Directive 153. The fundamental rights protected as does not, in my view, impose restrictions general principles of Community law include freedom of expression. 180 In deter- which correspond to the internal-market mining the range of rights protected by objectives which were necessary for its Community law and the scope of the lawful adoption. protection accorded to them, the European Convention on Human Rights has 'special significance' as a source of inspiration. 181 Article 10(1) of the Convention states, in relevant part:

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183 — For a reference to both the social and the personal functions of freedom of expression, see Hanayside v United Kingdom, judgment of 7 December 1976, Ser- 184 —Case C-320/93 Ortscheit [1994] ECR1-5243, para- ies A, No 24 (hereinafter 'Handyside'), paragraph 49. graph 16.

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185 — BSE, op. cit., footnote 119 above, paragraph 60, already quoted at paragraph 98 above. 187 — See Sunday Tunes v United Kingdom, judgment of 26 April 1979, Series A, No 30; Obsenvr and Guardian 186 — The position is different regarding economic rights such v United Kingdom, judgment of 26 November 1991, as the right to property or the freedom to pursue a trade Series A, No 216, paragraph 59. or professional activity, not least because of the inevitable effects on the exercise of such rights of general economic 188 — Markt intern v Germany, op. cit., footnote 182 above, policy, regarding which the legislator (or those to whom paragraph 37; Groppera v Switzerland, op. cit., foot- power is delegated) should enjoy considerable discretion. note 182 above, paragraph 73. See Case C-44/94 R v Minister far Agriculture, lishencs 189 — Sec, for example, langens v Austria, judgment of 8 July and load, ex fiarte Vtshermen's Organisations and 1986, Series A, No 103, paragraph 4 1 , on the impor- Others | 1 9 9 5 | LCR 111 15, paragraphs 57 to 6 1 . tance of a free press.

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OPINION OF MR FENNELLY — CASES C-376/98 AND C-74/99

160. The evidence required to justify a restriction will depend on the nature of the claim made. We are here largely con- cerned with the objective assessment of the likely effects of the Advertising Directive. The legislator should not enjoy as wide a margin of appreciation as in the case, for 161. Evidentiary requirements may be less example, of the protection of morals. 190 strict where public health is at stake. The However, the Community should not be Court stated in BSE that '[w]here there is prevented from acting in the public interest uncertainty as to the existence or extent of simply because justification of its action risks to human health, the institutions may necessarily depends, not on 'hard' scientific take protective measures without having to studies, but on evidence of a social scien- wait until the reality and seriousness of tific character, which predicts, on the basis those risks become fully apparent'. 193 of past behaviour, the future responses of However, the present cases do not concern consumers to changes in their level of a prohibition of the marketing of tobacco exposure to promotional material. 1 9 1Fur- products themselves, whose harmful effects thermore, where the Community legislator on health have not been disputed, but can show that it acted upon the basis of rather a comprehensive ban on promotion reputable specialist studies in the field, the of such products. The scientific debate at fact that other apparently reputable studies

issue relates to the effects of such promo- Imperial Tobacco presented evidence of tion on overall consumption levels (as studies with contrary findings before the opposed to the mere choice of brands by national court, the United Kingdom also existing smokers), which is at one remove produced studies which have not been from the assessment of the health risks subjected to analysis in these proceedings. actually posed by such consumption. Fur- France also produced evidence of the effect thermore, the ban at issue in BSE was of its national restrictions (la loi Évim). It temporary in nature and was subject to suffices, in my view, to have regard to the review after a further examination of the studies upon which the institutions rely. situation. 194 Differences of opinion regard- The reports find a correlation both between ing the effect of tobacco advertising are of tobacco advertising and the taking up of long standing and are unlikely to be smoking, particularly among the young, resolved quickly. The standard proposed and between the banning of advertising and in the immediately preceding paragraph - reductions in average per capita tobacco makes allowance for the lack of unanimity consumption. The NBER report includes in scientific circles; it would, in my view, be an estimate, based on regression analysis, insufficiently respectful of freedom of of the likely effects of the Commission's expression to go beyond that and to permit revised 1997 version of the second pro- the legislator to restrict the exercise of that posed Directive, 197 which concludes that it right without any clear evidence that such a would probably have reduced tobacco restriction is likely to result in changes in consumption by approximately 6.9% dur- behaviour which, in turn, were likely to ing the sample period. 198 Furthermore, it benefit public health. concludes that, while comprehensive bans have a clear effect in reducing tobacco use, limited bans are minimally effective in reducing the impact of advertising because they allow substitution of other media for those restricted and do not result in a reduction in total tobacco advertising expenditure or exposure. The possibility of circumventing a ban which does not cover all forms of advertising is referred to in the eighth recital in the preamble to the 162. The Council submitted in evidence the Advertising Directive. Interestingly, the conclusions of two reports, one prepared institutions have been at pains to contest by the United States National Bureau of the totality of the ban, in order to defend it, Economic Research ('NBER') 195 and the other commissioned from the Institut für Therapie- und Gesundheitforschung, Kiel, by the German Federal Ministry of Health. 196 Although the applicants in

163. I conclude, on the basis of this evi- dence, that the Community legislator had reasonable grounds to believe that the comprehensive prohibition of tobacco pro- 165. I now turn to the third stage of motion would result in a significant reduc- analysis, regarding whether or not the tion in consumption levels and would, thus, Advertising Directive imposes restrictions contribute to the protection of public on freedom of commercial expression health. which are disproportionate having regard to the public interest gains envisaged, no matter how efficiently pursued. Given the massive role of tobacco consumption as a mortality factor and as a cause of grievous health problems in the Community, I 164. As regards the requirement that consider that a potential reduction in restrictions imposed be no more burden- consumption levels of 6.9% would be a some than necessary, I would accept the significant gain for public health, probably point that a nearly total ban on advertising corresponding to the saving of thousands of an economic activity is a particularly grave lives. intrusion on the exercise of the right of free expression. 199 The more restrictive the effects, the greater is the onus on the legislator to show that a less burdensome measure would not have sufficed. However, I conclude that the legislator has discharged that onus in the present cases, by demon- strating that it had reasonable grounds to consider that limited restrictions on 166.1 would take the view that, in princi- tobacco promotion are ineffective. The fact ple, where the requirements of effectiveness that other, positive measures, such as and minimal necessary burden are satisfied, information campaigns, might also have rights such as freedom of commercial an effect does not in itself show a compre- expression are not unacceptably impaired hensive advertising ban to be over-restric- by a ban on the promotion of dangerous tive, as (subject to the division of compe- products, where exchanges of scientific and tence between the Community and the other information and of political views Member States) one option does not about the regulation of the trade in ques- tion remain unrestricted. Tobacco produ- cers remain free to market their products, 199 — In Aragonesa, op. cit., footnote 192 above, para- to which the expression rights invoked graph 18, in the context of its analysis of the propor- ultimately relate, and may even engage in tionality of an obstacle to the free movement of goods, the Court attributed some significance to the fact that the restrictions on advertising of alcoholic beverages under point of sale advertising if national rules scrutiny were not total. permit this.

167. The fact that the Advertising Directive on expression, as a helpful precedent for prohibits the promotion of products which the present cases. are lawfully marketed in the Community is not conclusive, although it is not irrelevant either. The European Court of Human Rights observed in Open Door Counselling v Ireland that the contested national rules required 'careful scrutiny' because the pro- hibited information in that case related to 169. The European Court of Human an activity which was lawful in the place it Rights accepted the Irish Government's was performed, 200 implying that the sup- argument that 'the restriction [flowing ply of information about lawful activities from an order of the Supreme Court] ... may be justifiably restricted in some cir- pursued the legitimate aim of the protec- cumstances. I suggest that the Court take tion of morals of which the protection in judicial notice of the enforcement and other Ireland of the right to life of the unborn is problems which could attend on banning one aspect'. 202 It was, however, only the outright an addictive activity such as smok- particular restriction imposed on the appli- ing 201 (as well as the restriction of the cants in that case by a court order that it personal freedom of smokers that this considered to be absolute in character. would entail). The lawfulness of an activity Indeed, it went on to point out that (and the impracticability of prohibiting it) information on foreign abortion services does not, therefore, imply that it is without was available from a range of other deleterious effects which the legislator may sources. 203 seek to control in the public interest. Moreover, it is not necessarily consistent with the requirement that the least restric- tive means be used to achieve legitimate objectives to require that an activity itself be banned in order to permit restrictions to 170. The Court of Human Rights, in be placed on its promotion. assessing the necessity and, hence, propor- tionality of that particular restriction, introduced into the balance the protection of the health of women, an obviously relevant consideration in that context, but one which complicates the straightforward balance between freedom of expression and a single pressing social need.

174. In any event, I do not think it is possible to detach Open Door from its extremely difficult and sensitive context or to draw any definitive conclusions for the present cases. Open Door related to the non-directive supply of information rather than the commercial promotion of abor- 172. In effect, the majority of the Court of tion; 205 we are concerned in the present Human Rights resolved the issue of pro- cases with the restriction of direct and portionality by reference to its own view indirect promotional measures 206 and about the competing values of health of there is no suggestion that non-promo- women (related to the right to receive tional information about lawful products information), freedom of expression and will be restricted. 207 protection of unborn life. It does not appear to have attached any weight at all to what it implicitly accepted was a par- tially effective protection of the last-named value. If this analysis were transposed literally to the facts of the present case, it might be difficult to argue that the aim of a presumed mere 6.9% reduction in smoking could justify a comprehensive ban on advertising of tobacco products, despite 175. I conclude, therefore, that the Adver- the significant reduction in the absolute tising Directive does not constitute a dis- number of smokers (and likely smoking- proportionate restriction on freedom of related illnesses and deaths) it would repre- expression in so far as it imposes a sent. 204 — Op. cit., footnote 170 above, paragraphs 32 to 38 of his Opinion. The Court did not reach this issue in its judgment. See also the dissenting Opinion of Judge Baka in Open Door, op. cit., footnote 200 above. 205 — Ibid., paragraph 75. For that reason, the Court of Human Rights does not appear to have regarded the case as relating to commercial expression. 206 — See the definitions of advertising and sponsorship in Article 2(2) and (3) of the Advertising Directive. 207 — For this reason, inter alia, I do not address here the issue of freedom to receive information, which might come 173. In fact, in Grogan, when examining into play if an existing or potential customer sought essentially the same issue in the context of information about its products from a tobacco producer or distributor. The likelihood of consumer interest in Community law but also in the light of receiving promotional material seems more remote.

176. I do not, however, take the same view regarding the prohibition of the advertising of diversification products. It is by no means self-evident that the advertising of non-tobacco goods and services which bear brands or other distinguishing features associated with tobacco products has an (vii) Inadequate reasoning effect on consumption levels of the latter products, taken as a whole. 209 No evidence has been presented on behalf of the Com­ munity legislator to suggest that such a link exists. In these circumstances, I conclude 177. The Court has consistently held that that it has not discharged the onus of the obligation under Article 190 of the showing that it had reasonable grounds to Treaty to give reasons requires that the adopt the restrictions on such advertising measures concerned should contain a state­ contained in Article 3(3)(b) of the Directive ment of the reasons which led the relevant and that that provision should be annulled. institutions to adopt them, so that the It is in no way excused by the possibility Court can exercise its power of review that its scope will be limited in practice by and so that the Member States and the Member States taking advantage of the nationals concerned may learn of the terms of Article 3(2) of the Directive. conditions under which the Community Similarly, no argument or evidence was institutions have applied the Treaty. 210 At offered to explain why Article 3(3)(a) pro­ the same time, the level of detail required hibits tobacco products from bearing brand may vary with the nature of the act names or other distinguishing features involved. In the case of a measure of already associated with other goods and general application, the preamble may be services. In so far as the application of such confined to indicating the general situation a brand or mark to a product also consti­ which led to its adoption, on the one hand, tutes an exercise of freedom of commercial and the general objectives which it is expression, I conclude that Article 3(3)(a) intended to achieve, on the other. It is not necessary to set out the various facts taken into account by the legislator, which are 208 — It is not clear whether the NBĽR report includes often very numerous and complex, or that sponsorship under the general rubric of advertising for the measure contain a more or less com­ tne purposes of its calculation of the likely effects of the 211 proposed Directive. In the absence of argument on this plete evaluation of those facts. point before the Court and because I am discussing freedom of expression merely in the alternative to my main recommendation that the Directive be annulled in its entirety, I will not address the ban on sponsorship in this section. 210 — Case C-41/93 France v Commission, op. cit., foot­ 209 — I am not concerned with the question of whether such note 134 above, paragraph 34. advertising strengthens certain tobacco brands vis-ii-vts 211 — C a s e 87/78 Weldmg v Hauptzollamt Hamburg-Walter- others. shofl 19781 ECR 2457, paragraph 11.

178. As should be clear from my analysis of for this exceptional provision on the use of the issue of competence, the statement of brand names or other distinguishing fea- reasons in the preamble to the Advertising tures of other goods and services for Directive is, in my view, sufficient to enable tobacco products and, as I said in para- the Court to undertake judicial review. The graph 116 above, it does not appear to basic internal-market thesis of the Com- have any connection with the Directive's munity legislator is made quite clear by the stated objective of achieving the internal first and second recitals, and their adequacy market in services and goods associated as a statement of reasons is not undermined with advertising and sponsorship of by the failure of the Directive to achieve the tobacco products. objectives posited. It was not necessary for the legislator to include precise information regarding the studies of the effects of advertising on tobacco consumption or relative levels of cross-border trade in advertising services and media. I would recommend that the Directive as a whole be VI — Costs annulled for inadequate reasoning only if the Court envisaged holding that the Com- munity was competent to adopt it by reference to its effects on the establishment 180. By virtue of Article 69(2) of the Rules or functioning of the internal market in of Procedure of the Court of Justice, the economic sectors which are nowhere men- Council and the Parliament should be tioned in the preamble, such as tobacco ordered to pay Germany's costs in Case producers and distributors or the advertis- C-376/98. Since the proceedings in Case ing industry in general. It is not permissible, C-74/99 are, for the parties to the main in my view, to permit the legislator to proceedings, a step in the proceedings proffer internal-market benefits previously pending before the national court, the unmentioned in circumstances where doubt decision on costs is a matter for that court. is cast on its achievement of the objectives In neither case are the costs incurred by the originally invoked. Commission or by the other Member States which intervened or submitted observa- tions before the Court recoverable. I do not make any recommendation as to liabi- lity for costs in the event that the Court 179. I recommend, however, that Arti- accepts one of my alternative recommenda- cle 3(3)(a) of the Directive be annulled for tions of partial annulment, or that it inadequate reasoning. No reason is given accepts none of them.

— Annul Directive 98/43/EC on the grounds of breach of the general principle of proportionality, of breach of Article 30 of the EC Treaty (now, after amendment, Article 28 EC), of the right to property and of freedom to pursue a trade or professional activity.

In either case, I also recommend that the Court:

— Order the European Parliament and the Council of the European Union to pay the costs incurred by the Federal Republic of Germany in Case C-376/98.

I recommend, in the further alternative, that the Court:

— Annul Article 3(3) of Directive 98/43/EC on the ground of infringement of freedom of expression; and/or

— Annul Article 3(3)(a) of Directive 98/43/EC on the ground of failure to give reasons.