A British company has begun a legal challenge to planned EU controls over e cigarette production, sales and marketing.

Totally Wicked, which employs 150 people in Blackburn, Lancashire, says rules due to come into force in May 2016 are disproportionate and deprive consumers of an alternative source of recreational nicotine. The company, which also operates in the US and Germany, argues that limits on the use of nicotine that can be used in e cigarettes will also mean they can only offer a muted choice to users of more dangerous and toxic tobacco.

Although a hearing is unlikely to take place before autumn next year, Totally Wicked has said it will be the first company to fight the directive in the European court of justice in Luxembourg. The challenge will be closely monitored by other companies in the industry.

The firm claims the burdens of the rules could destroy or seriously damage legitimate manufacturers and retailers, and warns of a hidden or parallel trade in products made either illegally within the EU or outside.

A four minute hearing at the Royal Courts of Justice in London on Monday cleared the way for the action. The health secretary, Jeremy Hunt, made no objection to the case going ahead, although his department has insisted the new rules are lawful.

The EU legislation, if enacted, would torpedo sports sponsorship by e cigarette makers who have become a valuable source of finance for football, rugby and motor sport, among other events.

An estimated 2.1 million Britons use e cigarettes, whose benefits are disputed by health campaigners. While some want further controls, such as over their use in public places, others believe they may prove a healthier alternative than tobacco.

Action on Smoking and Health, for instance, says a third of vapers so called because they exhale vapour, not smoke are ex smokers, while two thirds use tobacco and e cigarettes. The use of e cigarettes among those who never smoked is said to be negligible.

Some manufacturers, including e cigarette makers that are part of big tobacco conglomerates, have applied for their products to be given medicinal licences as nicotine replacement therapies similar to gums, sprays and patches.

Fraser Cropper, managing director of Totally Wicked, told the Guardian We just want a competitive, level playing field that allows us to sell our products.

Rejecting any prospect of applying for a medicinal licence, an expensive process, he said We are not a nicotine replacement therapy. We do not have to provide a pharmaceutical response to those who want to give up smoking. We are trying to provide an alternative to those who want recreational nicotine.

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