Dec. 12 (Bloomberg) -- The European Union's highest court upheld a law that bans most forms of tobacco advertising, rejecting arguments by Germany that the legislation is illegal.

Germany, Europe's biggest tobacco market, challenged the law in 2003, arguing that tobacco advertising in local newspapers shouldn't be subject to bloc-wide legislation because it doesn't affect trade between nations in the 25-member EU.

``The prohibitions of advertising and sponsorship meet the conditions for them to be adopted for the purpose of the establishment and functioning of the internal market,'' the European Court of Justice in Luxembourg said in a statement today.

EU countries were required to adopt the legislation by July 3, 2005, which Germany refused to do. While the rules allow billboards and cinema advertising, all other cigarette ads aimed at an international audience are banned, including sports sponsorships such as Formula One racing.

Germany and tobacco companies, including Imperial Tobacco Group Plc, successfully opposed the EU's first attempt in 1998 to outlaw tobacco advertising. The EU court in October 2000 annulled the regulation, saying that ads without a cross-border element, such as billboard ads, couldn't be banned throughout Europe.

The EU introduced a more limited version of the law in May 2003, banning some types of tobacco marketing and print ads. Four months later Germany sued again.

The case is C-380/03 Germany v. Parliament and Council.

To contact the reporter on this story: Matthew Newman in Brussels at Mnewman6@bloomberg.net; Stephanie Bodoni in London at sbodoni@bloomberg.net

Last Updated: December 12, 2006 03:50 EST