UK based Totally Wicked, the UK's leading independent electronic cigarette manufacturer, will formally challenge the validity of Article 20 of the EU Tobacco Products Directive (TPD) at the Court of Justice of the EU (CJEU) in Luxembourg on 1 October 2015 at 14h30 (CET).
The CJEU's decision, expected early next year, will determine whether Article 20 of the TPD breaches EU law. The hearing follows a decision by the High Court in London on the 6th of October 2014 to refer questions relating to the lawfulness of Article 20 to the CJEU for a "preliminary reference" ruling.
Totally Wicked is the only electronic cigarette manufacturer to win the right to challenge this Directive which will bring e-cigarettes and e-liquid within its regulatory scope as a "tobacco related product" - despite not containing tobacco - and subject e-cigarettes to more stringent regulation than some tobacco products. Electronic cigarettes are a revolutionary product. They are estimated to be at least 95 per cent less harmful than tobacco products and are recognised as the number one tool used by smokers to quit smoking. Left to develop under proportionate consumer regulation, e-cigarettes have the potential to render tobaccoobsolete and prevent millions of deaths from smoking. There are currently nearly three million vapers in the UK.
All of these people are now smoking fewer or no cigarettes as a direct result of having switched to e-cigarettes. If Article 20 of the TPD is implemented:
- E-liquid will only be sold in bottles no larger than 10ml;
- significant testing costs will reduce the number of flavours available;
- nicotine strengths will be restricted to 20 mg/ml;
- most refillable devices will be banned;
- tanks will be restricted to 2 ml in size;
- restrictions will be placed on e-commerce, and;
- advertising and sponsorship will be banned.
Put simply, this will make it harder for smokers to switch to vaping and many vapers will return to smoking. Specifically, Totally Wicked’s challenge is based on its view that Article 20 of the TPD represents a disproportionate impediment to the free movement of goods and the free provision of services, places electronic cigarettes at an unjustified competitive disadvantage to tobacco products, fails to comply with the general EU principle of equality, and breaches the fundamental rights of electronic cigarette manufacturers.
Totally Wicked’s legal challenge has the support of vapers and electronic cigarette companies right across Europe. A petition containing more that 71,000 signatures in support of the legal challenge was delivered to the UK Department of Health on Tuesday the 29th of September.
Fraser Cropper, the managing director of Totally Wicked, said: “1 October will be a truly historic day in the history of vaping. It will be a culmination of a battle that has lasted more than two years. A battle between those who recognise the public health potential vaping offers and therefore wish to see vaping flourish under a robust yet proportionate consumer regulatory regime, and those who either do not understand vaping or see it as a threat to established interests and therefore wish to see e-cigarettes subjected to a disproportionate and inappropriate regulatory regime.
"Article 20 of the TPD would result in electronic cigarettes being subjected to a stricter regulatory regime than some tobacco products. Not only is this Article therefore disproportionate, we believe it is also contrary to established EU law. It is therefore vitally important that the CJEU makes a ruling on the lawfulness of Article 20. For the sake of e-cigarette users and potential users, it is crucial that our industry is allowed to mature within a proportionate regulatory framework, which supports appropriate controls and safety requirements, and necessary social responsibility and continues to provide consumer choice to maximise the enormous potential of these products. Article 20 of this Directive patently will not deliver this environment.”
Susan Garrett, the partner leading the team at Addleshaw Goddard LLP mounting the challenge said: "Totally Wicked believes that the Tobacco Products Directive is a misconceived and disproportionate attempt to regulate electronic cigarettes. The decision last year to refer certain questions regarding the lawfulness of the provisions in the Directive relating to e-cigarettes was a key milestone for our client, given the impact it believes the Directive will have in stifling this emerging market. We are pleased to be supporting Totally Wicked in pursuing this landmark challenge to the lawfulness of the Directive, and are delighted that our client has the opportunity to argue its case in Luxembourg during the preliminary reference hearing on 1 October."
Why there should be no harmonized excise duties on nicotine-free e-cigarettes in the EU
Since 2016, the European Commission has been working on a revision to the Tobacco Excise Directive, the ‘TED’, the legal framework ensuring excise duties are applied in the same way, and to the same products, throughout the Single Market, writes Donato Raponi, honorary professor of European Tax Law, former head of excise duties unit, consultant in tax law.
Member states, through the Council of the EU, recently asked for a range of new products to be contained within the TED. It includes e-cigarettes which contain no tobacco but do contain nicotine. However, there are also e-cigarettes with no nicotine in them and their fate is unclear.
But why should a directive that has, until now, been only for tobacco be extended to include products which contain neither tobacco nor nicotine? Isn’t this a step too far?
The EU's constitution, enshrined in the Treaties of the European Union, is very clear that before proposing any legislative initiative, some key questions must be addressed.
The EU rules1 explain very clearly that products should be included in the TED only to ensure the proper functioning of the internal market and to avoid distortions of competition.
It is by no means clear that a harmonized excise treatment of nicotine-free products, such as nicotine-free e-liquids, across Europe will help to alleviate any such distortions.
There is very limited evidence on the extent to which consumers view e-liquids without nicotine as a viable substitute for e-liquids with nicotine in them. The European Commission’s recently published Eurobarometer study on the attitudes of Europeans towards tobacco and electronic cigarettes has nothing to say on this question. And the evidence from the available market research experts is limited at best.
It is, consequently, virtually impossible to know how many consumers – if, indeed, any at all – would switch to e-liquids without nicotine if only nicotine containing e-liquids were subject to an EU level excise duty.
What we do know, however, is that almost everybody who consumes tobacco products already covered by the TED does not view nicotine-free e-cigarettes as viable substitutes for them. And that is why most cigarette smokers who switch to alternative products look for other products containing nicotine.
There may be parallels between this and the excise treatment of alcohol-free beer, the latter not being, covered by the EU Alcohol Directive. Although it is designed to be an alternative product, this does not mean that alcohol-free beer is viewed as a strong substitute by most of the people who drink alcoholic beer. Member states have not applied a harmonised excise on alcohol-free beer and so far, the effective functioning of the Single Market has not been damaged.
Even if the absence of a harmonized excise on nicotine-free e-cigarettes were to distort competition, it must be material enough to justify any EU level intervention. Case law from the CJEU confirms how distortions of competition must be ‘appreciable’ to justify any changes to EU legislation.
Simply put, if there is only limited impact, there is no rationale for EU intervention.
The market for e-cigarettes without nicotine is currently very small. Euromonitor data shows that nicotine-free e-liquids for open systems represented only 0.15% of all EU tobacco and nicotine product sales in 2019. Eurobarometer reveals that while nearly half of Europe’s e-cigarette consumers use e-cigarettes with nicotine every day, only 10% of them use e-cigarettes without nicotine daily.
With no clear evidence of any material competition between nicotine-free e-cigarettes and the products already covered in the TED, together with the low sales of nicotine-free products, the test of there being an ‘appreciable’ distortion of competition is not – at least at the moment – obviously being met.
Even if there is no case for new EU-level legislative measures for nicotine free e-cigarettes, this does not stop individual member states from levying a national excise on such products. This has already been the practice across member states so far.
Germany does not, for instance, need an EU Directive to levy its domestic excise on coffee, while France, Hungary, Ireland and Portugal levy a tax on sugary drinks without any EU Soda Excise Directive in place.
The case of non-nicotine e-liquids is no different.
There is nothing to stop any member state from taxing non-nicotine e-liquids at its own pace without the unnecessary intervention of the EU.
1 Article 113 of the Treaty on the Functioning of the European Union
Tobacco Excise Directive consultation: 83% of submissions warning about higher taxes on vaping
The World Vapers’ Alliance strongly urges policymakers to stay away from equating smoking tobacco and vaping, especially when it comes to taxation. This comes off the heels of a recently ended consultation on the update of the Tobacco Excise Directive, which specified the European Commission’s intention to tax vaping products similarly to how cigarettes are taxed.
Commenting on the consultation, WVA Director Michael Landl said: “Making vaping less appealing to smokers by higher prices will discourage current smokers from switching to less harmful alternatives. This is certainly not going to be of any public health benefit. Additionally, high taxes on vaping products are particularly harmful to the lower income brackets of the population, which make up the largest proportion of current smokers.”
The consultation ended on 5 January and out of 134 responses from citizens, associations and industry, 113, or 84% referenced the positive impacts of vaping and the serious negative impact that taxing it the same as cigarettes would have.
Michael Landl added: “I am delighted by the overwhelming number of responses in favour of vaping to this consultation. It shows that many people know the potential for harm reduction of vaping. . What policymakers need now to understand is that tax hikes on vaping will lead to people switching back to smoking, an outcome absolutely nobody wishes for.”
Therefore, for the WVA it is important that non-combustible products are not regulated and taxed the same way combustible tobacco is. Lawmakers need to follow the scientific evidence and abstain from tighter regulation and higher taxation of vaping products.
“If we want to reduce smoking induced burdens on public health, access and affordability to vaping products need to be guaranteed,” Landl concluded.
Europe’s Beating Cancer Plan: Time to back vaping and beat cancer
Europe’s Beating Cancer Plan needs bold action on tobacco, and MEPs must Back Vaping to Beat Cancer, according to the World Vapers’ Alliance. The Special Committee on Beating Cancer (BECA) today identified that ‘tobacco use, in particular cigarette smoking is the main risk factor for cancer death in Europe’.
Commenting on the new document, World Vapers’ Alliance (WVA) Director Michael Landl said: “To succeed in its mission, the BECA committee and the European Parliament must be brave enough to endorse new approaches. Vapers across Europe are calling on policymakers to recognise the benefits of vaping, and its potential to massively reduce the harm of smoking. Policymakers cannot ignore the facts any longer.
"We appreciate the commitment from MEP Mrs. Véronique Trillet-Lenoir and the entire Special Committee on Beating Cancer to fight smoking-related cancer. The Europe Beating Cancer Plan needs to endorse vaping as an effective tool to help smokers move to a safer alternative. That’ Back vaping, beat cancer!”
The new working document presented in today’s Special Committee on Beating Cancer (BECA) by the Committee's rapporteur MEP Véronique Trillet-Lenoir states that: “Tobacco use, in particular cigarette smoking, is the main risk factor for cancer death in Europe. Various measures to fight against smoking appear heterogeneous and inconsistently implemented. Overall, the WHO Europe region is the global area with the highest tobacco consumption, with major discrepancies between Member States, as the proportion of smokers varies by a factor of up to 5 from one country to another.”
The European Parliament’s Special Committee on Beating Cancer (BECA) met for the second time today for an exchange of views with Health Commissioner Stella Kyriakides.
As part of the Committee’s work, a draft WORKING DOCUMENT on Inputs of the Special Committee on Beating Cancer (BECA) to influence the future Europe’s Beating Cancer Plan was released by the Committee and its rapporteur Veronique Trillet-Lenoir. It identifies that tobacco is the main risk factor for cancer death in Europe. You can find the document here.
The World Vapers’ Alliance (WVA) amplifies the voice of vapers around the world and empowers them to make a difference for their communities. Our members are vapers associations as well as individual vapers from all over the world. More information available here.
Michael Landl is the director of the World Vapers’ Alliance. He is from Austria and based in Vienna. He is an experienced policy professional and passionate vaper. He studied at the University of St. Gallen and worked for several public policy outlets and as well in the German Parliament.
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