C-491/01

BRITISH AMERICAN TOBACCO (INVESTMENTS) AND IMPERIAL TOBACCO

OPINION OF ADVOCATE GENERAL GEELHOED delivered on 10 September 2002 1

Table of contents

I — Introduction I -11463 II — The legal framework I-11464 A — The operative provisions of the Directive I -11464 B — The legal basis of and the preamble to the Directive I-11471 C — The judgment in Case C-376/98 on tobacco advertising I-11473 III — Facts and procedure I -11475 A — The main proceedings I-11475 B — The questions submitted for preliminary ruling I-11476 C — Procedure before the Court I-11477 D — Preliminary point I-11477 IV — The particular character of the proceedings and the issue of admissibility I-11478 V — Contextual factors I -11484 A—General I-11484 B — The factual context I -11484 C — The background to the Directive I -11487 D — What substantial changes result from the Directive? I -11488 VI — Examination of the first question: the legal basis chosen I-11489 A — Introduction and approach I-11489 B — A preliminary comment on the legal basis I-11491 C — Article 95 and the protection of public health I-11493 1. Arguments submitted I -11493 2. The case-law I -11494 3. General appraisal I -11495

1 — Original language: Dutch.

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C — Other principles of law I-11543 1. The principle that reasons must be given I-11543 2. The principle of subsidiarity I-11544 3. Misuse of powers I-11545 VIII — Examination of the second question I -11545 A — Arguments submitted I-11545 B — Appraisal I-11547 IX — Conclusion I-11549

I — Introduction European Union and exported to non- member countries.

1. This request by the High Court of Justice (Administrative Court) for a preliminary ruling concerns the validity and interpre- 3. Central to this case is the question tation of Directive 2001/37/EC of the whether Article 95 EC could serve as the European Parliament and of the Council legal basis for the Directive and whether of 5 June 2001 on the approximation of the Article 133 EC could be used as a legal laws, regulations and administrative provi- basis for regulating exports of cigarettes. sions of the Member States concerning the The High Court of Justice (Administrative manufacture, presentation and sale of Court) also asks whether the Directive may tobacco products (hereinafter: 'the Direc- be invalid on the ground that it infringes tive'). 2 certain legal principles or the right to property. The High Court submits, finally, a question on the interpretation of Article 7 of the Directive.

2. The Directive can be distinguished in one significant respect from other EC directives laying down product-related requirements. The Directive (at any rate, 4. The present case is related to Case Article 3 thereof) is applicable not only to C-376/98 Germany v Parliament and tobacco products placed on the market Council 3(hereinafter: 'the tobacco adver- within the European Union itself but also tising judgment'), in which the Court to tobacco products manufactured in the

A — The operative provisions of the Directive

— does that power also encompass the possibility to adopt rules intended primarily to protect public health, and 7. Articles 3 to 7 of the Directive set out the obligations imposed on manufacturers 4 —OJ 1998 L 213, p. 9. of and dealers in tobacco products. These 5 — Case C-406/01, ECR I-4561. articles are reproduced in extenso below.

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8. Articles 3 to 7 provide as follows: Member States may apply the yield limits laid down in this Article as from 1 January 2005 but shall in any event do so by 1 January 2007 at the latest.

'Article 3

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2. The tests referred to in paragraph 1 shall Member States shall ensure the dissemi- be carried out or verified by testing labora- nation, by any appropriate means, of tories which are approved and monitored information submitted in accordance with by the competent authorities of the this Article with a view to informing Member States. consumers and in so doing shall take account, where appropriate, of any infor- mation which constitutes a trade secret.

Member States shall send the Commission a list of approved laboratories, specifying the criteria used for approval and the 5. Each year Member States shall com- methods of monitoring applied, by 30 Sep- municate all data and information sub- tember 2002, and whenever any change is mitted pursuant to this Article to the made. Commission, which shall take account thereof when drawing up the report referred to in Article 11.

(a) general warnings:

Member States may determine the posi- tioning of the warnings on those surfaces in 1. "Smoking kills/Smoking can kill", order to accommodate language require- or ments.

2. "Smoking seriously harms you and 3. The Commission shall, as soon as prac- others around you". ticable and in any event not later than 31 December 2002, in accordance with the procedure laid down in Article 10(2), adopt rules for the use of colour photo- graphs or other illustrations to depict and The general warnings indicated above shall explain the health consequences of smok- be rotated in such a way as to guarantee ing, with a view to ensuring that internal their regular appearance. The warning shall market provisions are not undermined. be printed on the most visible surface of the unit packet, and on any outside packaging, with the exception of additional transpar- ent wrappers, used in the retail sale of the product; and Where Member States require additional warnings in the form of colour photo- graphs or other illustrations, these shall be in accordance with the abovementioned (b) an additional warning taken from the rules. list set out in Annex I.

The additional warnings referred to above 4. Tobacco products for oral use, where shall be rotated in such a way as to their marketing is permitted under guarantee their regular appearance. Article 8, and smokeless tobacco products

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Member States may determine the posi- tioning of the warning on that surface in order to accommodate language require- ments. (a) printed in black Helvetica bold type on a white background. In order to accommodate language requirements, Member States shall have the right to determine the point size of the font, provided that the font size specified in their legislation is such as to occupy the 5. The general warning required pursuant greatest possible proportion of the area to paragraph 2(a) and the warning for set aside for the text required; smokeless and oral tobacco products referred to in paragraph 4 shall cover not less than 30% of the external area of the corresponding surface of the unit packet of tobacco on which it is printed. That pro- portion shall be increased to 32% for Member States with two official languages (b) in lower-case type, except for the first and 35% for Member States with three letter of the message and where official languages. The additional warning required by grammar usage; required pursuant to paragraph 2(b) shall cover not less than 40% of the external area of the corresponding surface of the unit packet of tobacco on which it is printed. That proportion shall be increased to 4 5 % for Member States with two (c) centred in the area in which the text is official languages and 50% for Member required to be printed, parallel to the States with three official languages. top edge of the packet;

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(d) for products other than those referred packet enabling the place and time of to in paragraph 4, surrounded by a manufacture to be determined. black border not less than 3 mm and not more than 4 mm in width which in no way interferes with the text of the warning or information given;

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their effects on health and taking into Article 7 account, inter alia, any addictive effects. The list shall be established in descending order of the weight of each ingredient included in the product.

Product descriptions

The information referred to in the first subparagraph shall be provided on a yearly basis and for the first time by 31 December 2002 at the latest. With effect from 30 September 2003, and without prejudice to Article 5(1), texts, names, trade marks and figurative or other signs suggesting that a particular tobacco product is less harmful than others shall not be used on the packaging of tobacco 2. Member States shall ensure the dissemi- products.' nation of the information provided in accordance with this Article by any appro- priate means, with a view to informing consumers. Due account shall nevertheless be taken of protection of any information on specific product formulae which con- stitutes a trade secret. 9. Article 13 of the Directive sets out the powers and obligations which apply once the Directive has come into force. It provides as follows:

3. Member States shall ensure that the list of ingredients for each product, indicating tar, nicotine and carbon monoxide yields, is made public. ' 1 . Member States may not, for consider- ations relating to the limitation of the tar, nicotine or carbon monoxide yields of cigarettes, to health warnings and other indications or to other requirements of this 4. Each year Member States shall com- Directive, prohibit or restrict the import, municate all data and information sub- sale or consumption of tobacco products mitted pursuant to this Article to the which comply with this Directive, with the Commission, which shall take account exception of measures taken for the pur- thereof when drawing up the report poses of verifying the data provided under referred to in Article 11. Article 4.

— the first and second sentences of the ninth recital: 'There are differences 11. In the preamble Article 95 EC, or at between the laws, regulations and least the removal of obstacles to the oper- administrative provisions of the

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Member States on the limitation of the Directive 90/239 (hereinafter: 'Directive maximum nicotine yield of cigarettes. 90/239') 6 lays down the maximum Such differences are liable to constitute amounts for tar yields of cigarettes mar- barriers to trade and to impede the keted in the Member States. A further smooth operation of the internal mar- reduction follows from the carcinogenic ket.' nature of tar. Regarding carbon monoxide, 'cigarettes have been shown to produce amounts of carbon monoxide which are hazardous to human health and capable of contributing to heart disease and other ailments'. Nicotine, according to the ninth recital, raises specific public-health prob- lems.

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tobacco product packaging of certain texts, which also seeks to reduce tobacco con- such as "low-tar", "light", "ultra-light", sumption and is — at least in the main — "mild", names, pictures and figurative or based on Article 95 EC. For that reason I other signs, may mislead the consumer into shall set out here, as part of the legal the belief that such products are less framework, the main findings in that judg- harmful and give rise to changes in con- ment. sumption. Smoking behaviour and addic- tion, and not only the content of certain substances contained in the product before consumption, also determine the level of inhaled substances. This fact is not reflected in the use of such terms and so 18. It its judgment the Court laid down the may undermine the labelling requirements conditions under which Article 95 EC can set in this Directive. In order to ensure the serve as a legal basis for the harmonisation proper functioning of the internal market, of product requirements. 7 In summary and given the development of proposed form these conditions are as follows: international rules, the prohibition of such use should be provided for at Community level, giving sufficient time for introduction of this rule.'

— The measures must improve the con- ditions for the establishment and func- tioning of the internal market. Article 95 EC does not confer any general power to regulate the internal market.

C — The judgment in Case C-376/98 on tobacco advertising — The measures must have as their object the removal of obstacles to the exercise of fundamental freedoms or the removal of distortions of competition.

— Distortions of competition are, accord- ing to established case-law, relevant 21. The examination in regard to free only if they are appreciable. movement provided the following results. The Court took the view that the advertis- ing rules for printed media are authorised under Article 95 EC, while the prohibition of advertising on, inter alia, posters, para- sols and ashtrays, and the prohibition of advertising spots in cinemas have no effect — The Court regards as a distortion of on free movement. The Court apparently competition any restriction of forms of proceeded on the assumption that these competition applicable to all market latter cases involve more or less local participants in a Member State, for markets, which, in my view, considering instance through the fact that a par- the international nature of the market in ticular course of action is prohibited. tobacco, of which the production of and Such a distortion does not by itself trade in advertising hoardings form part, is justify Article 95 EC as a legal basis for hardly self-evident. The Court attached the general application to the entire importance to the fact that the conditions European Union of a stringent prohib- governing advertising hoardings are mini- ition existing in one Member State. mum conditions; the Member States may impose more stringent requirements. There was no provision relating to free move- ment. Consequently — as I understand the view taken by the Court — the Directive could not make any actual contribution to 19. If the conditions governing the use of the elimination of obstacles to free move- Article 95 EC are met, the protection of ment.

23. A final point of importance is that the Court did not in that case consider that it 25. On 3 September 2001 the claimants had the power to annul the directive in brought proceedings before the High Court part, in view of the general nature of the of Justice in which they sought leave to prohibition laid down by the directive. apply for judicial review of the intention and/or obligation of the United Kingdom Government to transpose the Directive into national law. During the hearing before the Court the question arose in this connection as to the meaning of section 2(2) of the European Communities Act. The claimants submitted that that provision empowers the I I I— Facts and procedure United Kingdom Government to give effect to its Community obligations. The clai- mants sought a declaration from the national court that the exercise by the United Kingdom Government of its powers under the European Communities Act was A — The main proceedings ultra vires inasmuch as the Directive is per se invalid. The United Kingdom Govern- ment was for that reason under no Com- munity-law obligation such as could justify 24. The claimants in the main proceedings, the exercise of those powers. British American Tobacco (Investments) Ltd and Imperial Tobacco Ltd ('the clai- mants'), manufacture tobacco products in the United Kingdom. They are among the largest manufacturers of tobacco products in the world. They operate in 180 countries and have a global market share of 15.1%. They have more than 80 factories in over 26. By order of 26 February 2002 the High 64 countries and manufacture 800 billion Court of Justice granted leave to Japan cigarettes annually. The claimants employ Tobacco Inc. and JT International SA to 80 000 people worldwide. Their most intervene in the main proceedings. prestigious international brands are Lucky Strike, Kent, Dunhill and Pall Mall. Other major brands include Rothmans, Peter 8 — Information obtained from the claimants' website.

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(e) infringement of Article 253 EC before the Court on 2 July 2002 the and/or the duty to give reasons; claimants, Japan Tobacco, the European Parliament, the Council and Commission, and the Governments of Belgium, Ger- many, Finland, France, Greece, Ireland, Italy, Luxembourg, the Netherlands and the United Kingdom presented oral argu- (f) infringement of the principle of ment in support of the forms of order subsidiarity; respectively sought.

(g) misuse of powers? D — Preliminary point

32. The Parliament notes that the claimants 2. If it is valid, does Article 7 of Directive in the main proceedings have contended 2001/37/EC of the Parliament and that their argument finds support in con- Council apply only to tobacco products fidential advice regarding the draft Direc- marketed within the European Com- tive provided by the Parliament's Legal munity, or does it apply also to tobacco Service. Two separate opinions from the products packaged within the Euro- Legal Service were also annexed to the pean Community for export to third witness statements of the claimants in the countries?' main proceedings. The claimants further reinforce their viewpoint with an opinion from the Parliament's Legal Committee.

institution, an opinion of the Legal Service latter type of advice, I see no reason of that institution cannot be invoked before whatever for maintaining secrecy. How- the Court either directly or indirectly. To ever, in the case of internal advice also, do so would be prejudicial to the public such advice may also be rendered public, interest in the provision of independent for whatever reason. Parties in proceedings legal advice. The Parliament also refers to such as the present would of course then be the order of the President of the Court of free to make use of the arguments set out in First Instance in Carlsen, 11 which makes it opinions of that kind. This does not, clear that the diffusion of opinions given by however, mean that an institution can be the Legal Service may generate uncertainty bound by the internal views expressed by with regard to the legality of Community its Legal Service. measures and may impact negatively on the operation of Community institutions. The stability of the Community order and the proper functioning of the institutions — general interests, compliance with which must be positively guaranteed — would be adversely affected by such diffusion. 35. In the present case, the documents in question need not be taken into account for the purpose of ascertaining the intention of the Community legislature. I further pro- pose that the Court take note, when examining this case, of the fact that these opinions do not represent the viewpoint of the European Parliament. The request made by the European Parliament does 34. I take the view that legal opinions not require further consideration. delivered in the course of the adoption of Community legislation need not remain secret in all cases. Divulgation of such opinions also has an important advantage in that it increases the transparency of the process governing the adoption of Com- munity legislation. This, however, does not mean that all opinions and advice must be made public. I draw a distinction in this IV — The particular character of the pro- regard between, on the one hand, internal ceedings and the issue of admissibility advice proffered by legal services, which must be capable of being given freely for the purpose of determining the internal standpoint of an institution and, on the other hand, more formal, external advice 36. The present case is particular in char- such as that given in certain Member States acter inasmuch as the Court is being called by a Council of State. In the case of this on for the first time to rule on the admissibility of preliminary questions con- cerning the validity of a directive which 11 — Order in Case T-610/97 R Carlsen and Others v Council have been raised, during the implemen- [1998] ECR II-485. See also Case T-44/97 Ghignone v Council [2000] ECR-SC I-A-223 and II-1023. tation phase, by affected parties in proceed-

38. In my opinion the Court's established case-law on the admissibility of questions referred for preliminary ruling provides the answer in the present case with regard to 37. The French Government and the Com- questions concerning the validity of a mission contest the admissibility of the directive which were submitted during the present case. The French Government period set for implementation of that points out that a directive cannot by itself directive. impose obligations on individuals. It refers specifically to the judgment in Salamander and Others v Parliament and Council, 15 in which the Court of First Instance ruled that a directive which requires Member States to impose obligations on economic oper- ators is not of itself, before the adoption of national transposing measures and inde- pendently of them, such as to affect directly 39. Essentially, the established case-law of the legal position of those economic oper- the Court states that, where questions referred by the national court or tribunal concern the interpretation of a provision of 12 — Case C-74/99 Imperial Tobacco and Others [2000] Community law, the Court is, in principle, ECR I-8599. 13 — Case C-376/98, cited in footnote 3. obliged to reply to those questions. A 14 — Case C-306/93 SMW Winzersekt [1994] ECR I-5555. reference by a national court or tribunal 15 — Joined Cases T-172/98, T-175/98, T-176/98 and T-177/98 Salamander and Others v Parliament and Council [2000] may be rejected only if it appears that the ECR II-2487, paragraph 54. procedure laid down by Article 234 EC has

been misused, either in order to elicit a law a genuine dispute concerning the ruling from the Court by means of a authority of the United Kingdom Govern- contrived dispute or where it is obvious ment to apply section 2(2) of the European that Community law cannot apply, either Communities Act. Second, the questions directly or indirectly, to the circumstances concern the application of Community law. of the case. 16 The dispute, indeed, does not relate to draft Community legislation but rather to a directive which has been adopted and which, in accordance with its Article 16, entered into force on the day of its pub- 40. The Court thus construes broadly its lication. The content of the Directive and obligation to reply to a question submitted the obligations rising under it on expiry of for preliminary ruling, referring consist- the implementation period are thus fixed ently to the fact that the Article 234 EC and ascertained. procedure is an instrument of cooperation between the Court and national judicial bodies. Consequently, so the Court holds, it is exclusively for the national court or tribunal which is seised of a case and is responsible for the decision to be given to decide, in the light of the special features of the specific case, whether a preliminary ruling is necessary to enable it to give a decision, and to decide on the legal rel- evance of the questions which it submits to the Court. 43. This finding — as the Commission points out — is not affected by the Court's judgment in Vaneetveld. 17 The Court there held that individuals can invoke a directive before national courts only after the period 41. In other words, it is the national laid down for its transposition into national court — and thus not the Court of Jus- law has expired. Before that period has tice — which decides whether it is appro- expired, a directive cannot create rights for priate to refer questions for a preliminary an individual which national courts must ruling. The only conditions are that the protect. No obligations whatever can arise dispute must not be contrived and the under a directive for an individual during questions must concern the application of that period. It is only on the Member States Community law. that clearly defined obligations devolve at that time. They must transpose the direc- tive into national law and must also refrain from taking measures liable seriously to compromise the result prescribed by the 42. In my view, these points are beyond directive. 18 any doubt. First, there is under national

46. I accordingly conclude that the Court must answer the questions which the High Court has referred to it for a preliminary ruling. I would point out that this con- clusion is in line with that chosen by the 45. Furthermore, there can be no doubt Court in the somewhat analogous case of that the claimants have an interest in SMW Winzersekt. 22 securing a response to the questions sub- mitted. That interest lies on the fact that they require certainty as regards the rights and obligations fundamental to the oper- ation of their business which will be devol- ving on them in the near future. In addi- tion, it may be presumed that they will need to adopt certain measures for operational purposes even before the expiry of the 47. It ought, however, to be pointed out period set for implementation. The Court that a different conclusion — leading to need not evaluate the content or scope of inadmissibility — would mean that the that requirement; under the preliminary Community legal order does not provide reference procedure, that evaluation is effective safeguards for the claimants' reserved to the national courts. This is rights. As a result, no account would be precisely the difference between the pre- taken of this important general principle of liminary reference procedure and direct law that has been consistently recognised actions brought before the Community by the Court 23 as underlying the constitu- Courts under Article 230 EC. 20 Merely tional traditions common to the Member for the sake of completeness, I would also States. This principle of law is laid down in point out that there is also no doubt but Articles 6 and 13 of the European Con- that the claimants' interest is significant. vention for the Protection of Human Rights Likewise, I take issue with the French and Fundamental Freedoms ('the ECHR') Government's argument that the claimants' and is expressed for the European Union in interest is factual in nature and is not based Article 47 of the Charter of Fundamental Rights.

48. In connection with the requirement of imposes stringent requirements as to the effective legal remedies, I would first of all particular interest that individuals must refer to the following: the preliminary have in order to be able to institute reference procedure forms part of a corpus proceedings before the Community of provisions designed to offer the necess- Courts. 25 Persons concerned have locus ary legal protection to individuals. In standi to bring an action only if a 'decision addition to the preliminary reference pro- affects them by reason of certain attributes cedure, provision is made for direct actions which are peculiar to them, or by reason of which every natural or legal person may, factual circumstances which differentiate under specified conditions, bring before the them from all other persons and thereby Court of First Instance. distinguish them individually in the same way as the person addressed'. 26 According to this case-law, the claimants in the main proceedings have no right of action in that they are not differentiated from other manufacturers of tobacco products affected by the Directive. In brief, therefore, even if the fourth paragraph of Article 230 EC had

The entitlement of individuals to have their rights vindicated effectively can be guaran- teed through the preliminary reference procedure. 2 7 However, Community law 50. It must be inferred from the fact that must also of course not close off the the fourth paragraph of Article 230 EC sets out unequivocally the cases in which natu- ral and legal persons have a right of action 25 — For a review of this case-law, see the Opinion of Advocate General Jacobs in Case C-50/00 P Unión de Pequeños that the Community legislature expressly Agricultores (UPA) [2002] ECR I-6677. chose not to confer any direct right of 26 — Case C-321/95 P Greenpeace Council and Others v Commission [1998] ECR I-1651, paragraph 7, recently access to the Community Courts in a case confirmed in the judgment in Case C-50/00 P Unión ae Pequeños Agricultores (UPA), cited in footnote 25, para- such as the present. This is also in line with graph 44. the Court's case-law, in which the Court 27 — For the reasoning of the Court, see in particular the judgment in Case C-50/00 P Unión de Pequeños Agricul- tores (UPA), cited in footnote 25, paragraph 38 et seq.

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preliminary reference avenue and thereby bouring well-founded doubts as to its create a juridical vacuum. I consider this validity in law. In my view, it would be separately from the issue whether this contrary to the principle of legal certainty if restrictive interpretation by the Court of Community law were to be construed as the fourth paragraph of Article 230 EC meaning that an affected party must wait satisfies in full the fundamental entitlement until the expiry of the implementation of individuals to access to the courts. In this period before being entitled to use this connection, Advocate General Jacobs, in avenue of legal redress. his Opinion in UPA, 28 has, correctly in my view, raised serious doubts.

55. According to established case-law, the Court imposes stringent conditions on the award of compensation on grounds of 53. It is settled that, under the EC Treaty in unlawful legislation. I need not here preliminary ruling proceedings, the legal address in detail the question of what validity of a directive may be brought for prospects of success such an action for decision before the Court in connection compensation against the European Com- with proceedings instituted before a munity might have. I do not consider this to national court by an affected party har- be excluded, certainly not if the invalidity arises from the fact that the Community legislature has adopted a measure which, 28 — See footnote 25. In its judgment of 3 May 2002 in Case under the EC Treaty, it has no power to T-177/01 Jégo-Quéré v Commission [2002] ECR II-2365, adopt by reason of the absence of a legal the Court of First Instance has also already given a broader interpretation. basis.

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56. It is more significant if a ruling of place. It was this factual context which inadmissibility, followed by a subsequent formed the basis on which the Directive declaration, in new proceedings, that the was drawn up. The drafting of the Direc- Directive is invalid were to result in damage tive comes under this as the second point for the parties concerned that is outwith for examination. The third point which I their control. The issue of whether — consider to be relevant is represented by the before invalidity has been determined — substantive changes resulting from the the necessary measures have been taken to Directive. The composition and labelling meet the requirements of the Directive is of tobacco products has, indeed, for a long not based on the choice made by an time been the subject of intervention by the undertaking, but on a legal obligation. Community legislature.

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consequently (whether or not after expor- ticated infrastructure at their disposal. tation and re-importation) placed illegally Cigarette fraud generally occurs in practice on the European market, or of cigarettes along the same lines: most cases involve originating in non-member countries. false declarations, circumvention of rules and pure smuggling. If more stringent checks on the origin of cigarettes are intro- duced in one Member State or non-member country, fraudulent operators will transfer their activities to another Member State or non-member country. Because enormous profits stand to be made, criminals are prepared to store or transport cigarettes over considerable periods in the hope that 64. Thus, the Luxembourg Government the attention of the investigation services states that 9 7 % of cigarettes illicitly will slacken before they fraudulently imported into the European Union come import the cigarettes into the Commu- from non-member countries, the German nity. 34 The report also states that, in the Government cites the same percentage for case of cigarette smuggling, the cigarettes clandestine imports into Germany, and the are first stored in the European Union claimants in the main proceedings aver that before being exported to non-member 85% of cigarettes illegally in Europe come countries (or declared as being exported). from non-member countries. The Commis- sion, on the other hand, states that, of the illegal cigarettes to be found in the Euro- pean Union, the percentage of those manu- factured within the European Union is significantly greater than 15%.

C — The background to the Directive Commission, in October 1999, submitted a report 37 on the follow-up to its 1996 communication. That report contains an analysis of Member States' policy and practices in regard to a series of measures designed to counter tobacco consumption. 67. The Directive has a long prior history. The most important measures in the Direc- tive (Articles 3 to 7 inclusive) were already mentioned as options in the Commission's communication of 18 December 1996. 35 In that communication, the Commission pro- posed a series of measures to intensify 70. In its conclusions on combating efforts designed to prevent smoking within tobacco consumption, 38 the Council the Community. underlined the need to develop an overall strategy comprising an effective system to monitor tobacco consumption, tobacco policies and their effects throughout the Community as well as the implementation of Community legislation. A number of the measures proposed in those conclusions 68. That communication was followed by, have been developed in greater detail in a inter alia, a Parliament resolution 36 in recent Commission proposal 39 on combat- which the Parliament recommended careful ing tobacco consumption. In particular, monitoring of developments in the display individual initiatives have been taken to of nicotine levels on packets throughout the protect minors, including legislation on Community. The Commission was also conditions of sale and sales through elec- requested to evaluate the effectiveness of tronic means and vending machines. the health warning on packages. The Par- liament further condemned the European Union's export to non-member countries of poor quality tobacco not meeting European standards, thereby contributing to health problems in countries which already have a low level of public health. 71. The efforts exerted by the European Community in the fight against smoking date back much further. As far back as 1985, the European Council, meeting in Milan, stressed the need to launch a pro- gramme of action against cancer. The

programme of action came into being on discussions. It is evident from the minutes 7 July 1986 40 with the objective of con- of the negotiations 42 that the tobacco tributing to an improvement of the health industry is being kept informed of the and quality of life of Community citizens discussions on a framework convention by reducing the incidence of cancer. This and is in a position to set out its views on programme of action stated that priority that convention. should be given to combating smoking. It was in order to give effect to this pro- gramme of action that the first harmonising directives with regard to tobacco consump- tion were adopted. 74. In summary, the restrictions which the Directive imposes on the composition, labelling and designation of tobacco prod- ucts have not been totally unexpected. They have an extensive prior history in which the tobacco industry has been closely involved. All of this means that the manu- facturers of tobacco products in the Euro- pean Union — as well as the importers of tobacco products — have had the oppor- 72. The background to the adoption of the tunity to adopt in good time the measures Directive must also be considered in the needed to limit any potential harm to their light of developments at international level. interests resulting from the Directive. A number of western countries outside the European Union have considerably tightened up their legislation over the last number of years. Canada is frequently cited as an example in this process, its health warnings being significantly stricter than the provisions proposed in the Directive. D — What substantial changes result from the Directive?

administrative provisions of the composition. In addition to lower maxi- Member States concerning the labelling mum tar yields, maximum levels are now of tobacco products (hereinafter 'Di- also in force for nicotine and carbon rective 89/622'); 43 monoxide yields. Furthermore — and this is an entirely new feature in the legis- lation — the maximum yields now also apply to cigarettes manufactured in the Community for export to non-member countries. — Council Directive 90/239/EEC of 17 May 1990 on the approximation of the laws, regulations and adminis- trative provisions of the Member States concerning the maximum tar yield of cigarettes; 77. The Directive also imposes two obli- gations which must be regarded as novel. Article 6 provides for publication of prod- uct composition via the authorities of the Member States. Article 7 prohibits the use — The directive on television without of certain designations which may have a borders 44 bans television advertising suggestive effect, such as 'mild', 'light' or of tobacco products. 'ultra-light'. This prohibition applies even if the designation concerned has been registered as a trademark or as part of a trademark.

Also in force was Directive 98/43 on advertising and sponsoring for tobacco products. As stated above, this directive has now been annulled by the Court.

VI — Examination of the first question: the legal basis chosen 76. This existing Community legislation is rendered more stringent by the present Directive. That is the case both with regard to the provisions on labelling — the seri- ousness of the warnings for smokers has been increased — and to the provisions on A — Introduction and approach

79. The Governments of the United King- dom, Belgium, Finland, France, Ireland, Italy, the Netherlands and Sweden, together with the Parliament, the Council and the Commission, take the view that the Directive is valid. In contrast, the claimants in the main proceedings and the Govern- 81. In this approach I shall follow the order ments of Greece and Luxembourg consider in which the question has been posed by the that the Directive is invalid in its entirety. High Court. A significant portion of the The claimants argue that the purpose of the proceedings relates not so much to the Directive is not to improve the conditions Directive as a whole as to the legal validity for the establishment and functioning of the of the various obligations laid down in internal market. Nor, in so far as Articles 3 to 7 inclusive. The approach Article 133 EC has been employed as a chosen means that some of these obli- legal basis, does the Directive serve the gations will be addressed at more than objective of introducing a common com- one point. Essentially, however, I shall mercial policy. The Luxembourg Govern- draw a distinction between, on the one ment argues that the Directive's sole pur- hand, the requirements governing composi- pose is to safeguard public health. Har- tion (Article 3 in conjunction with Article 4 monisation cannot be authorised for that of the Directive), in which the legal basis reason. The Greek Government calls the chosen is a matter for discussion and, validity of the Directive into question with ancillary thereto, inter alia, proportional- regard to the exportation of cigarettes. In ity, and, on the other, the obligations the opinion of Japan Tobacco, Article 7 of relating to labelling and the provision of the Directive is invalid. While not express- information (Articles 5 to 7 inclusive), with ing any views on the validity of other regard to which the discussion will concen- provisions of the Directive, the German trate on proportionality and the right to Government submits that the provisions of property. Article 3(1) and (2) are invalid on the ground that this article prohibits the manu- facture of cigarettes intended for export.

86. The reasons given by the legislature for applicability of the Directive to exports can be found in the 11th recital in the preamble to the Directive. Of the provisions con- tained in that recital, only the final sentence is appropriate to form the basis for a rule. That final sentence refers to the desire to 84. The reason for not paying separate ensure that the internal market provisions attention to Article 6 of the Directive is of a are not undermined. At the hearing the different nature. No specific heads of com- Council and Parliament provided addi- plaint have been directed against Article 6 tional reasons. They argue that applicabil- in the course of the proceedings. The ity to exports serves two objectives which claimants' argument that this article does are inextricably linked one to the other. not have any internal market objective but The first objective, which justifies the legal is designed rather to safeguard public basis of Article 95 EC, relates to the health 45 is adequately addressed in section desirability of combating illegal trade and VI — C, separately from the provisions of thereby protecting the internal market. The Article 6 of the Directive. second objective concerns the exportation of cigarettes in se. Article 133 EC consti- tutes the legal basis for this. I proceed on 45 — The claimants also refer to the 22nd recital in the the basis that the first objective alone has preamble, which refers to transparency as being an objective. its origin in the recital.

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87. When examining the propriety of the required Article 133 EC as a supplemen- legal basis chosen, the Court ought to take tary legal basis, the fact remains that it did account of the lack of equivalence between use that article as such. the two legal bases and of the grounds selected by the Community legislature. First of all, it is necessary to examine whether the Directive as a whole could have been based on Article 95 EC. Two questions are central to this examination: 88. The examination of the use made of Article 133 EC as a legal basis covers the following questions:

89. The claimants argue that the Commu- nity legislature does not have the power to establish harmonisation measures in the 91. Realisation of the internal market can- domain of public health. Article 152(1) EC not, in the claimants' view, be used in any provides that a high level of human health way whatever as an argument in favour of protection must be ensured in the definition the requirements which the Directive and implementation of all Community imposes in respect of tar. Indeed, Directive policies and activities. Article 152 EC goes 90/239 harmonised in full the rules govern- on to set out in greater detail what the ing maximum tar yields. No further bar- Community, in conjunction with the riers to trade are permissible and there is Member States and complementary to their therefore no power to reduce maximum tar action, may do within the area of public yields even further with a view to realising health. Article 152(4)(c) excludes measures the internal market. To this the claimants of harmonisation. The Luxembourg Gov- add the following. Even if the Community ernment shares this view taken by the legislature were empowered to fix new claimants. rules on tar yields on health grounds, such rules would at least have to be supported by new developments based on scientific data.

90. According to the claimants, the legal basis provided by Article 95 EC may be used only for the purpose of improving the establishment and functioning of the inter- 92. The claimants submit that there is also nal market. In this context, they regard the no power in regard to maximum yields of objectives mentioned in Article 95 EC as nicotine and carbon monoxide in view of constituting means for promoting trade, the fact that no concrete threat of barriers not for restricting it. They point out that to trade can result from unilateral measures Directive 98/43 was annulled notwith- taken by Member States. In this connec- standing the fact that the preamble to that tion, the ninth recital in the preamble,

95. In the case where the purpose of a 2. The case-law measure is to protect public health, the power of the Community legislature to adopt rules under Article 95 EC is at least equally extensive. This power, however, is not unlimited, as is clear from the tobacco 94. In its judgment in Netherlands v Euro- advertising judgment. Even if they do not pean Parliament and Council (hereinafter: have the removal of barriers to free move- 'the Biotechnology judgment'), 46 the Court ment as their objective, the measures must

46 — Case C-377/98 Netherlands v Parliament and Council 47 — Now Articles 157 EC and 163 EC respectively. [2001] ECR I-7079, paragraphs 27 and 28. 48 — Now Article 95 EC.

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49 — Opinion in Case C-300/89 Commission v Council [1991] ECR I-2867. 50 — See paragraphs 67 to 77.

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99. In order to answer these questions I whether the intervention of the legislature shall now examine in general the powers in a given case is genuinely appropriate for which Article 95 EC confers on the Com- contributing to the removal of the barrier munity legislature. to trade. Possible misuse of the powers conferred by the Treaty may also be addressed, as can the other principles of law mentioned by the High Court in the questions which it has submitted. The principles of law are dealt with below in the present Opinion. 52 100. The issue boils down to the following: if a (potential) barrier to trade arises, the Community must be in a position to act. Such action must, as I construe the biotech- nology judgment, 51 consist in the removal of those barriers. Article 95 EC creates the power to do so. No conclusive significance attaches in this connection to the issue 4. Appraisal of the essential aspects of the whether the barrier to trade also constitutes powers conferred the principal reason for action on the part of the Community legislature. The fact that there are specific powers under the Treaty for the Community legislature to act within defined areas of policy, as in the area of public health under Article 152 EC, also 102. I shall now develop these premisses, has no bearing on this finding. beginning with the essential aspects of the powers conferred by Article 95 EC.

obstacles to the free movement of goods, Article 30 EC, however, offers a ground for persons, services and capital. To abolish justification of such a national measure if those obstacles, the EC Treaty provides for that measure is intended to protect public two instruments which are complementary health. According to the Court's case-law, in their operation. If I confine myself to the the national measure must satisfy a number free movement of goods, the first instru- of ancillary conditions, inter alia with ment consists of the prohibition in regard to proportionality. In the present Articles 28 EC and 29 EC of quantitative case, where the intention is to counter restrictions on imports and exports and of smoking, such a national measure would be measures having equivalent effect, includ- easily acceptable. ing the exceptions thereto recognised in Article 30 EC and in the Court's case-law. The second instrument is the Community legislature's power under Article 95 EC to remove the obstacles which remain — or which are created — by virtue of the fact that the national legislature applies one of the derogations from the Article 28 EC and Article 29 EC prohibitions. National statu- 106. Proceeding on the assumption that a tory measures to protect specific recognised national measure such as that outlined in public interests such as public health con- the preceding paragraph is justified by stitute a prime example of measures which Article 30 EC, this will already mean that generate barriers to trade. the barrier to trade exists. In order to set aside this barrier to trade, the Community legislature is entitled to adopt measures by which it takes over from the national legislature the protection of the matter of public interest (in casu, public health). In other words, the realisation of the internal market may mean that a particular public 104. According to the Court's case-law, the interest — such as here public health — is power of the Community legislature arises dealt with at the level of the European only once actual barriers have come about, Union. In this the interest of the internal or at least once future barriers are likely to market is not yet the principal objective of be created. a Community measure. The realisation of the internal market simply determines the level at which another public interest is safeguarded.

110. The claimants in the main proceedings draw a link with the specific power which the EC has within the domain of public health. They note in particular that Article 152(4)(c) EC excludes harmon- isation of national legislation. If harmon- isation of legislation could none the less be effected on the basis of Article 95 EC, so they argue, this would involve circumven- 108. As has already been stated, the pur- tion of the provision laid down in pose of the action is not important. In this Article 152(4)(c) EC. connection the Community's power is comparable to that enjoyed by the federal authorities in the United States in regard to inter-State trade. As the US Supreme Court has ruled, 'It makes no difference if the extraneous objective [in our case: public 111. This construction of Article 152 is health] is the principal or dominant objec- wide of the mark. During the drafting of tive of the federal measure [in our case: the the Maastricht Treaty, through which the EC Directive] — so long as a legitimate title on public health was incorporated in objective [in our case: the internal market] the EC Treaty, it was specifically intended is sufficiently served.' 54 I regard the power that the Community legislature should be of the Community legislature as a func- given power in areas where it was hitherto lacking. This related, in particular, to measures in the area of public health which 54 — Oklahoma, ex rel. Phillips v Guy F. Atkinson Co, 313 U.S. are not directly connected to the function- 508, 533-34 (1941), as quoted in David E. Engdahl, Constitutional Federalism, St. Paul, Minnesota, 1987. ing of the internal market.

115. Under this point I address the exercise 113. Moreover, if it were not possible to by the Community legislature of the powers use the power under Article 95 EC in order conferred on it. to harmonise standards in the area of public health, an important instrument in the realisation of the internal market would thereby be rendered ineffective. As I have already pointed out, it frequently turns out to be precisely the justified national meas- ures of public-health protection that create 116. The following must be stated by way barriers to trade. 55 of preliminary comment. I have already mentioned that the EC Treaty imposes on the Community legislature the duty to adopt the measures necessary for the estab- lishment and functioning of the internal market. In performing that duty the Com- munity legislature enjoys the necessary margin of discretion. It determines for itself in which cases it considers it appropriate to 114. Stated briefly, Article 152 comple- adopt Community harmonisation meas- ments the already existing EC Treaty ures. That evaluation includes the deter- powers such as Article 95. The exception mination as to whether the instrument in Article 152(4)(c) means simply that selected is the most effective for ensuring

55 — See also, along these lines, paragraph 23 of the titanium dioxide judgment, in which the Court alludes to the effects 56 — I am also basing myself here on the line of reasoning on the internal market which might result from national followed by Advocate General Fennelly in his Opinion in provisions prompted by health and environmental con- the tobacco advertising case, cited in footnote 3, at siderations. paragraph 78.

117. The first limit concerns the effect which a measure is expected to have. According to the Court's case-law, a meas- ure adopted pursuant to Article 95 EC must contribute practically to the establish- ment of the internal market. 57 With spe- 119. Essentially, the Community legis- cific regard to the present case, the issue is lature is faced with the same evaluation as whether a measure is likely to contribute to the national legislatures which it is replac- the abolition of existing or at least probable ing. That evaluation must lead to certain barriers to trade. I would point out that prior conditions being attached to the Directive 98/43 was annulled in the economic freedom of market participants, tobacco advertising judgment on the under which equal account is taken of the ground that not all of the provisions of freedom of market participants and of the that directive satisfied that criterion. The need to protect specific public interests. Court held that not all the provisions were concerned with inter-State trade. The posi- tion is different in the present case: apart from the product ban in issue here, all of the measures relate to inter-State trade in products. 120. In carrying out that evaluation the Community legislature enjoys a broad degree of latitude, at any rate where health protection is in issue. In this the Commu- nity legislature does not therefore differ from the national legislature which utilises 118. The second limit is connected with the the scope conferred on it by Article 30 EC. (principal) objective of the action pursued In this appraisal by the legislature, a multi- tude of aspects enter into play. The need for on the basis of Article 95 EC, in this case the protection of public health. By using 58 — In paragraph 65 of his Opinion in the tobacco advertising case, Advocate General Fennelly speaks of substitution in 57 — Sec, inter alia, paragraph 23 of the titanium dioxide this regard. Cited in footnote 3. judgment, cited in footnote 49. 59 — See, inter alia, Articles 3 (1) (p) EC and 152 EC.

122. To summarise, then: the Community legislature derives its powers from the realisation of the internal market. Those powers can, none the less, be exercised with a view to protecting a matter of public 124. Following harmonisation, the protec- interest, such as public health in the present tion of public health has become a task for case. The measures adopted must in fact be the Community legislature. Indeed, appropriate for abolishing existing or at national legislatures are no longer least probable obstacles to free movement. empowered to act in that regard. The In exercising its powers the Community Community legislature, however, can carry legislature is faced with the same evalu- out this task properly only if it has the ation as the national legislature when it freedom to amend legislation so as to take intends, for the protection of a matter of account of changes in perceptions or cir- public interest, to impose prior conditions cumstances. In short, the performance by on the economic freedom of market par- the Community legislature of its tasks is ticipants. not static but dynamic in character.

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125. This dynamic character is also taken 7. The Directive specifically in issue in the into c o n s i d e r a t i o n in the T r e a t y . present case Article 95(3) EC requires the institutions to take account of scientific develop- ments. 6 0Contrary to what the claimants contend, Article 95 does not require that there must be a new scientific development. 128. Judicial appraisal in the present case Article 95 provides only that account must ought to be confined to the issue of whether be taken of any scientific development. I the Community legislature could reason- have already referred to this in paragraph ably have reached the conclusion in ques- 120. tion. I need not here examine the require- ments imposed with regard to production.

60 — A good example in the Community's secondary legislation is provided by the rules on dangerous substances in the context of Council Directive 76/769/EEC of 27 July 1976 on the approximation of the laws, regulations and administrative provisions of the Member States relating to restrictions on the marketing and use of certain dangerous substances and preparations (Oj 1976 L 262, 130. A positive response in regard to the p. 201). These rules provide, inter alia, for compulsory periodic and systematic assessment of certain dangerous Community legislature's balancing of inter- substances and preparations and consequently for a ests is thus also in my view evident. First, simplified procedure for the adaptation of the rules to the level of technical development. competence exists, and the measure relates

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— There is no doubt as to this attitude of the Member States. The priority being given to measures to counter the use of tobacco is as great as is the extent of 131. The seventh recital otherwise merits the political and social importance particular attention. This recital appears to attached to this issue. be based on a questionnaire completed by the Member States at the Commission's request. A perusal of the results of this questionnaire 61 does not lead directly to the conviction that concrete plans for national legislation exist. None of the Member States indicates an intention to amend existing national legislation. That notwithstanding, I see no reason to cast If the Community legislature defaults in doubt on the powers of the Community such a situation, it is entirely credible that Member States will choose the alternative which is for them the most attractive, 61 — See the Report from the Commission to the Council, the namely tightening of the norms at national European Parliament, the Economic and Social Committee and the Committee of the Regions — Progress achieved in level. To this I would add one point linked relation to public health protection from the harmful effects of tobacco consumption, COM/99/407 final, p. 22 to the possible consequences of an opposite et seq. view. Preference on the part of Member

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States for regulation at Community D — Article 95 and manufacture for level — and thus renunciation of national export to non-member countries measures in restraint of trade — would then result in the Community legislature not having any power precisely because of the absence of national measures in restraint of trade.

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ation or because they never leave the 136. Against these are ranged the argu- European Union. In essence, the arguments ments which support a production ban: presented to the Court have focused in large measure on expectations concerning the rise of illegal trade and the appropri- ateness of the production ban as a means of countering that trade. — the Council in particular has stated that, although the percentage of ciga- rettes which are the subject of illegal trade is small, this does not mean that the dimensions of the illegal trade are also small in absolute terms; 135. If I abstract from the many and frequently inconsistent figures adduced in these proceedings and relating to both legal and illegal trade in cigarettes, the objec- tions to the production ban boil down essentially to the following points: — the report of activities of OLAF 63 substantiates the serious nature of cigarette smuggling;

— the measure is not appropriate, in view of the fact that by far the greater part of the cigarettes unlawfully smoked in — an increase in vigilance by Member the European Union come from non- States is not an appropriate alternative member countries; within the open area of the European Union.

— in so far as there is an illegal trade in cigarettes, this takes place solely in order to avoid high excise duties. 2. Approach Illegal trade has no connection with the composition or labelling of ciga- rettes; 137. The question here for examination is whether the Community legislature is e m p o w e r e d in t h i s c a s e u n d e r Article 95 EC to adopt rules on the manu-

138. I shall adopt the following approach in answering this question. I shall first outline how the Community legislature has used Article 95 EC — and the similar Article 94 EC — in previous cases for the 140. Actual production requirements purpose of establishing rules for the which also apply at the production stage production stage. This outline leads to an constitute an exception in Community analysis of the powers which Article 95 EC legislation. Most of the legislation which has conferred on the Community legis- is based on Article 95 EC relates only to the lature in regard to rules which do not placing of products on the internal market directly concern inter-State trade. This and does not affect the production stage, analysis is necessary to enable me to even where health-sensitive products are determine that Article 95 confers broad, concerned. By way of example I refer to the but certainly not unlimited, powers to authorisation systems as they apply in the effect harmonisation. In conclusion I shall case of medicinal products, veterinary determine whether the exercise of those products and plant protection products. 64 powers by the Community legislature in the The legislature evidently took the view that present case remains within the bounds it was not necessary for these products that conferred on it. the authorisation systems be applied to production and thereby to those products intended for export from the European Union. Product requirements do, however, arise at the production stage. Thus, Euro-

142. Earlier environmental directives adopted prior to the Single European Act, in which, among other things, a specific 141. I now turn to the requirements which environment title was incorporated in the apply to production. As the first, I shall Treaty, provide an insight into the possi- mention the titanium dioxide directive. 67 bilities of imposing requirements on the This directive was adopted after the earlier p r o d u c t i o n process p u r s u a n t to titanium dioxide directive had been Articles 94 EC and 95 EC. 7 0 In these the annulled by the Court on the ground that Community legislature has consistently an incorrect legal basis had been chosen. 68 taken the view that differences in national The Commission sets out as follows the legislation in regard to, for instance, auth- reasons for its decision to base the proposal orised discharges into water or the air may for a r e p l a c e m e n t d i r e c t i v e on result in unequal conditions of competition Article 95 EC: although the existing and thereby directly affect the functioning national rules were introduced with a view of the common market. Article 94 EC was to protecting the environment, the harmon- able to serve as a legal basis in this regard. isation requirement follows from the need On the other hand, it was, according to the legislature, necessary also to employ Article 308 EC for the reason that the 65 — See Article 4 of Regulation (EC) No 178/2002 of the EC Treaty did not make provision for European Parliament and of the Council of 28 January powers in respect of environmental pro- 2002 laying down the general principles and requirements of food law. establishing the European Food Safety tection. The limit with which the Commu- Authority and laying down procedures in matters of food safety (OJ 2002 L 31, p. 1). nity legislature was here dealing was not 66 — I refer also in this connection to Council Directive entirely clear and was also not reasoned. 89/107/EEC of 21 December 1988 on the approximation of the laws of the Member States concerning food additives authorised for use in foodstuffs intended for human consumption (OJ 1989 L 40, p. 27). While the directive does not impose any requirements on actual 69 — COM(91) 358 final. production (whether of additives or of the foodstuffs in which those additives are used), it does indirectly impose 70 — See, for example, Council Directive 76/464/EEC of 4 May requirements on the manufacture of foodstuffs. 1976 on pollution caused by certain dangerous substances discharged into the aquatic environment of the Commu- 67 —Council Directive 92/112/EEC of 15 December 1992 on nity (OJ 1976 L 129, p. 23), Council Directive procedures for harmonising the programmes for the 85/203/EEC of 7 March 1985 on air quality standards reduction and eventual elimination of pollution caused for nitrogen dioxide (OJ 1985 L 87, p. 1), and Council by waste from the titanium dioxide industry (OJ 1992 Directive 87/217/EEC of 19 March 1987 on the prevention L 409, p. 11). and reduction of environmental pollution by asbestos 68 —Judgment of 11 June 1991 (cited in footnote 49). (OJ 1987 L 85, p. 40).

144. Following the establishment of a spe- 4. The powers of the Community legis- cific environment title and the specific lature: the requirement that a distortion powers under Article 137 EC in the area must be appreciable of the working environment, the Commu- nity legislature now has less need of Articles 94 EC or 95 EC in order to be able to adopt provisions governing produc- tion. This, however, does not mean that 146. Article 95 EC provides in the first there should no longer be any powers under place for the power to adopt measures Article 95 EC. 72 having as their object the establishment of the internal market: measures may also be adopted under Article 95 which directly remove barriers to inter-State trade. Con- fining myself to product legislation, what is in issue is the harmonisation of national 145. To summarise, then: it is primarily rules on trade in products on the internal within the context of distortions of com- market. Together with Articles 28 EC, petition that the Community legislature has 29 EC to 30 EC, this power of the exercised its powers to adopt rules at the Community legislature constitutes an elab- production stage. The Directive at issue in oration of Article 3(1)(c) EC. I have the present case involves product require- already addressed this matter in more detail ments which apply even before the prod- in paragraph 103 of the present Opinion. In ucts enter the commercial chain. It will be order to abolish these barriers, the EC Treaty thus provides for two instru- ments which complement each other in 71 — Council Directive 80/1107/EEC of 27 November 1980 on their operation. the protection of workers from the risks related to exposure to chemical, physical and biological agents at work (OJ 1980 L 327, p. 8). 72 — By way of further illustration I refer to Directive 2001/18/EC of the European Parliament and of the Council of 12 March 2001 on the deliberate release into the environment of genetically modified organisms and repealing Council Directive 90/220/EEC (OJ 2001 L 106. p. 1). This regulates not only the placing on the internal market within the Community of genetically modified organisms as a product or contained in products but also 147. It is through the complementary the deliberate release of such organisms into the environ- ment for purposes other than placing them on the market application of Article 95 EC, on the one within the EU. The objective of this addition is evident: hand, and of Articles 28 EC to 30 EC, on protection of the environment within the EU. Article 95 EC none the less provides the legal basis here. the other, that an internal market is estab-

lished. This, however, still does not provide tives cited in paragraphs 141, 142 and 143 any guarantee that the market thus estab- provide good examples in this regard. lished can also function as a common market. Additional harmonisation meas- ures will frequently be needed for that end. The Community legislature has acknowl- edged this problem and has provided a second component to the competence under Article 95 EC: the power based on Article 95 EC extends rattorte materiae to harmonisation measures concerning, not 149. We are here in an area in which the the establishment, but the functioning of power to adopt rules is in principle vested the internal market. 73 This is an elabor- in the Member States. There is no general ation of Article 3(h) of the EC Treaty prohibitory provision comparable to providing as follows: the approximation Article 28 EC. In issue are measures of national laws to the extent required for which — were they to be adopted by the the functioning of the internal market. national legislature — would not impose quantitative restrictions on imports or exports. These are measures which regulate the conditions governing production and which are not requirements for the prod- ucts on the common market itself. For these reasons the Community must have a quali- fied interest in order to be entitled to breach this competence of the Member States. Or, to use the words of the Court when dealing with distortions of compe- 148. To this I would add the following. tition: the operation of the market must be With the advancement of the establishment appreciably distorted. 74 of the internal market, as evidenced by decreasing frequency of obstacles in the way of cross-border trade between Member States — attributable to, inter alia, the harmonisation of product legislation — the emphasis will be increasingly placed on the functioning of the internal market. Genuine market unity requires more than 150. This requirement that any distortion simply the abolition of obstacles at borders. must be appreciable also means that I would point out in this connection that Article 95 EC does not confer a general the C o m m u n i t y h a s , p u r s u a n t to unlimited power to effect harmonisation. Article 95 EC, adopted a series of measures That would be the case if every — even a designed precisely to strengthen the func- very minor — disruption to the function- tioning of the internal market. The direc- ing of the common market could lead to harmonisation. Briefly, as we are here in an area where Member States have an auton- 73 — In practice, though, the Community legislature tends not to draw a very clear distinction between establishment and functioning. The removal of barriers to trade is referred to in the preambles to many instruments of Community legislation as 'functioning' of the market. This is also the 74 — See, inter alia, the tobacco advertising judgment, cited in case in regard to the Directive under present consideration. footnote 3, paragraph 106.

154. The titanium dioxide judgment is relevant in this regard. There the Court argued as follows: national provisions — 152. The first distortion relates to the risk motivated in that case by health and that the rules which directly govern trade environmental considerations — may be a on the internal market might easily be burden on the undertakings to which they undermined. The Community legislature apply. 75 If there is no harmonisation of will then be able to adopt supplementary national provisions there will be a danger rules for the production stage which are of serious distortion of competition. A designed to obviate this effect. If the measure to harmonise national rules on Community legislature is unable to adopt the conditions governing production within these rules, an internal market will still be a particular industrial sector which is established but will simply not be able to intended to put an end to distortions of function effectively. In more specific terms, these will be rules which are designed to contribute to the effectiveness of the rules 75 — Cited in paragraph 49; see in particular paragraph 23 of relating to trade on the internal market. the judgment.

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competition within that sector thus con­ being directly placed illegally on the market tributes to the realisation of the internal within the European Union. This relates market and consequently falls within the therefore to the first form of distortion of scope of Article 95 EC. The titanium the internal market, as I have described it in dioxide case involved legislation on the paragraph 152. processing of waste. The Court recognised in this context that national rules applying equally to all market participants in a sector may distort competition.

156. In the proceedings before the Court, the Community legislature, in support of its contention that the Directive applies to the manufacture of cigarettes intended for export, stated that the regulation of the internal market is not undermined. It is — The damage can reasonably be avoided clear from the manner in which the case has only if there is a guarantee that all been dealt with before the Court that the Member States are acting in uniform­ legislature 7Ć is concerned about the illegal ity. In other words, if there is diver­ re-importation of cigarettes which do not gence of national implementing provi­ meet the norms imposed by the Directive sions and practices, or at least a real and also wishes to prevent cigarettes from risk that national provisions will diverge, it will not be sufficiently certain that genuinely effective action 76 — The Council in particular followed this line of argument at can also be taken against circumven­ the hearing before the Court. tion.

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161. On this point my conclusion is that the Community legislature has in this case 159. The second condition relates to the removed an appreciable distortion in the need for Community action. A unilateral functioning of the internal market. That national ban on production for the purpose said, I consider that the production ban of countering illegal re-importation will not may also possibly be based on another be effective in view of the fact that controls foundation. The real risk of an appreciable

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distortion of competition, which is the antee the enforceability of the ban on trade second type of disruption to the functioning within the internal market. In such a case, of the internal market, can in my opinion the effect at least will be that a cigarette form the basis for the EC provisions. manufacturer will transfer production to a Member State in which no production ban is in force. A unilateral measure of this kind would thus have no effect whatever with regard to enforcement and would result solely in economic damage for the Member State concerned.

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the specific context of Directive 98/43. those different matters in one single meas- That directive imposed a very extensive ure? Third, the adoption procedure: are the restriction on advertising for tobacco prod- procedures laid down in Articles 95 EC and ucts and thereby pre-eminently deprived 133 EC compatible? manufacturers of tobacco products of an instrument of competition. They had in any event, as a result of that directive, less opportunity to present their product to consumers. The Directive in the present case, in contrast, does not have any such particular effect on competition. 168. In determining the first point Com- munity law provides plenty of scope to go on. A Community measure, such as the Directive, must, as follows from the first paragraph of Article 5 EC, rest on a specific legal basis. The Court's established 166. To recapitulate, then, Article 95 EC case-law is set out in its opinion on the can form the legal basis for a measure Cartagena Protocol: 77 which imposes conditions on the manu- facture of tobacco products irrespective of the intended destination for which they were manufactured.

are inseparably linked without one being 171. If it proceeds on the basis that this secondary and indirect in relation to the particular situation does not obtain here — other, the measure may be founded on the I shall return to this point below — the corresponding legal bases.' Court will not need to attach any signifi- cance to the inequivalence of the two legal bases used in this case. It is sufficient if Article 133 EC forms the real basis for a part of the Directive — no matter how small that part may be. More particularly, it is necessary to determine whether, in declaring that the Directive also applies to 169. If there are several objectives of more exports of cigarettes from the European or less equal importance, the principal rule Union, the Community legislature has from the judgment in the Commission v sought to attain an objective that falls Council case on the goods nomenclature 78 within the common commercial policy. must apply, to the effect that 'where an institution's power is based on two provi- sions of the Treaty, it is bound to adopt the relevant measures on the basis of the two relevant provisions'.

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and is intended to serve several purposes at 176. The Parliament, the Commission and the same time. This is also desirable from the Council, together with a number of the the point of view of legislative economy. intervening Governments, submit that There is little sense in distinguishing the cumulative use of Articles 95 EC and rules laid down for a particular type of 133 EC is possible in view of the fact that product according to the purpose or the such use differs fundamentally from that in series of purposes intended to be achieved the titanium dioxide case. The claimants, in thereby. Better integrated rules will be contrast, argue that the legislative pro- more comprehensible to the persons to cedures which the Community legislature whom they apply, while unnecessary diver- must follow under Articles 95 EC and gence in interpretation or implementation 133 EC respectively are mutually incom- can also be avoided. 82 In this connection I patible. The German Government also consider to be far from satisfactory the takes the view that the two legal bases are solution chosen, for instance, for the rules incompatible. The fact that the present relating to infant food, where two direc- Directive was adopted in accordance with tives were adopted whose application the co-decision procedure, whereas the depended on the intended destination of Council alone decides under the product. Article 133(4) EC, jeopardises, in its opinion, the institutional balance. 84

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essential element of the cooperation pro- misconstruction of the titanium dioxide cedure would be undermined if, as a result judgment. Institutional balance plays an of simultaneous reference to Articles 100a important role in the decisions of the and 130s, the Council were required, in any Court. In this, however, the Court estab- event, to act unanimously. The very pur- lishes a direct link with the prerogatives of pose of the cooperation procedure, which is the European Parliament and the demo- to increase the involvement of the Euro- cratic principles underlying them. pean Parliament in the legislative process of the Community, would thus be jeopard- ised. As the Court stated... that partici- pation reflects a fundamental democratic principle that the peoples should take part in the exercise of power through the inter- mediary of a representative assembly.'

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legislation on infant food and adopted a ings — that is to say, after the event — separate measure to cover exports. The fact that the Community legislature indicated that this is not my preference has no its intention also in fact to regulate such bearing on the matter. exports. At the end of this section I shall address the question whether an ex post facto statement of reasons can support a measure. Otherwise, I shall adopt an approach similar to that in VI — D: I begin with a brief outline of the existing Community legislation before going on to 182. To summarise then, and with specific analyse what I consider to be the broad regard to the present case: the Court's legislative powers of the Community legis- case-law does not in principle oppose the lature and addressing the question whether use of Article 133 EC as a legal basis in the latter remained within the confines of addition to Article 95 EC, given that the the powers conferred on it. adoption procedures provided in both articles are mutually compatible. The answer to the question whether the addi- tion of Article 133 EC in this case is also really possible or necessary will depend on the objective which the Community legis- lature was seeking to attain.

1. Arguments submitted

— According to the claimants, the Com- munity's powers in the area of the common commercial policy have as their main objective to ensure that trade between the Member States and non-member countries does not lead to distortions in intra-Community trade. — The Netherlands Government refers to the 11th recital in the preamble to the Directive, which states that the export regime forms part of the common commercial policy. The fact that the Directive also seeks to attain (or does attain, although not intending to do so) objectives not relating to commercial policy has no bearing on this. 88 — The claimants point out that the pur- pose of the Directive is to protect health. For that reason the Directive cannot be based on Article 133 EC. Article 133 EC confers power to pro- mote, not restrict, trade. The Greek Government sets out a similar argu- ment.

— In the Commission's view, the appli- cation of quality standards to the exportation of products must be regarded as a matter of commercial concern to the European Union as it prevents products of inferior quality — Following on from this, the German being dumped on the world market. Government submits that measures For that reason alone Article 133 EC based on Article 133 EC must have can serve as a legal basis. the objective of influencing currents of trade with non-member countries. The liberalisation, and not the restriction, 88 — Case 62/88 Greece v Council [1990] ECR I-1527, para- of trade must be to the fore. While graphs 17 to 20. restrictive measures are permitted on

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187. For the rest, measures governing products intended for export also fall outside the scope of Article 133 EC. An example within the agricultural sector is provided by the Commission decision 92 in which, by means of emergency measures to 2. Article 133 EC and exports of products combat BSE, a ban was introduced on to non-member countries: a brief outline exports of British cattle and beef. This measure also applied to exports to non- member countries. This is remarkable given that the underlying Council regulations related only to internal trade. The justifi- 186. Community legislation concerning products for export and based on 90 — Council Regulation (EEC) No 3677/90 of 13 December Article 133 EC is to be found in many 1990 laying down measures to be taken to discourage the diversion of certain substances to the illicit manufacture of areas and with a variety objectives. Inter- narcotic drugs and psychotropic substances (OJ 1990 L 357, p. 1). Although the products regulated in this national agreements frequently form the legislation are, as regards their effects, somewhat similar to basis of such legislation. By way of example tobacco products, the rules are substantially quite distinct from those in the Directive in this case. See also Council I cite the legislation on sanctions 89 and Regulation (EC) No 3295/94 of 22 December 1994 laying down measures to prohibit the release for free circulation, regulations to counter the exportation of export, re-export or entry for a suspensive procedure of counterfeit and pirated goods (OJ 1994 L 341, p. 8). Under this regulation counterfeit or pirated goods may not be brought into free circulation, exported or re-exported. 89 — See, for example, Council Regulation (EEC) No 990/93 of 91 — Regulation No 178/2002. cited in footnote 65. This 26 April 1993 concerning trade between the European regulation has as its legal basis Articles 37 EC, 95 EC, Economic Community ana the Federal Republic of Yugo- 133 EC and 152(4)(b) EC. slavia (Serbia and Montenegro) (OJ 1993 L 102, p. 14), 92 — Commission Decision 96/239/EC of 27 March 1996 on which was examined by the Court in the Bosphorus case emergency measures to protect against bovine spongiform (Case C-84/95 Bosphorus |1996] ECR I-3953). encephalopathy (OJ 1996 L 78, p. 47).

189. The basic rules for the application of Article 133 EC to exports are laid down in Regulation (EEC) No 2603/69 of the Council of 20 December 1969 establishing common rules for exports. 94 The main rule in Article 1 states that exports may not in principle be subject to any quantitative restriction. A r t i c l e11 provides Member States with the possibility of adopting national restrictions on exports in order 191. It was precisely for the purpose of to safeguard one of the interests mentioned regulating exports that Council Directive in Article 30 EC. 92/52/EEC of 18 June 1992 on infant formulae and follow-on formulae intended for export to third countries was adopted. 96 This directive, which is based on Article 133 EC, supplements earlier directives which contain (similar) product requirements for infant formulae and fol- 190. Article 133 EC forms the legal basis low-on formulae intended for the internal for Community product requirements relat- market. 97 The purpose of this directive is to safeguard the health of infants in non- member countries. The product require- 93 — In Case C-180/96 United Kingdom v Commission [1998) ments in question must be in accordance ECR I-2265, the Court dismissed an application for the annulment of this decision. See also paragraph 234 of the with the EC legislation applicable to the present Opinion. See also the legislation on the environ- ment pursuant to Article 175 EC, such as Council Regulation (EEC) No 2455/92 of 23 July 1992 concerning the export and import of certain dangerous chemicals (OJ 1992 L 251, p. 13). That regulation seeks to guarantee 95 — See footnote 65. the protection of humans and the environment both within 96 — OJ 1992 L 179, p. 129. the Community and in non-member countries. The provisions result in part from cooperation with inter- 97 — Council Directive 89/398/EEC of 3 May 1989 on the national organisations such as the United Nations Envi- approximation of the laws of the Member States relating ronmental Programme (UNEP) and the Food and to foodstuffs intended for particular nutritional uses Agriculture Organisation (FAO). (OJ 1989 L 186, p. 27) and Commission Directive 91/321/EEC of 14 May 1991 on infant formulae and 94 — OJ, English Special Edition 1969 (II), p. 590. follow-on formulae (OJ 1991 L 175, p. 35).

98 — The Community legislature has applied a similar technique in the legislation on radioactive contamination of food- stuffs and animal feedingstuffs. Council Regulation (EEC) No 2219/89 of 18 July 1989 on the special conditions for exporting foodstuffs and feedingstuffs following a nuclear accident or any other case of radiological emergency (OJ 1989 L 211, p. 4), which is based on Article 133 EC, 195. This opinion of the Court makes it prohibits the exportation of foodstuffs and animal feed- ingstuffs in which the level of radioactive contamination clear that Article 133 EC does not by itself exceeds the maxima applicable for products intended for suffice to promote trade between the Euro- domestic consumption. The maximum permissible levels of radioactive contamination for foodstuffs and animal pean Union and non-member countries. feedingstuffs are set out in Council Regulation (Euratom) No 3954/87 of 22 December 1987 laying down maximum permitted levels of radioactive contamination of foodstuffs and of feedingstuffs following a nuclear accident or any other case of radiological emergency (OJ 1987 L 371, 99 — Opinion 1/78 [1979] ECR 2871, paragraphs 44 and 45. p. 11), as amended by Council Regulation (Euratom) 100 — See also in this connection Case 45/86 Commission v No 2218/89 (OJ 1989 L 211, p. 1). Council [1987] ECR 1493.

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Even where Article 133 EC is applied, Community must — on the basis of other public interests may play a role, in Article 95 EC — be able to act. regard to which the Community legislature may impose prior qualitative conditions on trade. The Court's case-law hereby con- firms the broad construction placed on the concept of the common commercial policy, as evidenced in practice by Community legislation. 197. In brief, the competence of the Euro- pean Community to act externally on the basis of Article 133 EC is in large measure similar to the competence of the Commu- nity legislature under Article 95 EC to act internally. 101 What is here in issue is also a functional competence.

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countries. I share those Governments' view 202. In my opinion, those requirements that this protection — which in any event that belong to the first and second cat- is primary — is a matter for the Govern- egories are in general permissible, in view ments of the countries of importation. The of the broad construction placed on the question, however, is whether this means concept of the common commercial policy that no further requirements may be in both the Court's case-law and legislative imposed on exports. practice.

200. This question is situated within the delicate area of extraterritorial protection 203. With regard to the first category: measures. Significant differences exist in extraterritorial protection measures cannot the views on the permissibility of measures in any case be criticised if they are based on of this kind, depending on the interpre- international standards. Article 133 EC tation of what constitutes commercial pol- provides the instrument by which the icy. The Court has not so far set out its Community can give effect to international views in express terms on whether such agreements concerning trade. Standards of measures are permissible. Nor does any this kind form the basis of the export rules clear picture emerge within the framework governing infant foods. of the World Trade Organisation, at least not in regard to measures concerning exports. 1 0 2

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case relates to defective or dangerous that Community action was liable to have products or — as in the present case — repercussions on trade. This opinion of the products that constitute a health risk. In Court is, moreover, relevant only in those this sense I agree with the Commission's cases in which a choice of legal basis is argument referred to in paragraph 184 necessary in view of differences in pro- above. This ground forms the basis for cedures. 105 In those cases it is necessary to the ban on exports of harmful foodstuffs. consider within what area a measure prin- cipally falls. Frequently, however, a cumu- lation of legal bases will be possible.

205. In specific terms, my view means that the question whether extraterritorial pro- tection measures are permissible requires 207. Opinion 2/00 dealt with the demar- only to be answered for unilateral measures cation between the common commercial taken by the European Community (or by a policy and the Community's powers with Member State) which relate exclusively to regard to special areas of public interest. A exports and not also to the internal market. second line of demarcation also needs to be Having regard to the content of the tobacco drawn, namely that between the common Directive, that question need not be commercial policy (understood as meaning addressed in the present case. trade with non-member countries) and the internal market.

in force for the internal market applies to 211. I shall now sum up. The demarcation products that are manufactured for export of Article 133 EC has two dimensions. The to non-member countries does not auto- first line of demarcation is broad: matically mean that Article 133 EC may be Article 133 EC can be used for the benefit used as a legal basis. of public interests other than the interest of international trade per se. Exercise of this competence, however, may not be at vari- ance with special areas of competence that are recognised as vested in the Community institutions. The second demarcation line is narrower. If a measure is primarily 209. The regulation which governed intended to regulate internal trade, imports of agricultural products into the Article 133 EC will not be applicable, even EU in the wake of the Chernobyl disaster though both imported and exported prod- was, in contrast, quite capable of being ucts are affected thereby. based on Article 133 EC. 1 0 7 The Court based itself primarily on the purpose served by the regulation. The Community rules were intended to safeguard the health of consumers, maintain the unified nature of the market and prevent deflections of trade, 212. That said, I consider the powers under without imposing unnecessary barriers on Articles 95 EC and 133 EC to be com- trade between the Community and non- parable and complementary. member countries. Article 133 EC represents for the external market what Article 95 EC represents for the internal market. Article 133 EC can serve as a legal basis only for measures having a real connection with the external market and under which the consequences for external trade are more than merely 210. In its opinion of 15 November ancillary. 1994, 108 the Court was requested to rule on the competence of the EC to conclude the TRIPs Agreement. 109 The Court stated that intellectual property rights are not specifically linked to external trade, but are also not specifically linked to the internal market. Article 133 EC therefore did not constitute an appropriate legal basis in that case. 5. Appraisal of the Directive

214. This view rests on the following factors: 216. That said, I consider that I am bound by the reasoning which the Community legislature has set out in the 11th recital in the preamble. According to settled case-law — Article 133 EC constitutes a functional on Article 253 EC, the statement of reasons competence which can be used to provided by the Community legislature impose prior qualitative conditions on must set out the reasoning clearly and the exportation of products; unequivocally so as to inform the persons concerned of the justification for the meas- ure adopted and to enable the Court to exercise its powers of review. 1 1 1Regard being had to this function of the duty to state reasons, it is insufficient if reasons are — the extraterritorial effect of the pro- given subsequently when an issue happens tective measures is justified by their to be raised before the Court. A statement content, namely that the ban applies of reasons may, it is true, be clarified by the only to exports of inferior quality Community legislature in proceedings cigarettes which are not permitted on before the Court; that, however, does not the internal market; mean that an entirely new ground of justification can be submitted.

— cumulation of the legal bases of Article 95 EC and Article 133 EC is in principle possible; 217. As already mentioned in paragraph 86, the 11th recital in the preamble states that the application to exports is to ensure that the internal market provisions are not

— the measure does in fact relate to the 110 — See paragraphs 190 and 191. internal market. External effects are 111 — See, for example, Case C-228/99 Silos e Mangimi Martini more than ancillary effects. (2001) ECR I-8401, paragraph 27.

undermined. In this the consequences G — The legal consequence of incorrect which the Directive has for external trade use of Article 133 EC are no more than ancillary effects. These effects follow from the measures relating to the internal market and for that reason alone Article 133 EC cannot serve as a 220. The question then arises as to the legal legal basis. consequence of this formal defect: will this formal defect lead to the annulment of the Directive? My answer to that question is in the negative. Even after Article 133 EC falls as a legal basis, a sufficient legal basis still subsists in the form of Article 95 EC. Also, if one considers the legislative history of the Directive, there is justification for the view that Article 133 EC was, as it were, unnecessarily added as a legal basis. Once 218. The purpose of the measure is, this superfluous legal basis has fallen, the according to the recital, not to impose original legal basis continues to stand. restrictions on trade in cigarettes with non-member countries. Nor can it be regarded as forming part of the common commercial policy. The fact that it does indeed have consequences for trade with non-member countries has no bearing on 221. In addition, this formal defect means this. I refer on this point to the formulation only that the Directive is incorrectly rea- used by the Court in the biotechnology soned. An inaccuracy in the preamble to a judgment. 112 In brief: applicability to ciga- directive cannot be placed on a par with an rettes intended for export is an ancillary or inaccuracy in its substantive regulatory subordinate objective of the Directive and part. An inaccuracy in the substantive does not coincide with its raison d'être. regulatory part means that the provision in question may not be applied. In such a case, the Court is obliged to annul a directive in whole or in part. An inaccuracy in the preamble means only that the recital or legal basis in question cannot support the measure. The Court must consequently rule whether there remains an adequate statement of reasons without that recital or legal basis. 219. All of this leads me to the conclusion that Article 133 EC was incorrectly included as a legal basis for the Directive. Even the rules relating to exports could, and s h o u l d , have been based on Article 95 EC. 222. I never the less take the view that letting a directive such as the present stand notwithstanding a defect in the reasoning 112 — Cited in footnote 46. need not constitute an incitement for the

223. Even if it is clear that the correct legal basis has been chosen, the validity of the 225. Assessment of the principle of pro- Directive will not yet have been established. portionality in the present case consists of a There may be other reasons for invalidity, variety of elements. The primary element is such as infringement of legal principles. as follows: the task of the Community The High Court directs its queries in this legislature to offer adequate protection for direction in parts (c) to (g) inclusive of its matters of public interest is not disputed in first question. I attach greatest significance regard to the protection of public health. In in the present case to the possibility of an this the Community legislature is no dif- infringement of the principle of propor- ferent from national legislative bodies. As tionality, given that it is only in connection the Commission has also stated in these with this legal principle that serious doubt proceedings, the scope of judicial review is can arise as to validity. In the case of the limited. Examination may be made only as other legal principles in issue, it is clear that to whether the Community legislature did

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or did not exceed the limits of its compet­ Court has stressed the importance of this ence. The principle of proportionality con­ provision, inter alia in connection with the stitutes one of those limits. I refer to common agricultural policy. 1 1 4 paragraphs 120 and 121 of this Opinion.

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230. It is in this light that I also consider 2. Appraisal in regard to applicability to the operation of the principle of propor- exports tionality. This principle does not provide that two matters of interest have to be weighed one against the other but focuses only on the choice of measure which has been or is being adopted to protect public health. Is this measure appropriate and is any other — less intrusive — measure 232. More particularly, the Court must available which would provide equally examine the proportionality of having good protection for public health? The (Article 3 of) the Directive apply to ciga- Community Courts exercise a limited rettes destined for export from the Euro- appraisal of these issues. pean Union. Above (paragraph 213 et seq.) I have found that this ban is primarily intended to counter the illicit trade in cigarettes within the European Union. The question now is whether this objective could equally well have been attained by measures less restrictive of trade. The claimants argue that the ban which Article 3 of the Directive imposes on the manufacture, and thus on the exportation, of cigarettes manufactured in the Commu- nity otherwise than in accordance with the maximum yields indicated is contrary to the principle of proportionality.

234. To begin, both the claimants and the European Union but may not be marketed German Government cast doubt on the there and which none the less come on to appropriateness of the measure. They draw that market. In the light of that limited a comparison with the ban on exports of objective it can be established that the cattle from the United Kingdom in the measure is appropriate in nature. context of BSE infection, which the Court upheld in its judgment in United Kingdom v Commission. 117 They argue that the ban in that case was indeed appropriate to achieve the intended purpose as the source of the health risk which the legislation sought to counter was to be found in the United Kingdom, whereas in the present case the source is in large measure to be found outside the European Union. The 236. The question whether, in that case, a Council comments as follows on this line of less intrusive measure might not have been argument: the measure in issue in the BSE available is, in my view, more difficult to case also went considerably further than answer. On this point the Council's margi- the tobacco Directive. In other words, as nal remark is material. I am not entirely in the tobacco Directive is not appropriate for agreement with that remark: the measure is doing away effectively and entirely with the not limited in its scope. As already stated, health risk, the Community legislature the measure results in a total ban on confines itself here to a more limited exports of cigarettes that fail to satisfy the measure. requirements. On the other hand — and this is what I consider to be more import- ant — the significance of the ban should also not be overestimated: a number of importing countries have themselves imposed similar — or even stricter — requirements on cigarettes, international norms covering cigarettes are at present 235. The claimants and the German Gov- being drafted and, furthermore, the fact ernment have, in my view, chosen an that the European Union guarantees that incorrect basis for their appraisal of the no inferior cigarettes will be placed on the appropriateness of the measure. If the world market can also increase the con- objective is to ban the illegal consumption fidence which consumers in non-member of cigarettes which fail to meet Community countries vest in European cigarettes. requirements, that measure will not be appropriate in view of the fact that a large proportion of those cigarettes originate outside the European Union. However, the measure has a more limited objective, namely that of preventing the internal market rules from being undermined by cigarettes that are manufactured in the

238. I fail to see how any measure less drastic than a ban on production could offer the same protection. As less drastic measures, one might, for example, envisage 240. The central argument relating to the obligations to separate production flows, appropriateness of Article 7 is that this possibly supplemented by more extensive article is at variance with Articles 3 and 5 provision of proof by manufacturers that of the Directive. It is essentially as follows: cigarettes have indeed been exported. whereas Articles 3 and 5 contain measures Whatever might be the effectiveness of that seek to ensure that smokers will such measures in themselves, they will choose lighter cigarettes, Article 7 has pre- never be able entirely to counteract the cisely the effect of impeding them in making that choice. Japan Tobacco submits in this connection that the indications 118 — See paragraphs 159 to 163 of this Opinion. which Article 7 prohibits — also referred

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243. In this connection there is a second point of controversy: the effect which the measure is expected to have on public health. The views concerning expectations in this regard are divergent, as is evident from the submissions made by the various intervening parties to these proceedings. 242. Underlying this discussion is, inter Nor does it surprise me that no uniform alia, a controversy regarding the extent to pattern of expectations emerges. The ques- which cigarettes with a lower tar yield are tion here is one of the extent to which a less harmful than those with a higher yield. consumer who smokes will adapt his The arguments presented and evidence behaviour as a result of the disappearance adduced in the present proceedings cannot of indications such as 'light' and 'mild'. resolve this controversy. On the one hand, it strikes me as sufficiently obvious that a cigarette with a lower tar yield is per se less harmful than a cigarette that has a higher tar yield. This is also a starting point for the Community legislature. For that reason the maximum tar yield has been reduced in Article 3 of the Directive. The fifth recital in the preamble also stresses the connection between this reduction and carcinogenicity. 244. These two aspects of the controversy On the other hand, the Commission, determine the context of this measure. In

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order to give a meaningful answer to the among consumers, particularly in regard to question of the appropriateness of a meas- the harmfulness of the product. A provision ure for the protection of public health, I of this kind strikes me as being, in the shall now examine in more detail the general sense, an appropriate means by content of the measure itself. which to protect public health.

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the notification of tar, nicotine and carbon well. The system in force in the Kingdom of monoxide yields which Article 5(1) of the Spain has been cited as such a measure in Directive requires to be displayed on the this case: under that system, the use of packet. Whereas these yields simply pro- indicators such as 'light' and 'ultralight' are vide objective information for consumers, allowed only for cigarettes with specified the descriptors, as already mentioned, low or, as the case may be, very low tar amount to euphemistic indications and are yields. The Greek Government, in particu- thereby not limited to providing objective lar, has argued that the use of the descrip- information. tors — as authorised under Spanish legis- lation — contributes precisely to provid- ing direct and objective information to consumers without any serious adverse effect on the economic interests of manu- facturers.

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4. Summary ing. Their contention is that the Directive thereby makes the proper exercise of those rights impossible and reduces the goodwill that the trademarks have acquired. Japan 252. The Directive satisfies the principle of Tobacco also states that, due to the pro- proportionality. This holds true for all hibition in Article 7, cigarette manufac- sections of the Directive. turers will no longer be able to exercise their rights under a number of registered trademarks. Japan Tobacco considers that Article 7 of the Directive prohibits it from exercising its intellectual property rights inasmuch as it is no longer able to use the brand 'Mild Seven' as a trademark within the Community. 120 It claims that it is B — Restriction of (intellectual) property thereby deprived of the economic advan- rights tage of the exclusive licences for that mark. At the hearing Japan Tobacco added that the rules under Article 7 will deprive it of one of its most important assets. The Greek Government shares the view that the ban infringes the intellectual property rights of 1. Demarcation cigarette manufacturers.

253. The claimants argue that Articles 5 and 7 of the Directive are contrary to 255. In what follows I shall examine the Article 295 EC, which provides that the substantive aspects of the potential Treaty may not prejudice the rules in infringement of the right to (intellectual) Member States governing the system of property. Before doing so, I would state property ownership. They further claim that two legal rules have been invoked that that these provisions of the Directive are are not relevant to the present case. This at variance with the right to property, as relates to Article 295 EC and the TRIPs laid down in, inter alia, the ECHR and/or Agreement. Article 20 of the TRIPs Agreement. 119

relation to the systems of property owner- ment may have some significance in pro- ship in the Member States within the ceedings before national courts. 124 In this meaning of Article 295 EC. The Directive connection I refer to the TRIPs Agreement does no more than impose a restriction on itself. It is not contrary to that Agreement the exercise of specified property rights by for a party to it to restrict the use of a cigarette manufacturers. Article 295 EC trademark for imperative reasons of public cannot be invoked in order to set aside a interest. The assessment which, pursuant to restriction on the exercise of property rights the TRIPs Agreement, must consequently which results from the application of be carried out before the national courts Community provisions. 121 adds nothing, however, to the assessment which must in any event be made pursuant to the EC Treaty. In brief, the TRIPs Agreement, precisely for those reasons, plays no role in assessing whether the interference with the right to property was 257. In relation to the TRIPs Agreement, I lawful. will comment as follows. The Court has ruled on more than one occasion that, having regard to their nature and structure, the WTO agreements are not in principle among the rules in the light of which the Court may review the legality of measures adopted by the Community institutions. 122 While it recognises that there are individual exceptions to this principle — what it 2. The right to property in Community law refers to as 'particular obligations' assumed in the context of the WTO — the Court held in its judgment in Dior 123 that the TRIPs Agreement is not such as to create rights upon which individuals may rely directly before the courts by virtue of 259. The right to property is not a right Community law. recognised as such by the EC or EU Treaties. Article 17 of the Charter of Fun- damental Rights 125 does, it is true, recog- nise the right to property (and the pro- tection of intellectual property). With regard to the present legal position, how- 258. The Court did, however, recognise in ever, I attach more importance to the Dior judgment that the TRIPs Agree- Article 6 EU. That article requires the European Union to respect fundamental rights, as guaranteed by, inter alia, the 121 — See in this connection Case 182/83 Fearon [1984) ECHR, as general principles of Community ECR 3677, paragraph 7. The Court there ruled that the law. One of those fundamental rights is the entitlement of Member States to regulate property rights is circumscribed by restrictions resulting from the prin- ciple of non-discrimination as protected by the EC Treaty. 122 — inter alia, Case C-149/96 Portugal v Council [1999] 124 — See in particular paragraphs 47 and 48 of the judgment, ECR I-8395, paragraph 47. cited in the previous footnote. 123 — Joined Cases C-300/98 and C-392/98 Parfums Christian 125 — Charter of fundamental rights of the European Union, Dior and Others [2000) ECR I-11307, paragraph 44. OJ 2000 C 364, p. 1.

right to property, as referred to in Article 1, 262. I shall begin by considering the scope First Protocol, of the ECHR. of the interference. To what extent is the enjoyment of the property curtailed and the very substance of the right thereby under- mined? Without going into this point in detail (I need not yet address the matter of the possible infringement of trademarks): 260. The Court has also on several occa- the enjoyment is not curtailed in any sions expressly recognised the right to particular way or undermined in its very property in the Community legal order. 126 substance. There is no curtailment of the According to its settled case-law, the exer- enjoyment of the property of any cigarette- cise of this right to property may be made manufacturing unit. Even after the Direc- subject to restrictions, provided that such tive has been implemented, it still remains restrictions in fact correspond to objectives possible for such a unit to be operated and of general interest pursued by the Commu- for cigarettes to be manufactured there. nity and do not constitute, with regard to Only the composition and the labelling of the aim pursued, disproportionate and those cigarettes must be adapted. Nor is unreasonable interference undermining the there any curtailment of the enjoyment of very substance of that right. 127 the property in the products themselves: as is frequently the case with product legis- lation, the party entitled must adapt the composition and labelling of its product and is given a transitional period for that purpose, enabling it to dispose of existing stocks. The new tobacco products which it 261. There cannot in this case be any is to manufacture and market must meet question but that the restrictions on the specified requirements as to composition right to property have been introduced by and labelling. Those requirements have virtue of a matter of public interest. In nothing to do with a restriction of the replying to the question whether this situ- property right in products. ation can be described as one of dispropor- tionate and unreasonable interference, the following matters, in my view, are relevant. First of all it is necessary to determine whether interference, in view of its scope, is in itself legitimate. Next, if the interference is in itself legitimate, the question needs to be addressed as to whether the case none the less involves an infringement of the principle of legal certainty or, as the case may, the principle of legitimate expec- 263. To state it briefly: regard being had to tations. the objective, the measures referred to are nowhere close to constituting a dispropor- tionate and unreasonable interference with 126 — See, inter alia, Case 44/79 Hauer [1979] ECR 3727, the right to property. It is for that reason paragraph 17. unnecessary to give any opinion on possible 127 — This case-law has been developed in the context of the common agricultural policy. See Case 5/88 Wachauf infringement of the principles of legal [1989] ECR 2609, paragraph 18, and, more recently, Case C-292/97 Karlsson and Others [2000] ECR I-2737, certainty or, as the case may, of legitimate paragraph 45. expectations.

267. The situation is more complicated with regard to the ban laid down in Article 7. Article 7, indeed, prohibits the use on tobacco products of certain trade- marks, such as the Mild Seven trademark 265. It is also the case in regard to trade- used by Japan Tobacco, or parts of trade- mark rights that their exercise may be made marks, such as the word 'light' when used subject to restrictions on grounds of general as a component part of a trademark. In the interest, 128 but the very substance of the case of the trademark Mild Seven, as Japan rights themselves may not be undermined. Tobacco also submits, the trademark can- not be adapted by dispensing with the additional word 'mild'. I would, however, point out 129 that it is precisely the word 'mild' forming part of the trademark Mild Seven that may be misleading for con- sumers. The reason for this is that, in the course of the present proceedings, it 266. I fail to see how the obligations emerged that cigarettes with widely dif- resulting from Article 5 can be regarded fering tar yields are marketed under the as undermining the very substance of the Mild Seven trademark.

128 — As I stated in paragraph 261, this area of interest does not require to be discussed here. 129 — As the Commission also submitted at the hearing.

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268. I take the view that Article 7 is none situation in which that right is not in itself the less not at variance with the right of inviolable. (intellectual) property. In reaching this view I do not base myself on an assessment as to whether the very substance of the use of the trademark right is being undermined in this case, but rather reason on the basis of the trademark right itself. That right is not inviolable in se. Community legislation 271. There cannot, in such a case, be any on trademark rights already provides for a question of unlawful interference with the number of individual grounds of invalidity. essential aspects of the right. Nor do I need to carry out any appraisal of the extent of the interference with regard to its poten- tially disproportionate or unreasonable nature.

273. For the sake of completeness, I should 270. Article 7 of the Directive, which, also point out that I am not convinced that moreover, refers expressly to commercial the scope of the interference is dispropor- trademarks, bans specific indications with a tionate or unreasonable. The Council refers suggestive meaning. These, in short, are in this connection to the judgment in Estée indications liable to mislead the public. Lauder, 132 which involved a cosmetic Article 7 thereby does no more than pro- product the title of which contained the hibit the exercise of a trademark right in a word 'lifting'. The Court in that case upheld national rules which prohibited the 130 —First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trademarks (OJ 1989 L 40, p. 1). 132 — Case C-220/98 Estée Lauder [2000] ECR I-117. This case 131 —OJ 1994 L 11, p. 1. did not otherwise involve any trademark right.

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274. Can one none the less speak — in the case of lawful interference as outlined above — of an infringement of the prin- ciple of legal certainty, and more particu- 276. This question is almost rhetorical in larly of the principle of legitimate expec- tone. A manufacturer of no matter what tations? An entrepreneur must generally be product will always have to bear in mind able to rely on the version of legislation in the fact that the product norms to which it force when he takes a commercial decision. is subject will not remain unchanged The principle of legitimate expectations, as indefinitely. Such — technical — norms, I stated in my Opinion in the Silos case, 133 indeed, are by their very nature time- and manifests itself in two forms of confidence place-specific. This is a fortiori the case which may require protection. First, this with regard to the norms governing ciga- involves protection against interference rettes. Scientific insights into the harmful- with existing rights. This right, as I held ness of smoking and social views on smok- in that Opinion, is not absolute. Second, ing are undergoing rapid development. It is thus no more than logical that the estab- lishment of standards should be subject to equally rapid change. The tobacco industry 133 — Opinion of 3 April 2001 in Case C-228/99 Silos, cited in footnote 111, paragraph 46 et seq. is aware of this like no other.

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278. By way of illustration I would also refer to the position of Japan Tobacco, which it seems would have been most unlikely to have been taken aback by 280. The arguments submitted regarding a Article 7 of the Directive. It was stated at possible breach of the duty to state reasons the hearing, without being contradicted, are of two types. The first type of argument that, when the Directive was adopted, the relates to the factual and scientific basis Mild Seven brand had only a very short underlying the Directive. I mention the time previously been introduced into the claimants' submission that new legislation European Union, in any event well after the must be based on new developments, which C o m m i s s i o n ' s c o m m u n i c a t i o n of in turn must be based on scientific data. 18 December 1996. Further, the brand The preamble to the Directive, however, was still at that time available in only one does not make any reference to scientific data. The second type of argument con- cerns the reasons set out in the 11th recital 134 — See paragraph 67 of this Opinion. in the preamble. The Greek Government

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points out, inter alia, that the reference to case-law not all data need be specified. I Article 133 EC does not indicate which note in this connection that the recital does aspect of the common commercial policy is not allude to the risk of distortions of being realised by the ban on export-geared competition as a basis for the Directive. For production. In the opinion of the German that reason what I have stated in paragraph Government, the recital fails to indicate 161 et seq. is in the nature of a superfluous why health protection within the Commu- submission. nity would be affected by illegal re-import- ation of tobacco products manufactured in the Community.

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second, the need for Community interven- basis of objective, relevant and consistent tion is thoroughly reasoned, 136 while factors, to have been taken with the finally the Directive complies with the exclusive purpose, or at any rate the main guidelines enunciated in the subsidiarity purpose, of achieving an end other than protocol. 1 3 7 As I have concluded in this that stated or of evading a procedure case that action by the Community legis- specifically prescribed by the Treaty for lature under Article 95 EC was necessary, dealing with the circumstances of the case. no further significance attaches to the appraisal of subsidiarity. In connection with this Directive I wish in particular to refer to: 287. If I apply that case-law to the present case, I must conclude that in a case such as that here, where the legal basis of a Community measure is under discussion, — paragraph 130 of this Opinion, in no separate significance need be attached to which I concluded that the measure the principle that powers must not be has its basis in — at least the specific misused. The Court can rule that the threat of — differences between the correct legal basis was chosen, whereby it legislation of the Member States liable will be settled that the Community legis- to give rise to barriers to trade; lature made proper use of the powers conferred on it. There could therefore be no question of misuse of powers. The Court can also rule that the correct legal basis was not chosen and for that reason annul the — paragraphs 159 to 163 inclusive of this Directive. There would then also be no Opinion, in which I concluded that a need for the Court to examine the question national ban on production would be whether powers had been misused. neither effective nor conceivable.

290. The principal arguments adduced by the second group of intervening parties in 289. The main arguments put forward by favour of a broad construction are as the first group of intervening parties in follows: favour of a restricted interpretation run as follows:

— It is not evident from the wording of — It is not clear from the wording of Article 7, which provides that certain Article 7 that it was intended to have designations may no longer be used on extraterritorial effect, and thus the the packaging of tobacco products, prohibition also cannot have such an that this article is limited to cigarettes effect. The Council, however, recog- destined for the internal market. nises in this connection that Article 7 also does not expressly limit the terri- torial effect.

— Application of Article 7 to exports is justified because of the real danger of — An extension of the prohibition to illicit trade. tobacco products intended for export is inappropriate for the purpose of preventing undermining of the internal market provisions.

— Article 7 constitutes a necessary supple- ment to Articles 3 and 5. The effect of these latter articles would be under- — Article 7 cannot be considered in mined without Article 7. For that isolation from Article 5 in view of the reason Article 7 has the same scope of fact that Article 7 is designed to pre- application as do Articles 3 and 5.

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291. The main significance in my view attaches to the fact that the text of the Directive provides no indication as to whether Article 7 is also applicable to cigarettes intended for export to non- member countries. The text is not unam- biguous, as illustrated by the fact that both 293. Article 7 is just as silent as Article 5, those who argue for and those who argue but in contrast to Article 3 it is silent as to against an external effect invoke the word- its scope and for that reason alone can be ing of the Directive. In such circumstances construed better by analogy to Article 5. In the Community Courts may avail of a addition, Article 7 is, qua content, more variety of methods of interpretation. similar to Article 5 than to Article 3. Indeed, Article 7 concerns the designations, not the composition, of tobacco products. Even more significant, in my opinion, is the fact that Articles 5 and 7 are substantively also closely related to one another. As the Belgian Government also pointed out dur- ing the hearing, Articles 5 and 7 can be 292. My view is that the systematic legis- treated as complementary provisions. lative interpretation is here the most effec- Article 5 imposes an obligation as to the

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inclusion on packaging of objective data guiding principle for the Community legis- on, inter alia, tar yields, and Article 7 lature but is not a source for the inter- prohibits the inclusion of suggestive desig- pretation of Community law where the nations which may adversely affect the legislature has elected to remain silent. In value which consumers attach to the objec- addition, as is clear from my conclusion, tive data notified pursuant to Article 5. I and in contrast to the position which I am also in agreement with the view that the mentioned in the fourth indent of para- effect of Article 5 could be undermined graph 290, the Directive has nothing to do without Article 7. with the common commercial policy.

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IX — Conclusion

298. On the basis of the foregoing considerations, I propose that the Court reply as follows to the questions submitted by the High Court of Justice (Adminis- trative Court):

(1) Directive 2001/37/EC of the European Parliament and of the Council of 5 June 2001 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco products is valid.

(2) Article 7 of Directive 2001/37/EC does not apply to tobacco products that are not marketed within the European Community.