C-376/98 Germany v Parliament and Council [2000]

C-376/98 Germany v Parliament and Council [2000] ECR I-8419 revolves around the annulment of the Tobacco Advertising Directive, adopted under Article 95 EC (now Article 114 TFEU). In this legal dispute, Germany contested the validity of the Directive, arguing that its true purpose was to regulate public health—an area falling under the supporting competence of Article 138 TFEU—rather than genuinely promoting the operation of the internal market.

The outcome of the case resulted in the annulment of the Tobacco Advertising Directive on grounds of improper legal bases and a breach of the principle of conferral under Article 5(2) TEU. The judgment provides crucial insights into the interpretation and application of Article 95 EC, emphasising that measures adopted under this provision must authentically aim at improving the conditions for the establishment and functioning of the internal market.

The court's decision highlights that Article 95 EC does not grant a broad regulatory power for the internal market. Mere disparities between national rules and abstract risks to freedoms or competition are insufficient justifications for invoking Article 95 EC as a legal basis. The court stressed the necessity of assessing whether the distortion of competition targeted by the measure is appreciable, preventing the use of this provision for minor or negligible distortions.

Moreover, the judgment underscores that the Tobacco Advertising Directive, in this specific case, exceeded the scope of Article 114 TFEU. It applied not only to tradeable media (e.g. newspapers and magazines) but also to non-tradeable media, such as hotel and restaurant posters, parasols, and ashtrays. Additionally, the Directive failed to ensure free movement for compliant products, and advantages for advertising agencies in Member States without a ban were considered remote and indirect.

While the court acknowledged that certain regulations might lead to appreciable distortions, it concluded that a blanket ban, as imposed by the Directive, was not justified. The court also addressed the issue of partial annulment, emphasising that it was not feasible, as it would amount to amending the directive—a matter reserved for the legislative authority.

In summary, the case sets important precedents regarding the proper application of Article 95 EC (now Article 114 TFEU), emphasising the need for a genuine focus on improving the internal market conditions and the requirement to carefully assess the appreciability of distortions targeted by the regulatory measures.
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