Minimum Alcohol Pricing in Scotch Whisky Association v Lord Advocate

Published date01 January 2015
Date01 January 2015
Pages106-112
AuthorAngus MacCulloch
DOI10.3366/elr.2015.0253

The Alcohol (Minimum Pricing) (Scotland) Act 2012 empowers the Scottish Ministers, by order, to set a minimum price per unit of alcohol (“MPU”). A draft order setting the MPU at £0.501

The Alcohol (Minimum Price per Unit) (Scotland) Order 2013. The minimum price for a product would be set using the formula: MPU × strength × volume in litres × 100. For a bottle of red wine with 13% alcohol by volume the minimum price would be £4.88 [£0.50 × 13 × 0.75 × 100]. For a typical bottle of Scotch whisky the price would be £14.00 [£0.50 × 40 × 0.70 × 100].

was immediately challenged by the Scotch Whisky Association2

Scotch Whisky Association v Lord Advocate [2013] CSOH 70, 2013 SLT 776 (henceforth “SWA”). A reclaiming motion is before the Inner House and a number of questions are to be referred to the CJEU, see Scotch Whisky Association v Lord Advocate [2014] CSIH 38.

on the basis that it would be contrary to EU law as a restriction on the free movement of goods. The Scottish Government justified the measure as being designed to protect public health. In this note I will highlight some of the key free movement issues raised by the case THE JUDGMENT OF THE OUTER HOUSE

The judgment focuses on whether the MPU can be justified. It spends no time discussing how the MPU order falls within the terms of the prohibition of quantitative restrictions on trade in article 34 of the Treaty on the Functioning of the European Union (“TFEU”). Both parties agreed that the MPU order was a measure “having equivalent effect” to a quantitative restriction.3

SWA para 28.

This followed an EU Commission opinion on the compatibility of the draft order with EU law after its notification under the Technical Standards Directive.4

Council Directive 98/34/EC OJ 1998 L204/37, laying down a procedure for the provision of information in the field of technical standards and regulations.

The Commission notes that the Court of Justice of the EU (“CJEU”) has ruled that measures which fix retail prices fall within the prohibition of quantitative restrictions on imports if they are set at such a level that imported products are placed at a disadvantage when compared to identical domestic products.5

Case 82/77 Van Tiggele [1978] ECR 25.

The Commission argues that minimum prices do not take into account the costs of production and, therefore, disadvantage imported products that have lower production costs than their domestic rivals.6

See AG Kokott in Cases C-197, 198 & 221/08 Commission v France & Others [2010] ECR I-1599.

The Commission also argues the measure would have greater impact on new entrants to the market, echoing the court's position in Gourmet International. 7

Case C-405/98 Konsumentombudsmannen v Gourmet International Products AB [2001] ECR I-1795.

In the case of MPU the argument would be that novel products from other member states would be unable to use pricing promotions, below the MPU, to break into the UK market

As these issues were not contested, the legal assertions made by the Commission in its opinion were not scrutinised. However, the opinion is less than convincing. It was not formally published or subject to any transparent debate or challenge, and yet it appears to have been decisive. If the Commission wishes to play a role in developing public policy it should surely do so in a much more transparent and accountable fashion.

The Scottish Government sought to justify the MPU order as reducing the harm to public health and public disorder caused by problematic alcohol consumption.8

SWA para 35.

The measure was designed to target harmful and hazardous drinkers and reduce their consumption. It argued that the Scottish Parliament had considered alternative measures but had concluded that “none of the alternatives suggested would be suitable and appropriate, or as effective, in achieving the aims”.9

Para 38.

The central issue was, therefore, the proportionality of the measure chosen – was there a measure less restrictive of trade which could also protect health and prevent disorder
PROPORTIONALITY

The petitioners argued that less restrictive measures were possible. Their main suggestion was a “combination of increases in excise duty and bans on below duty plus vat sales, or below cost plus vat sales”.10

Para 33.

They also argued it would be wrong to allow the Scottish Parliament any “margin of appreciation” in relation to the measure.11

Para 34.

The approach of Lord Doherty in the...

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