Legal advice: Unit pricing issue to return

With the recent focus on the changes announced by the Government to its guidance on the ‘safe’ number of units of alcohol that can be consumed each week, and on Public Health England’s suggestion of a sugar tax, the decision just before Christmas by the Court of Justice of the European Union on minimum alcohol pricing, has slipped somewhat under the radar.

It is worth reminding ourselves of the background, before considering the decision, its implications and what may now happen in 2016.

In May 2012, the Scottish parliament passed legislation introducing a minimum unit price of 50p per alcoholic unit.

There followed a challenge to that decision by the Scottish Whisky Association (SWA), which argued that the legislation breached European Law. Without going into all of the details of the legal proceedings, ultimately the Court of Session in Scotland asked the Court of Justice of the European Union to rule on whether or not a minimum unit price for alcohol contravened European Law.

Advocate General Bot delivered his preliminary advice on 3 September 2015, before the European Court provided its ruling on 23 December 2015.

Media

In the trade press, there has been much vaunting of the successful challenge by the SWA, but is this the case? It could safely be said that the decision is currently at a score draw.

What is the issue around free trade law? Again, keeping it short, the issue is that alcohol can be produced in member states of the European Union at a lower base cost in one country than in another. If the alcohol then has to be sold at a minimum unit price, producers in other European countries outside Scotland are effectively prevented from selling the alcohol at a lower cost in Scotland and, thereby, deprived of taking advantage of their lower production costs.

It is safe to say that the tenor of the decision from the European Court of Justice was that it would prefer to see an increase in general duty or taxation, as opposed to a minimum unit price. However, it is ultimately for the Scottish courts to decide whether or not a minimum unit price is a proportionate step to introduce to meet the public health objective, or if there is a less restrictive step that can be used to address the serious public health concerns.

What is the objective that the Scottish government is trying to address? In the original decision, the Outer House of the Court of Session in Scotland decided that a minimum unit price was a proportionate way of targeting “harmful and hazardous drinkers” because it was targeted at those who drank lower-priced strong alcoholic drinks.

Public health

The European Court accepted that the Scottish government was making a real effort to address health problems associated with alcohol, but emphasised that the government could do no more than is necessary to protect public health, in other words, any decision it reached had to be proportionate to the objective it was seeking to achieve. Could a less onerous step be taken which would realise the same objective? In suggesting that it may be more proportionate to deal with the issue by taxation, commentators have made the point that other products are made more expensive by taxation on health grounds, eg, tobacco.

However, there are a couple of points worthy of note in the reasoning of the European Court. Firstly, all tobacco is bad for you, and drawing any analogy to tobacco or, indeed, the topical issue of a sugar tax, is wrong. All tobacco is harmful and there is evidence that excessive sugar is too. Not all alcohol is necessarily bad for you and, therefore, a taxation increasing the price of all alcohol could be said to be a less proportionate approach.

Secondly, by raising the price of all alcoholic drinks by way of taxation, this is not necessarily targeting cheap strong alcoholic products sold at off-licences, which are more likely to be drunk by people who drink in hazardous amounts. Such a move could be said to be more restrictive on free trade for importers than introducing a minimum unit price. A minimum unit price is not so indiscriminate because it is unlikely to have an impact on alcohol sales from on-licences, where alcohol is likely to be sold above any minimum unit price.

Next chapter

But where does this leave us now, and what is likely to be the next chapter of the story in 2016?

The issue is now referred back to the Inner House of the Court of Session in Scotland, in order to give effect to the decision of the Court of Justice of the European Union. It will need to hear evidence from the Scottish government, which will need to convince the court that there is no other realistic measure that would enable the same objective to be realised.

The Scottish government does, of course, have a plethora of recent reports on the effects of alcohol on both the health of our nation and society generally to draw upon.

The ruling in the Court of Justice of the European Union has certainly brought the conclusion to the debate a step closer and, in 2016, the Inner House Court of Session will need to reconsider the whole question. However, inevitably, whatever decision it makes will lead to a further appeal that will be to the UK’s Supreme Court, brought either by the Scottish government or the SWA.

The battle may be said to have been won by both sides, but the war is a long way from being over.