## Facts

- The Tobacco Products Directive (2014/40/EU) was adopted to harmonize tobacco product regulation across the EU, introducing standardized packaging, health warnings, and product restrictions.
- Tobacco companies challenged the Directive before the Court of Justice of the European Union (CJEU), alleging that it exceeded EU competence and violated subsidiarity and proportionality principles.
- The primary argument of the tobacco companies was that Member States could achieve the Directive's public health objectives as effectively through national legislation.
- The tobacco industry also claimed that the Directive infringed fundamental rights, particularly the freedom to conduct a business, due to measures such as standardized packaging and pictorial warnings.

## Issues

1. Whether the Tobacco Products Directive exceeded the EU's legislative competence, specifically in light of the subsidiarity principle.
2. Whether the measures imposed by the Directive were proportionate to the public health objectives pursued.
3. Whether the Directive unfairly restricted fundamental rights, including the freedom to conduct a business.

## Decision

- The CJEU held that a rigorous subsidiarity analysis is required, and that the EU must show that objectives cannot be sufficiently achieved by Member States individually, but can be better achieved at EU level due to scale or effects.
- The Court found that the evidence regarding cross-border trade, regulatory disparities, and benefits of harmonization justified EU action under subsidiarity.
- The CJEU determined that the measures of the Tobacco Products Directive, though restrictive, were proportionate to the public health aims and did not go beyond what was necessary for their achievement.
- The Court ruled that the Directive’s restrictions on commercial freedom were justified and struck a fair balance between public health objectives and the freedom to conduct a business, which is not an absolute right.

## Legal Principles

- Subsidiarity under Article 5(3) TEU requires that EU legislative action is justified only where it is more effective than national action and must be demonstrated with convincing evidence.
- The principle of proportionality requires that legislative measures must be appropriate, necessary, and not excessive to achieve their objectives.
- The right to conduct a business can be limited in the public interest, provided such limitations are proportionate.
- Harmonization measures that prevent regulatory fragmentation and protect the internal market are within the competence of the EU where substantiated.

## Conclusion

The CJEU upheld the Tobacco Products Directive, reaffirming the demanding requirements for subsidiarity and proportionality in EU law and confirming that rigorous justification is needed for EU measures in areas of shared competence, especially when fundamental rights and public health are at stake.

Philip Morris v Secretary of Health (C-547/14), ECLI:EU:C:2016:325