The recent decision of the European Court of Justice in the Swedish alcohol case has been reported in the press as a victory for freedom to advertise that is likely to bring about a single advertising market within the EU. Whilst a significant legal step forward, claims made for the practical importance of the case need to be examined critically.
It will be recalled that as a result of previous EU case law, so long as a ban on advertising does not actually discriminate against imports, it does not fall within the prohibition against measures having an equivalent effect to barriers to the free movement of trade and services. This case law has had a significant negative effect upon advertisers who need to get their message across in member states where advertising for the products in question is prohibited. The ban on direct marketing of CDs in Germany is a frequently cited example.
In the Swedish alcohol case, the European Court of Justice would appear to have at least reduced this barrier. Without any significant market analysis, it stated that the ban on alcohol advertising has greater impact in practice on imports than on domestic products. It amounts therefore not just to a ban on a form of selling, but a ban on movement of goods altogether. The Court was not impressed with evidence that whisky imports had been increasing. Instead, it asserted (again, without any evidence) that had advertising not been banned, whisky sales would have been greater still!
Thus far, so good for advertisers and exporters. However, there are particular features of the Swedish market (which might not be present elsewhere) that need to be taken into account. In Sweden, there is a State monopoly on alcohol retailing and the Court noted that although point of sale advertising was possible, only the national retailers’ magazine was actually sold in the shops (the implication being that these magazines would only contain adverts of their own Swedish products).
However, bringing non-discriminatory measures within the scope of the protections afforded by the Treaty is not the end of the story. To strike down non-discriminatory bans on advertising, it is necessary to establish that the ban is proportionate, ie. matches the public policy objective that it is designed to achieve. The Court gave a steer as to its view when it stated that alcohol abuse in Sweden was already addressed by the fact that there is a State monopoly and that there is a ban on selling to young people under the age of 20. Unfortunately, the Court was forced to concede that “there was no evidence before it to suggest that the public health grounds on which the Swedish authorities rely have been used in such a way as to discriminate against goods originating in other member states, or to protect national products indirectly.” This is a key finding because under the Treaty, the issue of whether a restriction is proportionate is for a member state authority to determine in the light of its own evaluation of the facts.
It follows that as a result of this judgment, the case will now be remitted to the national authorities, who may well decide on the basis of the passage quoted above that the ban is proportionate and that it meets a public health objective. If this is so, progress made in the Swedish case, and other similar challenges that are in the pipeline (eg. against the French Loi Evin), are likely to be of academic legal interest only.