Tuesday, 24 January 2012

Minimum Alcohol Pricing in Scotland 1: The Law

Scotland loves a drink. Too much. It seems well accepted that we need to do something about it, but what that thing is is a bit more controversial. The SNP are pushing ahead with a bill to have a minimum price per unit for alcoholic drinks. This would push up prices of currently cheap drinks like white cider and own brand vodka. In so doing, it would make a good underage house party far more expensive.
There are lots of good issues to discuss here. Minimum pricing in relation to tax; the role of education in improving our ‘drinking culture’; whether or not such a measure is progressive in how it affects people of different means; which economic actors benefit from the price rises; and whether other strategies, or even simply enforcing existing ones, would do the same job or a better one.
But I’m more concerned here with business and law. There are legal issues with the plan. Minimum pricing for alcohol could fall foul of European ‘free movement’ legislation. These rules, set out in the TFEU, are to protect the point of the EU. The EU cannot be a ‘common market’ if there are barriers to trade which prevent goods moving around that market freely; just as a garden cannot be a common garden if each of the garden’s users fence off their own portion. The argument, which may well be litigated, is that minimum pricing is one such barrier – it would make it harder for goods to cross borders.
It has been litigated before. In 1978, the top EU court (the ECJ) ruled that Dutch minimum pricing rules on gin (see para 18) amounted to a measure that could “likely to hinder, directly or indirectly, actually or potentially , imports between Member States.” Note that a measure would fall foul if it potentially caused indirect hindrance; the boundary is set low. And if anything, the hurdle has fallen lower over the last 30 or so years, with Keck opening up a whole new realm of possible arguments to disgruntled companies. Forbidding sales of pharmaceutical goods in Germany over the internet was, in Doc Morris, held to fall foul of free movement laws because it would ‘in fact’ hurt the business of a non-German company more than a German one.
The Dutch Gin case is not a beautifully reasoned judgment (when is an EU case?). But the fact is that minimum pricing might affect external companies more. Extrapolating as well from GIP, having a minimum retail price for alcohol makes it harder for, say, French companies to sell their booze in Scotland because there is a floor price under which they cannot compete. Given how tough it is to break drinks into new markets, removing one arena for competition is likely going to constitute a measure that restricts trade.
Now, it is possible to justify restrictions such as these on other grounds. One way, which is central in much EU case law, and would be interesting here, is whether the measure is necessary to protect the health of humans. Maybe the restriction of trade is justifiable, given the number of Scots keeling over with rotten livers.  Of course, that is arguable. But we should note that the ECJ has been wary of such arguments in the past, even in more emotive and morally charged cases like (the beautifully named) Humanplasma case. Further, as Stephen Weatherill was always at pains to point out, consistency is key. It’s no use to say minimum pricing saves lives when we struggle to keep Buckfast out of the hands of underage drinkers. And given the SNP Bill has only minimum pricing in it, they are left unable to argue that they are mounting some broadside attack on the Scottish drinking culture. I am left, therefore, agreeing with Anne Milton, in thinking that minimum pricing is, probably, illegal.
Of course, there are specific directives on alcohol duties, but Free Movement is more interesting, and is applicable.

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