Tobacco advertising challenges

The Public Health (Tobacco) Act, 2002 (also here), as amended in 2004 (also here) – and in particular Part 3 of the 2002 Act – constitute a comprehensive control on the sale and advertising of tobacco (the Office of Tobacco Control has a comprehensive list of the relevant legislation), and the legislation largely gives effect to EU law in this field. In particular, Section 33 of the 2002 Act as amended by section 5 of the 2004 Act prohibits advertising of tobacco products and section 43 of the 2002 Act as amended by section 14 of the 2004 Act requires vendors to ensure that tobacco products are kept in a closed container that is not visible or accessible to customers. These and related provisions were brought into force by the Public Health (Tobacco) Act 2002 (Commencement) Order 2008 (S.I. No. 404 of 2008) (also here) and took effect on 1 July of this year. Dublin solicitors Matheson Ormsby Prentice have a helpful description of the restrictions here. Now, today’s Sunday Times brings news that these prohibitions are to face a legal challenge in the Irish courts:

Philip Morris sues Irish government on tobacco ban

Tobacco giant Philip Morris International is to launch a legal action against the Irish government over its ban on the display of cigarettes in shops. …

The restriction on displaying tobacco products on shelves came into force in Ireland on July 1 and a similar prohibition is being discussed in the UK [Holyrood | Westminster]. … The governments of both countries believe forcing shops to stock cigarettes under the counter, where they cannot be seen by consumers, is an effective measure to combat the problem of teenage smoking. …

Philip Morris, which is being advised on the case by Matheson Ormsby Prentice, an Irish law firm, claims that the ban is anti-competitive because it favours those manufacturers who already have a large market share through the sale of cheaper brands. … The US company will argue that if retailers are unable to display cigarettes, smokers are more likely to stick with the brands they currently buy. …

In cases C-376/98 Germany v Parliament and Council 2000 E.C.R. I-8419 and C-74/99 Imperial Tobacco 2000 E.C.R. I-8599, the European Court of Justice struck down the Commission’s first set of rules on this issue on the grounds that they had not been adopted on the correct basis. This was relatively easy to correct: the Commission adopted a similar set of rules on another basis, and in another challenge by Germany, the ECJ upheld the new rules in Case C-380/03 Germany v Parliament and Council (noted by EU Law Blog and IRIS Merlin). Now that the EU rules have a valid legal basis, the next question becomes whether they infringe other provisions of the EU Treaties, and that is in effect the issue which Philip Morris seek to test; in particular, it seems that they are arguing that the display prohibitions infringe the competition provisions of the EU Treaty. Because of the EU background to the display restrictions and the competition arguments, the matter will doubtless end up in the European Court of Justice, and we will not see a resolution for quite some time.

However, if the competition law issues are to get an airing, what about the freedom of expression issues? In a similar pair of cases in the Supreme Court of Canada, similar Canadian legislation was struck down for infringing the Charter’s free speech guarantee in RJR-MacDonald Inc v Canada (Attorney General) [1995] 3 SCR 199, but a narrower statute was later upheld in Canada (Attorney General) v JTI-Macdonald Corp [2007] 2 SCR 610. Continuing its march towards full scrutiny of legislation regulating commercial speech, the US Supreme Court in Lorillard Tobacco v Reilly 533 US 525 (2001) (Findlaw | Justia | Oyez) held that some of the tobacco advertising regulations introduced by Massachusetts infringed the First Amendment. Indeed, just over a month ago, US tobacco firms began another First Amendment challenge to recent Federal restrictions on tobacco advertising. All of which raises the issue: why not make a commercial speech argument against the Irish regulations as well?

Commercial speech has been protected by the ECHR at least since Barthold v Germany 8734/79 [1985] ECHR 3 (25 March 1985), and the line of authority constructed upon it has influenced the ECJ in its commercial speech decisions. For example, Advocate General Fennelly (now a judge of the Irish Supreme Court) discussed the issue in the first German case (see Case C-376/98, paras 152ff of his opinion), and in Case C-71/02 Herbert Karner Industrie-Auktionen GmbH and Troostwijk GmbH, the ECJ explicitly measured Austrian advertising restrictions against commercial speech. However, in the event, the Court upheld the restrictions as proportionate, and there are hints that the ECJ is narrowing the scope of its commercial speech jurisprudence. The whole issue is brilliantly discussed in Joanna Krzeminska-Vamvaka Freedom of Commercial Speech in Europe (Hamburg: Verlag Dr. Kovac 2008; Studien zum Voelker- und Europarecht) (Amazon). A similar challenge by various tobacco companies was discontinued in 2007 (Irish Independent | Irish Times), but if this one does in fact go ahead, it will be interesting to see if the case ventilates not only the competition law issues but also the commercial speech questions as well.

Updates (05 October 2009): Insite noticed the Sunday Times piece as well. More coverage: Belfast Telegraph (Philip Morris claim the ban will boost illegal cigarette trade) | CNBC (display bans are also in effect in Iceland and certain Canadian provinces) | Guardian (display ban just another example of over-regulation of retailers) | Irish Independent (complaints include an alleged infringement on the right to free commercial speech) | Irish Times (case will be filed before the High Court on 06 October 2009) | Management Today (Philip Morris may take legal action against any similar UK ban) | MarketWatch (Philip Morris: a total ban on tobacco display does not work) | Reuters (Philip Morris said it would file a joint lawsuit on Tuesday with an Irish retailer seeking to overturn the display ban) | Richmond Times Despatch (Philips Morris’ parent company based near Richmond, Virginia) | Wall Street Journal (Philip Morris: the law severely restricts the plaintiffs’ ability to trade) | Welt Online (Philip Morris have launched a website about the issue).

It is heartening to see from this coverage that the commercial speech angle will indeed be explored in the case. I don’t necessarily expect the argument to succeed, but I do welcome the fact that the contours of commercial speech (whether in the Irish Supreme Court or the ECJ) might be delineated.