Drink pricing is in a fix

Adam Withrington looks at how minimum pricing schemes may work as a solution to binge-drinking.

Fighting, the spilling of blood and no small amount of vomit are common sights on many a high street on a Saturday night.

One solution that has been put forward to combat this sort of antisocial behaviour is for licensing authorities to impose a minimum price on drinks in pubs and bars.

This would put an end to the kamikaze 50p-a-pint or "£3 for as much as you can drink in two hours" style of promotions.

By limiting these types of promotions, which have grown as a result of increased competition on the high street, the police believe they will rein in drunk and disorderly behaviour.

Middlesbrough Council first mooted the idea of a minimum pricing scheme in 2001 and now both Middlesbrough and Bournemouth Councils have confirmed they are urging local licensees to sign up to a voluntary price fixing scheme.

But will these schemes work? They certainly have the support of local authorities and many licensees. However, there are concerns among some in the trade about the true worth of such initiatives.

As far as the authorities are concerned, minimum pricing schemes are the best solution to tackle the problems of binge-drinking. Sergeant Paul Higgins, the chief licensing officer for Middlesbrough Council, said: "We have seen a 46 per cent rise in crime relating to licensed premises. Competition on the high street has got too strong so people are dropping their prices."

Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, also believes that such schemes are sensible. "It stops price wars on the high street which is good because they lead to a deterioration in standards," he said.

However, Mark Hastings, spokesman for the British Beer & Pub Association (BBPA), said: "We would urge licensees to follow the advice we have sent out to them encouraging responsible drinks promotion and identifying promotions that shouldn't be used, such as those that encourage drinking games, or giving free drinks to customers every time the England football team score a goal during live matches.

"The danger of the minimum pricing solution is that it allows the irresponsible operators to continue quite comfortably."

This debate might seem like a simple case of "for or against", but it turns into a legal minefield when you take a look at competition law and the role of the Office of Fair Trading (OFT).

If licensees get together and agree on a fixed minimum drinks policy then they have formed a cartel. That is in breach of the Competition Act and publicans will face prosecution.

However, the OFT has gone on record on thePublican.com and said that if a local authority imposes such an agreement on licensees and they then go along with it, then it is outside the jurisdiction of the act and not the OFT's responsibility.

Confused? It gets worse.

Local licensing authorities in England and Wales do not have the legal authority to impose a minimum pricing scheme. So any licensees who sign up to such a scheme, believing they have the permission of the council, run the risk of prosecution.

So while the OFT has said it won't prosecute those involved in council schemes, licensees are not on stable legal ground. When pressed on the matter, a spokeswoman for the OFT told The Publican: "It is something we are considering at the moment."

Far from taking a proactive stance on this issue, the OFT is doing nothing.

According to Lee Le Clerq, regional secretary of the BBPA in the North West, the local licensing authorities in Bolton were putting pressure on licensees to sign up to a fixed drinks price policy.

"The OFT wrote to me asking for advice on the matter," he said. "I said that the police do not have the authority to enforce such a scheme in Bolton. The OFT wrote back and said that while in such cases it would use discretion, 'an investigation is not high on our list of priorities'.

"Well, that is not comforting and is, frankly, not good enough. If it had made a clear statement on the matter, then fine. But the OFT simply said prosecution was not a high priority."

This issue needs to be cleared up for the sake of licensees, who deserve to know where the OFT will draw the line. In theory, there is nothing to stop the OFT turning round in 12 months time and declaring all price fixing agreements illegal. If this happens it is the licensee who would be prosecuted - not the local authority.

Yet it is the local authorities that are applying the pressure on licensees to join up to these schemes. Mr Le Clerq says that the police told licensees in Bolton they might get hassled if they did not agree to the fixed pricing scheme.

According to Mark Hastings: "We are encouraging the OFT to look at the issue more closely. We need further clarification from it regarding competition law."

That we do.

History of minimum pricing schemes and the Office of Fair Trading​

• August 2001:​ The Office of Fair Trading (OFT) rules in favour of allowing cut-price drinks promotions despite concerns that they encourage binge-drinking. The ruling follows a case in Middlesbrough in which licensees and police were told such a policy went against competition laws

July 2002:​ A new initiative by Perth and Kinross council to set minimum drinks prices for pubs in the area is referred to the Office of Fair Trading

Oct 2002:​ Licensees are warned they could be fined tens of thousands of pounds if they sign up to controversial minimum pricing schemes.

Nov 2002:​ Glasgow Council becomes the latest council to consider introducing a ban on price promotions

May 2003:​ Middlesbrough Council launches minimum pricing scheme

May 2003:​ Bournemouth considers introducing a minimum pricing scheme

June 2003:​ The OFT distances itself from minimum drinks pricing schemes imposed by local authorities.