E-cigarettes not the same as cigarettes - Commission decides against harmonisation of duties for e-cigarettes

Consumption of e-cigarettes is on the rise with consumers using them as they consider them a ‘healthier’ alternative to traditional cigarettes or a way to cut down on smoking.(see a surveyconducted by Ernst and Young) Therefore, regulating e-cigarettes and their relationship with traditional tobacco products can be highly controversial. 

Traditional tobacco companies who have seen their sales fall argue that e-cigarettes are not adequately regulated. In a recent interview, Commissioner for Health and Safety Andriukaitis said that tobacco industry is feeling the pressure from EU regulation and expressed concern that EU citizens seem to consider e-cigarettes harmless. 

The latest development in the field is the publication by the European Commission of a Report on Directive 2011/64/EU (hereafter ‘the Directive’). Directive 2011/64/EU is the main regulatory instrument for excise duties for tobacco products. Tobacco products are broadly places in two categories: 1) cigarettes and 2) other tobacco products.

The current report is part of the evaluation every 4 years mandated by art.19 of Directive 2011/64/EU. The Commission considered a revision of the Directive and decided against it and the newly published report sets out the reasons for that. One of the topics considered for review was the harmonisation of excise duties for e-cigarettes. It should be noted that e-cigarettes are currently not covered by the Directive. 

The Commission is taking a cautious approach and underlined the need for further evidence to be made available before a decision to include e-cigarettes in the scope of Directive 2011/64/EU can be made. E-cigarettes may not fall under the Directive, but this does not mean they are not regulated on an EU level, as they are regulated by Directive 2014/40/EU (the Tobacco Products Directive), and according to the report the relationship between the Tobacco Products Directive and Directive 2011/64/EU has not been made clear. 

A similar approach is taken in relation to heat-not-burn tobacco products, which are a novel type of tobacco product, not yet available in all Member States. The Commission argues there is not enough data to decide on potential harmonisation of the tax regime. 

Is this decision to be interpreted as the Commission going easy on novel tobacco products, choosing not to regulate them so strictly? It is still too soon to tell, as this story is far from over. The Directive will undergo a REFIT evaluation in 2019, where the topic of regulating e-cigarettes will be once again on the table. So it seems like the Commission does not want to make big changes in light of the REFIT evaluation and would rather wait for its outcome.

Press digest

Mobile banking

The Financial Times Adviser discusses the ongoing plans to regulate on the European level mobile banking (Getting mobile banking working). Currently, the revision of the Payment Services Directive and of the Regulation on Multilateral Interchange Fees is being negotiated among the European institutions. 

On review of the mobile banking industry in the UK conducted by the Financial Conduct Authority see: Mobile Banking and Payments - FCA Industry Review. Important: no evidence of consumer harm was found in the mobile banking and payments area.

Tobacco Products Directive

Another company - Philip Morris International - was granted a right by the English courts to apply for a preliminary ruling in front of the Court of Justice with regards to the interpretation of the Tobacco Products Directive. This time it is the competence of the EU to regulate in this area that is being questioned: the argument is that the Directive does not aim to improve the internal market (e.g. it prohibits menthol even though it's legal in all Member States); that the Directive infringes consumers fundamental rights to information about the products they are choosing (through forcing companies to adopt plain packaging); as well as whether the delegation of power to the Commission to specify certain issue was validly defined (Philip Morris International Granted Right to Challenge EU's Tobacco Products Directive Before the Court of Justicce of the European Union).

Mortgage Credit Directive

Telegraph reports on the uncertainties related to the implementation of the new Mortgage Credit Directive in the UK - who exactly may be seen as consumer and fall under the Directive's scope? "Accidental landlords" - that is persons who became landlords "as a result of circumstance rather than through their own active business decision" will be seen as consumers. Who is that exactly? And what rules shall apply to buy-to-let mortgages? (Would this buy-to-let couple be caught out by new EU rules?)

Privacy online

If you are interested to see which applications and which online tools have what sort of privacy protection, check this data on the Secure Messaging Scorecard (A project of the Electronic Frontier Foundation).

US consumer news (just for fun)

Verizon fights against the Federal Communications Commission plan to introduce net neutrality, threatening to take them to court: Verizon: We Will Sue FCC Again If "Hybrid" Net Neutrality Happens.

Berkeley, California becomes the first American city to introduce a tax on sugary drinks: California City Votes In The Nation's First Soda Tax

Apple is being sued for an equivalent of wiretapping due to users who switched from an iPhone to an Android phone not receiving their iMessages (More Former iPhone Users Suing Apple, Claiming iMessage "Intercepts" Texts Meant for Android Phones).

Federal Trade Commission sues Gerber Products Co. for falsely advertising that its Good Start Gentle formula prevents or reduces the risk of children developing allergies (FTC Sues Gerber For False Advertising Over Claims Its Formula Can Prevent Allergies).

Press digest

Telecommunication

The European Commission announces not to further regulate fixed telephone lines, since the market moved towards mobile and online telecommunication. (Europe says goodbye to fixed line regulation, hello to mobile era)

Tobacco Products Directive

UK e-cigarette manufacturer, Totally Wicked, challenges the validity of art. 20 of the Tobacco Products Directive at the CJEU, claiming that e-cigarettes should not be regulated as "tobacco related products" if they don't contain tobacco. (E-cig manufacturer wins right to challenge Brussels in EU courts; Totally Wicked vs. the EU's tobacco directive; First e-cig TV adverts from next month)

EU Data Protection and ePrivacy rules

Worries are being expressed about strengthening existing data protection rules even when businesses do not seem to be able to hold to currently existing ones (EU set to strengthen data protection laws). Data Protection Authorities across the EU are currently stepping up enforcement of the compliance with the existing EU data protection rules, by conducting a widespread cookie sweep (Are you ready? The EU "Cookie Sweep" is upon us). Other sources report widespread non-compliance of cloud-based storage service providers with the existing EU data protection rules (Most cloud apps flout EU data protection rules - study).

Tourism sector

TUI Travel argues in the UK for more support to be given to the reform of the Package Travel Directive and the Regulation No 261/2004 on air passenger rights. (TUI Travel calls on UK government to support the travel and tourism sector at home and abroad)

Competition

European booksellers plead with the European Commission and BEUC to set up investigation into the monopoly position of Amazon in the online book market, which harms European consumers by depriving them of a rich and diversified online book offering. (Booksellers raise Amazon monopoly concerns with European Commission)

Health claims

The new rules on food labelling (EU Regulation 1169/2011 on food information to consumers) are to enter into force as of December 2014 (nutrition information as of December 2016). Especially the sport nutrition sector may have to invest time and money to adjust the labels of their products to the new rules. While this regulation forces producers to be very specific in listing ingredients of their products, it may be even more difficult for the producers to justify placement of easy claims on how certain products may boost energy etc. (which are also regulated by Regulation 1924/2006). (Claim, set and match)

Consumer behaviour

Two new survey results have been published showing us growing trends of consumer online shopping habits. (UK leads European online shopping; Northern European web shoppers spent €1,780 each in 2013) In the meantime, Facebook sets up a new division - Facebook IQ - to try to understand consumer behaviour better... (Facebook forms new unit to study consumer behaviour).

Tobacco Products Directive - not just a smoke screen

I know everyone is fixated now on the success of the proposal for the Common European Sales Law in the European Parliament's first vote, but it should not escape our attention that yesterday the European Parliament also voted on the Tobacco Products Directive (finally!). While the proposal for the CESL regulation will now have to be negotiated through the Council, the Tobacco Products Directive has been adopted yesterday after a long and controversial (see our previous posts, e.g. On lobbying in Brussels) legislative process and we expect the new Directive to enter into force in May 2014 (with the transposition period for the Member States of 2 years and some longer phase-out periods provided for). As we have previously written (One last menthol cigarette?) the new law focuses on improving awareness among smokers of the detriments it brings to their health, decreasing its attractiveness. 

The future packaging of cigarettes will need to be covered with more of both textual and visual health warnings (65% on top and back thereof - placed on the top edge, and 50% on the sides) (New rules for tobacco products), which should increase visibility of this information. With that in mind it has also been determined that a cigarette pack would need to have a cuboid shape and contain minimum 20 cigarettes - the bigger the package, the bigger the warning on it. This means that, e.g., the slim cigarette packs that often appeal to women will be prohibited. Tobacco producers will be prohibited from encouraging their clients to use cigarettes by placing misleading elements on the packs - e.g. references to lifestyle benefits, taste, absence of additives, special offers etc. Similar rules will apply to roll-your-own tobacco products. Some more discretion was given to the Member States as to how to regulate smokeless products, pipe tobacco and cigars. Member States are also allowed to strengthen the protection of the citizens by e.g. allowing plain packaging if it would be justified by public health grounds and would not create hidden barriers to cross-border trade. Quite a revolution for some of the smokers out there would be that menthol cigarettes would be banned after a phase-out period of four years. In general, any flavourings that would disguise the taste of tobacco will be prohibited, however, the additives necessary for the manufacture of tobacco products remain valid to be used. 

The new Directive will also start regulating e-cigarettes which is a new product that slowly starts gaining in popularity on the market. The Directive sets a maximum nicotine concentration level for e-cigarettes and a maximum volume for cartridges (which should be child-proof) as well as also regulates the duties to inform consumers by placing health warnings on the packs together with instructions for use etc.

Combating illicit tobacco trade

The European Council's meetings take place this week and the Council published yesterday its conclusions among others with regards to stepping up the fight against illicit trade in tobacco products (Economic and Financial Affairs). Since the business of smuggling cigarettes into the EU seems to be growing, the Council deems it necessary that stricter rules are applied to prevent it. The negative financial impact of illicit trade in tobacco products is estimated at over 10 billion euro on the budget of the EU and the Member States. More importantly for consumer protection, such practices have a negative impact on health protection, especially of young people. The Council points out to the Member States and the Commission areas in which some improvements could be made to more effectively combat illicit trade, e.g., easier and faster detection of smuggled tobacco products, cooperation with source and transit countries, awareness raising campaigns (Cigarette smuggling threatens financial, social and health security of the EU and must be tackled effectively).

One last menthol cigarette?

This Tuesday, as re-scheduled (see our earlier post On lobbying in Brussels), a vote took place in the European Parliament on the proposal for a new tobacco products restrictions. The draft law suggests, for example, that the health warning on packaging should cover 65% of its surface (instead of current 30/40%). Additionally, flavoured cigarettes are to be banned and e-cigarettes are to be regulated (in the same way as tobacco products with regards to advertising and they could be sold only to consumers over 18 years old). (Tobacco: larger warnings, flavours banned, e-cigarettes regulated) Small cigarette packs (less than 20 cigarettes) would be banned. The idea behind these new revisions is that they would help prevent young people from taking up smoking by making it less attractive and less accessible. As we mentioned in our previous posts it remains to be seen whether these new rules will manage to be agreed on by all the European institutions prior to their term's ending.

On lobbying in Brussels

It is not a secret that international companies lobby heavily the European institutions in Brussels. However, the scale of that lobbying may astound even the most cynical of our readers. The Guardian reported last week on documents leaked to The Observer from the international tobacco giant - Philip Morris, which reveal what measures it undertook to prevent new EU regulations regarding health warning labels on cigarettes' packaging from becoming reality ("Tobacco giant Philip Morris 'spent millions in bid to delay EU legislation'"). We have previously reported on the proposal to change existing labelling rules in order to make cigarettes even less attractive to European consumers (Plain packaging of tobacco products; Smoke-free EU; Smokers beware). This week the European Parliament was supposed to vote on the new law that would review the existing 2001 Tobacco Products Directive (in our previous posts we've discussed the proposed changes), however, the vote has been postponed until 8 October. You could think that a month should not make a difference, however, if the revisions of the Directive are not adopted by January 2014 they may not be adopted at all, since in January the presidency of the European Union goes from Lithuania (pro-regulation of stricter tobacco products measures) to Greece (against-regulation). This delay in the legislation process is definitely a win for the lobby sector in Brussels, and no wonder since according to the Guardian just Philip Morris International (PMI) employed 161 people (!) to oppose the proposed changes. The employees of the PMI met at least once with 233 MEPs (31% of the total) and spent almost 1.25 million GBP in a year for these meetings. I was less surprised to find out that PMI commissioned academic and economic studies to promote its claims and give negative opinion to European studies. Knowing what a hard battle is being fought behind the scene, I am even more interested in following the fate of the proposed review.

Plain packaging of tobacco products

Yesterday the Irish government has approved the drafting of legislation for generic packaging for tobacco, which means that Ireland will be the second country in the world, after Australia, to remove branding from tobacco product packaging. (Ireland's move to implement tobacco plain packaging must resonate in Brussels) 

The European Public Health Alliance (EPHA) just published a new Position Paper on Revision of the Tobacco Products Directive. (see our earlier posts: Smokers beware and Smoke-free EU?) EPHA claims that tobacco packaging is the main link between consumers and manufacturers and recommends to the Commission the adoption of an EU rule on mandatory plain packaging combined with health warnings (text and picture) that should cover 80% of both front and back of tobacco packages. It supports Commission's plans to regulate other nicotine containing products, like e-cigarettes, and argues for the prohibition of online sale of tobacco products as well as the use of all additives, including flavourings.

Smoke-free EU?

Last week the Members of the European Parliament's Environment, Public Health and Food Safety Committee discussed a possibility to change the EU rules on labelling and advertising tobacco products as well as a possibility to ban or strictly regulate tobacco additives. Some MEPs brought up arguments that certain tobacco additives may be highly toxic, others argued for elimination of such additives that make tobacco products more attractive to young people (e.g., adding flavours, like vanilla), and therefore make it more likely that young people would start smoking tobacco. EP rapporteur Linda McAvan from the UK is preparing a report that would be voted on in July. (MEPs debate proposals to make smoking to tobacco less attractive) As a result thereof the 2001 Tobacco Products Directive is likely to change. 

This week in Dublin the Ministers are discussing the European Commission's report on the implementation of the Council Recommendation of 2009 to introduce smoke-free environments. (EU Health Ministers to tackle childhood obesity and smoke-free environments) The report points out that in 2002 among people who died in the EU due to exposure to tobacco smoke at home and at their workplace there were at least 19000 non-smokers. As a result of these data the subsequent changes in EU policy, incl the recommendation of 2009, aimed at protecting EU citizens from exposure to smoke in indoor workplaces, indoor public places, public transport and other public places. Member States were encouraged by the Recommendation to introduce smoke-free environments by November 2012 (in a non-binding way). The overview on smoke-free legislation in the Member States that has been introduced in the past few years, mainly, may be found in this table:

The overview of how exposure to smoke has changed:

Smokers beware

On the 19th of December the European Commission adopted also its proposal of the Tobacco Products Directive's amendment. The rules on tobacco products' manufacturing, presentation and trade will be strengthened. Among other, it would prohibit the use of cigarettes, roll-you-own tobacco and smokeless tobacco products with characterising flavours. Additionally, it makes it mandatory to use large pictorial health warnings on cigarettes and RYO and regulates cross-border online sales. It would also begin to regulate products like e-cigarettes and herbal products for smoking. The ban on snus (oral tobacco) will be maintained. Chewing and nasal tobacco would be covered by specific labelling and ingredient regulations. More on the revision project may be found here.