In its submission to the Health and sport committee of the Scottish Government. over the introduction of the Alcohol (Minimum Pricing) Bill the OFT admitted: “Much will depend on the level at which the minimum price is set for different types of alcoholic drink” and predicted that any potential effects on competition and consumers “would be greater” the higher the minimum price.
However, it claims there may be an unintended consequences of such a scheme. In particular that retailers will increase their margin on selling alcohol which “could give retailers an increased incentive to sell more rather than less low cost alcohol. for example through advertising or changing the mix of products on the shelves”.
On the issue of competition the OFT said it broadly agreed with the Scottish Government’s Competition Assessment which claimed that a minimum price could make it harder for new firms to enter the market. It also agreed that retailers would be unable to undercut one another on price, which could weaken competition.
On the issue of the European freedom of movement rules it claimed this is out of its jurisdiction.
The Bill was introduced in the Scottish Parliament on 31 October 2011. The main purpose is to introduce a minimum price below which alcohol must not be sold on licensed premises.
The minimum price will be set according to the strength of the alcohol, the volume of the alcohol and the minimum price per unit.
Oral evidence sessions are set to take place on 10, 17, 24 and 31 January and the committee intends to publish its report by the end of February 2011.