Ireland is one of six European governments facing legal action from the European Commission because it has set minimum prices on cigarettes.
Earlier today the Commission said it was taking legal action against Ireland, Greece, France, Belgium, Italy and Austria.
Public authorities setting the minimum price on cigarettes distorted competition and impaired the right of the manufacturer or importer of cigarettes in the 25-nation EU to determine the selling price, the European Commission said.
"Introducing minimum retail prices for cigarettes is against community law and mainly benefits manufacturers who are able to protect their profit margins," Tax Commissioner Laszlo Kovacs said in a statement.
The Commission said if governments wanted to discourage smoking through high cigarette prices, they should raise excise taxes.
"I strongly support member states in their efforts to implement new health policy. However, this must respect community law," Mr Kovacs said.