## Facts

- The European Parliament and Council adopted Directive 98/43/EC, aiming to ban most forms of tobacco advertising and sponsorship within the EU.
- Germany challenged the Directive, arguing it was beyond the EU's legislative powers and improperly based on Article 114 TFEU (then Article 100a).
- The Directive was presented as a measure to improve the establishment and functioning of the internal market by removing barriers created by differing national rules on tobacco advertising.
- The European Parliament and Council contended that the Directive addressed obstacles to the free movement of goods and services and removed unfair competition.
- Germany maintained that the true aim was public health protection, an area where EU competence is limited.

## Issues

1. Whether Article 114 TFEU could be used as a legal basis for a near-total ban on tobacco advertising and sponsorship.
2. Whether the Directive genuinely pursued the objective of improving the functioning of the internal market, or was primarily directed towards public health protection.
3. Whether the principle of subsidiarity and proportionality was respected in adopting the Directive.

## Decision

- The ECJ found that the Directive’s near-complete ban went beyond what was necessary to address cross-border obstacles or unfair competition within the internal market.
- The Court held that Article 114 TFEU requires a real link to improving the functioning of the internal market and cannot be used merely to achieve other objectives, such as public health.
- The ECJ concluded that the Directive was primarily aimed at public health, which remains largely within Member States’ competence, and not at addressing genuine internal market problems.
- The principles of subsidiarity and proportionality were not properly observed, as the Directive was broader than needed for its stated internal market objectives.
- Consequently, the ECJ annulled Directive 98/43/EC.

## Legal Principles

- Article 114 TFEU may be used as a legal basis for harmonisation measures only where the measure genuinely aims to improve the establishment and functioning of the internal market.
- EU measures under Article 114 TFEU must not circumvent specific Treaty rules in areas of limited EU competence, such as public health.
- The principles of subsidiarity and proportionality require that EU action is necessary and does not exceed what is required to achieve its objectives.
- A measure must demonstrate a clear link to the elimination of trade barriers or distortion of competition in the internal market.

## Conclusion

The ECJ’s judgment in Tobacco Advertising I established significant limits on EU legislative authority under Article 114 TFEU, confirming that measures must genuinely address internal market issues and cannot serve primarily as instruments to pursue objectives, such as public health, outside EU competence. This case remains a central reference for the scope of EU powers and internal market harmonisation.

Germany v Parliament and Council (Case C-376/98) [2000] ECR I-8419