Is minimum pricing back?
Current pressures on the Government suggest it is seriously considering minimum pricing again.
What's the background?
Minimum pricing, where retailers don't sell drinks for lower than a set price, has divided the trade for years. Advocates say it's a sensible way to stop irresponsible sales, while quietly helping pubs' bottom line. Critics say it amounts to price fixing and breaks competition law.
A number of schemes involving pubs and clubs have cropped up over the past few years, often under pressure from police or local authorities. Several have folded due to some venues refusing to take part, or fears over price fixing. This intensified after two legal cases: the Scottish Court of Sessions ruling that Aberdeen's minimum pricing scheme was illegal in 2004, and the Office of Fair Trading coming to a similar conclusion about Nottingham's scheme in 2005.
The past couple of years has seen the focus swing to the off-trade, as Government feels the pressure to act against ludicrously cheap deals in supermarkets. Last year the Government commissioned the University of Sheffield to probe the link between alcohol price, promotion and harm. Health minister Ben Bradshaw said the Government is "prepared to change the law" regarding below-cost alcohol sales, depending on the findings. Meanwhile, north of the border, a Scottish Government report wants minimum pricing to curb "pocket money pricing". The target is supermarkets. A rate of 35p per unit is mooted, which amounts to around £1 for the average pint.
What does the Sheffield report say?
An interim report — released last week to coincide with the KPMG report into how the trade has stuck by its voluntary agreements — says there's "strong and consistent" evidence that higher prices can reduce consumption. There's "low quality but demonstrable specific evidence" that minimum pricing "might be effective".
How has Government reacted?
No firm proposals are on the table regarding minimum pricing. A new consultation from the Department of Health (DoH) says Government will consider further action after the release of the full report from Sheffield, which is due in September.
What about other voices in Government?
"There are two schools of thought within Government," says Paul Smith, executive director of late-night trade body Noctis.
DoH and the Home Office may be eyeing minimum pricing, but the department responsible for business urges caution.
New advice from the Department for Business, Enterprise & Regulatory Reform (Berr) says Government officials should "avoid putting pressure on businesses to behave in a way that would result in the business being in breach of competition law".
The guide says some firms "have shown concern" over "pressure" applied to enter "voluntary agreements… to deliver public policy outcomes" — for example, over public health policy.
It talks of the potential risk of damaging the reputations of ministers and officials if a business is shown to have broken competition law on their advice.
Berr gave an example of an agreement that is "likely to be illegal": if a group of retailers agree between themselves to impose a charge for a service from a certain date. "This agreement can originate from pressure by Government, associations of from a group of undertakings."
MA legal editor Peter Coulson says the Government risks being hauled in front of the European Court of Justice if it tries to establish a minimum pricing regime.
What's the legal argument in favour of minimum pricing?
Guidelines from Europe on how to apply competition law point to exemptions if the steps are "objectively necessary for reasons of safety or health related to the dangerous nature of the product in question".
Advocates say that this could apply to minimum pricing.
"I don't think it's a done deal that we know where we are legally as far as minimum pricing is concerned," says Smith. "It's not inconceivable that there could be an exemption under European competition law."
What is the advice for pubs at the moment?
Trade groups have been advised to steer clear of minimum pricing agreements. National Pubwatch's website offers a link to the Berr advice, and says: "From time to time stories are published of watches agreeing to minimum pricing agreements to prevent drunkenness or possible disorder. However, these sorts of agreements are against the law and must be avoided as they carry extreme financial penalties."
Coulson says: "Basically, don't go there. A minimum pricing agreement is a cartel and it's illegal."
What about existing schemes?
The MA understands that minimum pricing schemes involving pubs do still operate. Carlisle's scheme hit the headlines in January when two JD Wetherspoon pubs were suspended from the local pubwatch for refusing to abide by the agreement not to sell drinks for less than £1.50.
In Blackpool, licensee Dave Daly says an agreement has been in place since 1999 not to sell for less than £1.50 per drink during the week and have no discounting at all at weekends. Daly says the agreement is voluntary, but police will put venues under closer scrutiny if they don't abide by it.
He says that the current political climate, with the fear of binge drinking back in the headlines, means there's "not a hope" of a legal challenge against the scheme.
"The minimum pricing scheme in Blackpool runs very smoothly," says the manager of the Castle.
"We all comply with minimum pricing but it's great because we are making a profit. My margin will go from 55% in the week to 75% at the weekend. It keeps my pub alive."
