The European Commission has stepped up its legal action against Ireland for fixing the retail prices of cigarettes.
The EU's executive arm said the practice of setting minimum and maximum prices broke EU law and distorted competition to the benefit of the manufacturers.
The Commission said if the legislation in the member states concerned is not brought into compliance it may refer the case to the Court of Justice of the European Communities.
Health protection objectives may be adequately attained by increasing excise duties, the Commission said.
EU Taxation Commissioner Laszlo Kovacs said he supports member states in their efforts to implement new health policy, but that community law must also be respected.
The EU's top court has already said that imposing a minimum price is incompatible with EU rules as it limits the freedom of producers and importers to determine their selling price, Kovacs added.
