The EU Commission filed a lawsuit against Denmark last year after the Danish government ignored numerous warnings to stop the sale of snus, an oral tobacco product that is banned in the EU under the Tobacco Products Directive.
On Thursday, the Court of Justice of the European Union ruled that Denmark failed to live up to its obligations by allowing the sale of loose snus.
The EU told Denmark in October 2012 that legal action would be pursued if the illegal sale of snus was not halted.
The Danish government tried in March 2013 to forbid the sale of loose snus, but the proposal failed to receive the necessary backing to pass in parliament. In April of this year, parliament finally passed a law banning the sale and obligating Denmark to live up to the EU's tobacco rules. The ban is to take effect at the outset of 2016, but Denmark's feet-dragging on the issue still caused it lose its case in the EU court system.
In July, the EU Commission made good on its threats to take Denmark to court over the issue and in November, European authorities formally served the Foreign Ministry with a lawsuit.
Under EU rules, only Sweden is granted permission to sell snus, due to that country's status as a snus producer. Denmark has been selling the loose form of snus in violation of EU regulations, but the sale of the more common packaged snus is banned in the country under the Tobacco Products Directive.