Industry Interference and the 2001 EU Tobacco Products Directive

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Note: The 2001 Tobacco Products Directive (TPD) was replaced in 2014 by the revised TPD 2014/40/EU.

Background

The original TPD was proposed by the European Commission in November 1999 and aimed to strengthen European legislation on cigarette yields (Article 3 and 4) as well as tobacco product labelling (Article 5). It also introduced mandatory ingredients disclosure (Article 6), banned misleading descriptors such as “mild” and “light” that suggest less harmfulness of a product (Article 7), and maintained the 1992 ban on sales of smokeless tobacco snus (Article 8) .

  • The full text of the 2001 TPD can be found here.

The TPD and Tobacco Industry Interference

The tobacco industry was seriously alarmed when discussions began in Brussels in 1996 regarding the need for further tobacco regulations. Despite strong tobacco industry lobbying in the following years and several legal challenges, the TPD was successfully enacted in 2001. Strong leadership from David Byrne, the then EU Health Commissioner, the political commitment across Member States and the skillful management of the TPD proposal through the parliamentary process by Parliamentary rapporteur Jules Maaten thwarted concerted tobacco industry efforts to derail the Directive. Below is a summary of the key findings of a report[1] written by researchers at the University of Bath, University of Edinburgh, and the London School of Hygiene and Tropical Medicine which examines the tobacco industry’s campaign to subvert the 2001 TPD.

Divisions between the transnational tobacco companies’ positions

Initially, the tobacco industry responded to the threat of further regulation in a cohesive manner. They adopted a relatively unified stance on the Commission’s 1998 consultation that preceded the formal TPD proposal in 1999. They established pan-European working groups to develop key arguments(see section below), and collectively lobbied against the proposed measures.

However, tensions between the companies soon started to emerge, notably between Philip Morris (PM) and European-based transnational tobacco companies (TTCs). This split appears to have been a product of differences in individual company positions and the resulting risks posed by legislation. PM was the leader of the European tobacco market and therefore seems to have been less threatened by the proposed measures, favouring ‘constructive engagement’ with policy makers. In contrast, British American Tobacco (BAT) and other companies were more exposed to the Directive’s impact due to their substantial EU manufacturing base, thus favoured a more aggressive approach. By September 2000, Japan Tobacco International (JTI) recognised that, although consensus was ideal, it had been difficult to achieve and the industry was left without a strong, united position.

Industry Arguments Against the 2001 TPD: Legal, Trade, Economic , and Scientific

To shape debates around the TPD and influence public opinion, the tobacco industry developed four key arguments to create doubt about the legitimacy of the proposed legislation:

  • The Directive has an invalid legal basis (i.e. was “ultra vires”).
Despite receiving legal opinion confirming the TPD’s legality, the tobacco industry publicly argued that the TPD was invalid, claiming that the TPD’s main legal basis (Article 95) and a later additional basis (Article 133) were inapplicable. This tactic of challenging the legal basis of tobacco control legislation has been central to all the tobacco industry’s efforts to undermine key tobacco control efforts in Europe.[1]
  • The Directive is in breach of existing trade agreements and Intellectual Property (IP) rights.
The tobacco industry alleged that the TPD was incompatible with obligations under the World Trade Organization (WTO) agreements on technical barriers to trade (TBT) and IP rights, threatening trade challenges despite the clearly weak nature of such claimed conflicts. Given the complex and often misunderstood relationship between trade and health, it is unsurprising that the tobacco industry continues to misuse such arguments, notably in the plain packaging debate.
  • The Directive will have adverse economic impacts, in particular significant job losses.
Alleged economic consequences, particularly a threat to jobs, were highlighted in BAT’s own impact assessment study which focused on the negative economic impacts only, exaggerating job losses, and overlooking potential health benefits. This report, co-written with trade unions, was widely used to lobby Members of European Parliament (MEPs) and secure press coverage.
  • The Directive ‘s scientific and technical elements have significant limitations.
This argument sought to exploit the limited technical capacity in the Commission and ongoing public health debates around product regulation (e.g. debates around the effectiveness of reduced yields based on discredited ISO methods). PM and JTI were particularly vocal on tar and carbon monoxide ratios, whereas BAT developed several arguments against toxicological testing and regulation of additives. PM in particular used this type of argument to gain access to Commission staff.

Direct and Indirect Lobbying Tactics

The tobacco industry’s success depended on an effective lobbying apparatus that was able to transfer and feed the pro-tobacco arguments into messages aimed at people and organisations with influence. TTCs had long scrutinised the EU legislative process and were well-informed about the EU’s policy cycle and EU institutions. This enabled the tobacco industry to carefully target their arguments to appropriate audiences according to the legislative stage the Directive was in. The EU’s institutional pluralism, providing many targets for lobbying (e.g. Commission, Parliament and Member States), worked to the advantage of the well-resourced TTCs, in contrast to public health advocates who were poorly resourced and had to prioritise their lobbying efforts.

TTCs lobbied directly and indirectly and had many lobbying targets (see Image 1).[1]

Image 1. Tobacco industry’s lobbying strategy to undermine the 2001 TPD

Targets of their direct lobbying efforts included those that were able to directly influence the Directive, such as Commissioners, Commission staff, MEPs, the European Economic and Social Committee (EESC) and the Committee of the Regions (CoR). Contacts were made with not just DG SANCO, the Commission’s department responsible for tobacco control, but also the departments of Internal Market and Industrial Affairs, Taxation, and Agriculture. Relationships with MEPs were built by writing letters and inviting them to social events that coincided with key committee meetings.

Attempts to table pro-tobacco amendments and building a blocking minority were made through the Council and MEPs on influential committees. The findings show that the German government and MEPs lent a sympathetic ear to the industry, which is consistent with its previous roles in opposing EU tobacco control measures.

TTCs also lobbied indirectly by collaborating with third parties who acted on its behalf. Targets included tobacco farmers, suppliers, distributors, employees, trade unions and the media, with plans made to enlist their support in key countries using carefully targeted messages. For example, trade unions were told that tobacco manufacturers were being “forced” to consider relocating. Supported by tobacco industry briefings, trade unions and other third parties were then mobilised to claim exaggerated impacts on employment, generating press coverage and political support.

Legal challenges

The tobacco industry is well-versed in using litigation to either stop or delay EU tobacco control legislation, and the 2001 TPD was no exception. Before the Directive had passed into EU law, British American Tobacco (BAT) filed an access case with the European Court of First Instance, requesting access to the scientific research the Commission had considered and had based the TPD proposal on. This case was dismissed. [2]

Within months of the Directive passing into EU law, tobacco companies filed legal challenges in national courts and the European Court of Justice.

BAT, Imperial Tobacco and JTI filed legal proceedings in the British Courts which were referred to the European Court for Justice (ECJ). Their argument was that Article 95 was an inadequate legal basis, claiming that the Directive was a public health measure being introduced as an internal market measure, and that the supplementary legal basis of Article 133 invalidated the Directive as they followed incompatible legislative processed. They also argued that the principles of proportionality and subsidiarity had been violated and that Article 5 (yields) and Article 7 (misleading descriptors) breached trademarks and intellectual property rights. In 2002 the ECJ ruled that the Directive was valid, although it did rule that misleading descriptors could be permitted on cigarettes manufactured for export.

Swedish Match, along with a German wholesaler, also brought a legal challenge against the UK and German governments in relation to the ban on snus sales, which was referred to the ECJ. They challenged the legal basis of the Directive but also claimed an infringement on prohibiting quantitative restrictions in trade between Member States. Again these complaints were rejected in 2004 by the ECJ.

Tobacco companies also filed cases in national courts. For example, PMI launched a court case in Sweden where it unsuccessfully challenged the Swedish interpretation of the Directive that the black border should be additional to the health warning. Seven tobacco companies, including BAT, PMI, JTI and Imperial Tobacco, filed separate court cases against the Dutch government’s ingredients disclosure regulation. The companies argued that this was tantamount to trade secrets and competitors would profit from them. The District Court of The Hague’s ruling in 2005 rejected these claims and ruled that trade secrets did not themselves enjoy absolute protection.

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Notes

  1. 1.0 1.1 1.2 S. Mandal et al, Block, amend, delay: tobacco industry efforts to influence the European Union’s Tobacco Products Directive (2201/37/EC), June 2009, accessed November 2014
  2. Judgment of the Court of First Instance (First Chamber) of 25 June 2002. - British American Tobacco (Investments) Ltd v Commission of the European Communities. - Decision 94/90/ECSC, EC, Euratom - Public access to Commission documents - Case T-311/00. , European Court Reports,2002 II-02781 Volume European Court Reports,2002 II-02781 2002, available from: http://curia.europa.eu/juris/liste.jsf?language=en&num=T-311/00, accessed November 2012