Price floor on tobacco infringes EU law
The European Court of Justice (ECJ) has ruled that the national legislation in certain Member States that allows the fixing of a price floor for tobacco products is contrary to the Directives of free competition.
The ruling follows the action bought against France, Austria, and Ireland by the European Commission before of the ECJ, regarding the national legislation of those member states with regards to the retailing of tobacco products.
According to the Commission, the legislation of those three Member States, which imposes minimum prices corresponding to a certain percentage of the average prices of the manufactured tobacco concerned (95 % in the case of France, 92.75 % for cigarettes and 90 % for fine-cut tobacco in the case of Austria and 97 % in the case of Ireland) undermines the freedom of manufacturers and importers to determine the maximum retail selling prices of their products and, correspondingly, free competition.
The ECJ closed by stating that the prohibition on fixing minimum prices does not prevent Member States from prohibiting the sale of manufactured tobacco at a loss, so long as the freedom of manufacturers or importers to determine the maximum retail selling prices for their products is not undermined. Those economic actors will not be able, in that case, to absorb the impact of the taxes on those prices by selling their products at a price below the sum of the cost price and all taxes.
The European Court of Justice - Justice and Application - Full text