The Treaty of Amsterdam and the Tobacco Advertising case

Since the mid-1990s, policy-makers have begun trying to pursue consumer protection as a distinct EU goal. Product scandals during this period, such as ‘Bovine Spongiform Encephalopathy’ (BSE), hormone-treated beef, and toys treated with phthalates, provided an opportunity for the EU to define a pro-consumer agenda. The Treaty of Amsterdam responded to such needs for stronger consumer protection, by enlarging the competence of the Union in consumer law.[1]

Article 153(1) EC stated that the Community ‘shall ensure a high level of consumer protection’ by contributing ‘to protecting the health, safety and economic interests of consumers’ and ‘promoting their right to information, education and to organise themselves in order to safeguard their interests’. The right to information, education, and organization were new consumer rights, which did not exist in the Treaty of Maastricht.[2]

The improvement of information was already mentioned before the Amsterdam Treaty, but merely as an objective of which care was to be taken, without stating its relevance as a fully fledged right.[3] Following the Treaty of Amsterdam, the right to information has been reinforced and has been included in recent directives, such as the new Consumer Credit Agreement Directive (2008/48) of 2008.[4] Furthermore, the new right to education proved crucial to improve decision-making by the consumer and prevent manipulation through advertising, enabling the Community to take measures to educate the consumer, supporting, supplementing, and monitoring the policy pursued by the Member States in this respect. On the other hand, the right of consumers to organize themselves, which is linked to the freedom of association, has been implemented through the Cross-border Injunctions Directive (98/27).[5]

Article 153(2) EC obliged the European institutions to take account of consumer protection interests in the definition and implementation of other EU policies. However, according to some scholars, the practical impact of this provision has remained limited.[6]

Article 153(3) EC provided two different legislative competences for the EU, which already existed in the Treaty of Maastricht. Thus, the Community could take either ‘(a) measures adopted pursuant to Article 95 in the context of the completion of the internal market’, or ‘(b) measures which support supplement and monitor the policy pursued by the Member States’. The first type of measures allowed the EC to harmonize the laws of Member States to improve market functioning. This implied that directives should be adopted only if there was a need to harmonize the law in order to establish or improve the functioning of the internal market. The internal market was defined in Article 14 EC as an ‘area without internal frontiers in which the free movement of goods, persons, services and capital is ensured’. Consequently, consumer protection measures could be adopted by the EU on this legal basis if national provisions differed so as to require an approximation of law, and if there was a sufficient link with a market-integration objective. In contrast, the second type of measures could be used by the Community for consumer protection initiatives independently of a market integration objective. Regarding these measures Member States kept the right of the Treaty of Maastricht to introduce ‘more stringent’ consumer protection rules (Article 153(5) EC). In practice, however, Article 153(3)(b) has seldom been used by the Community to adopt consumer protection measures; instead, consumer legislation continued to be created under the market-making basis of Article 95 EC. Indeed, the Commission has proposed numerous directives upon the basis of Article 95 EC (now Article 114 TFEU) by making the formal argument of market integration objectives. Among these, the directives on consumer credit (87/102),[7] doorstep selling (85/577), package travel (90/314),[8] unfair terms in consumer contracts (93/13),[9] and the protection of consumers in respect of distance contracts (97/7)[10] have been adopted. However, in certain cases, such as in the Doorstep Selling Directive, the consumer protection aim prevailed over the market integration objective.[11]

This growing harmonization trend, based upon Article 95 EC, caused some Member States to fear for their national powers.[12] Indeed, under the Amsterdam Treaty, the EU had only limited powers to adopt measures, as Article 5 EC required that the Community act within the limits of the powers conferred upon it by this Treaty. In addition, the principle of subsidiarity established in the Treaty ofMaastricht had not been altered. This meant that, regarding areas of shared competences, the EU was only allowed to take measures ‘in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can ( . . . ) be better achieved by the Community’. In addition, the measures by the Community were not permitted to go beyond what is necessary to achieve the Treaty’s objective (Article 5(3) EC).

Therefore, in the late 90s, Member States were becoming increasingly less tolerant towards the growing competence of the EU. This was for example reflected in the ‘Tobacco Advertising’ judgment,[13] where Germany sought the annulment of Directive 98/43/EC which banned the advertising and sponsorship of tobacco products.[14] This directive had been adopted under Article 100(a) EC (later Article 95 EC) presented as a measure of harmonization to improve internal market functioning. However, Germany argued inter alia before the ECJ that the legal basis applied for this directive was incorrect, because this measure did not actually contribute to the improvement of the internal market, and its true objective was to protect public health.[15]

The ECJ annulled the directive, because of its invalid legal basis. According to the Court, Article 95 EC does not give a general power to the Community to regulate the internal market. This would also be incompatible with Article 5 EC that provides that ‘the powers of the Community are limited to those specifically conferred on it’.[16] However, the ECJ specified that the fact that harmonizing measures have a positive effect on health does not exclude Article 95 EC as a legal basis. In order to assess its validity, it is ‘necessary to verify whether the directive actually contributes to eliminating obstacles to the free movement of goods and to the freedom to provide services, and to removing distortions of competition’.[17] In the Court’s view the ban on advertising imposed by the directive was too broad.

While in principle, the prohibition on advertising of tobacco products for the written media might be based on Article 95, with the aim of improving the free movement of press products, numerous other prohibitions, for example regarding advertising on posters, parasols, and ashtrays did not help to facilitate trade in the product concerned. Therefore, the Court considered that an outright prohibition of advertising was disproportionate and the measure was not apt to eliminate appreciable distortion of competition.[18]

This case had an important impact on EU law-making on the basis of Article 95 EC. The Commission has become more aware of its limited competence and has dedicated more effort to carefully justify new actions by establishing a stronger link to market-functioning objectives. Accordingly, after the annulment of the Tobacco Advertising Directive 98/43, a more restrictive measure was adopted by the EU in 2003[19] and this time the Commission shaped the directive so as to expressly underline the market-integration aim that was previously missing.

Although the more recent case law of the ECJ has revealed a rather permissive approach to new EU legislation,[20] [21] a number of former consumer directives based on Article 95 EC have become constitutionally vulnerable according to Weatherill, because of their weak links to the required market-building objectives.1 11 This in turn has created uncertainty over the effective division of competences between the EU and Member States in developing consumer protection.[22] All these issues, according to some scholars, would require an open debate on Treaty reform for a clearer competence in consumer law.[23]

In conclusion, since the Tobacco Advertising case, it has become more difficult to adopt harmonization measures for consumer protection based on Article 95 EC (now Article 114 TFEU), unless they contain an explicit market-integration objective. While adding yet another focus on market integration, this was not the last piece of an already complex mosaic. The Lisbon Treaty and, eventually, the Charter of Fundamental Rights, provide new elements to consumer law, which will be analyzed in the following section and chapters of this book.

  • [1] These changes have resulted from a compromise between the proposals of Scandinaviancountries for broader community powers, and, in particular, German and British opposition; see N.Reich, ‘Verbraucherpolitik und Verbraucherschutz im Vertrag von Amsterdam’, (1999) Verbraueherund Recht, p. 3.
  • [2] See more in Stuyck (n 31) pp. 384-92.
  • [3] This right has been recognized by the ECJ in the previously discussed Case C-362/88, GBInno BM v CCL [1990] ECR I-667.
  • [4] Directive 2008/48/EC of 23 April 2008 on credit agreements for consumers, OJ L 133/66,22.5.2008; see more on this directive in ch. 5.
  • [5] Directive 98/27/EC on injunctions for the protection of consumers’ interests adopted in1998, OJ L 166, 11.6.1998 (modified subsequently and codified by Directive 2009/22/EC of 23April 2009 on injunctions for the protection of consumers’ interests, OJ L 110/30, 1.5.2009), seech. 7 in this book.
  • [6] See e.g. Reich, ‘Verbraucherpolitik und Verbraucherschutz im Vertrag von Amsterdam’(n 91), p. 9; Stuyck (n 31), p. 386.
  • [7] Directive 87/102 of 12 February 1987, OJ 1987 L 42/48.
  • [8] Directive 90/314 of 23 June 1990, OJ 1990 L 158/59.
  • [9] Directive 93/13 of 21 April 1993, OJ 1993 L 95/29.
  • [10] Directive 97/7 of 4 June 1997, OJ 1997 L 144/19.
  • [11] Weatherill (n 47) pp. 71-72.
  • [12] Weatherill (n 47) pp. 72 et seq.
  • [13] Case C-376/98, Germany v Parliament and Council [2000] ECR I-08419; S. Weatherill, ‘TheConstitutional Competence of the EU to deliver Social Justice’, (2006) 2 Eur. Rev. Contract Law,p. 140.
  • [14] Directive 98/43/EC relating to the advertising and sponsorship of tobacco products, OJ 1998L213/9, 30.7.98.
  • [15] Case C-376/98, Germany v Parliament and Council [2000] ECR I-08419, paras 11-35.
  • [16] Case C-376/98, Germany v Parliament and Council [2000] ECR I-08419, para. 83.
  • [17] Case C-376/98, Germany v Parliament and Council [2000] ECR I-08419, para. 95.
  • [18] Case C-376/98, Germany v Parliament and Council [2000] ECR I-08419, paras 111-12.
  • [19] See the second directive on tobacco advertising adopted in light of the judicial annulment ofthe first: Directive 2003/33/EC of May 2003, OJ 2003, L 152/16. This directive was again testedbefore the Court of Justice in Tobacco Advertising II, Case C-380/03, Germany v Parliament andCouncil [2006] ECR I-11573; in this case, however, the Court concluded that the use of Art. 95 ECwas valid.
  • [20] E.g. Case C-377/98, Netherlands v Parliament and Council [2001] ECR I-7079, Case C-491/01,Imperial Tobacco [2001] ECR I-11543, or Case 210/03, Swedish Match [2004] ECR I-11893.
  • [21] See more in S. Weatherill, Whe Commission’s Options for Developing EC ConsumerProtection and Contract Law: Assessing the Constitutional Basis’ 1 (2002) 13 Eur. Bus. L. Rev.,p. 497.
  • [22] In recent decisions, such as Case C-491/01, Imperial Tobacco and Case C-210/03, SwedishMatch, these issues were not resolved; see Weatherill, ‘The Constitutional Competence of the EUto Deliver Social Justice’ (n 103), pp. 141 and 146.
  • [23] See the reform proposed in the Treaty revision by H.-W. Micklitz, N. Reich, & S. Weatherill,‘EU Treaty Revision and Consumer Protection’, (2004) 27 J. Consumer Policy, pp. 367-99.
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