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Oliver Bartlett – Distilling Prospects: Reflections on the Proportionality of Minimum Unit Pricing under EU Law

On 3 May 2013 the Outer House of the Scottish Court of Session (CoS) ruled that the Alcohol (Minimum Pricing)(Scotland) Act 2012 (‘the Act’) which implemented a minimum unit pricing policy (MUP) for alcoholic beverages did not breach EU law on the free movement of goods. Although the measure had equivalent effect to a quantitative restriction under Article 34 TFEU it was nonetheless a proportionate restriction on trade under Article 36 TFEU.  The Scotch Whisky Association (SWA), who led the legal challenge, have appealed the judgement to the Inner House of the CoS, and assert that the matter should be referred to the Court of Justice of the European Union (CJEU). This post argues that the evidence supporting minimum unit pricing and the CJEU’s case law on proportionality together show that the CoS decision was correct. It also considers the implications that success for MUP in Scotland might have for alcohol control policy generally.

The policy and the evidence supporting it

Under MUP, alcohol must not be sold below a price calculated by the following formula: minimum unit price x strength in abv x volume in litres x 100. With a minimum unit price of 50p set by the Act, the minimum price of a bottle of wine of strength 12.55 abv would therefore be 0.50 x 0.125 x 0.75 x 100 = £4.69. Evidence suggests that minimum pricing could be effective in combatting alcohol related harm. Higher alcohol consumption leads to higher risk of alcohol related harm, so seeking to reduce consumption though raising the price of cheaper alcohol which is preferred by heavier drinkers would seem to be one way of reducing harm, with research suggesting that a MUP of 50p would result in a 5.7% decrease in general consumption, coming mostly from this sub-population. Further research among alcohol related hospital admissions in Edinburgh found that those who paid the lowest prices for their alcohol consumed the greatest number of units, and that within this patient population 83% purchase their alcohol at or below 50p per unit. Studies conducted in British Columbia, where a MUP policy has been in force, also suggest that the policy is associated with large reductions in alcohol-related deaths.

Proportionality of Minimum Unit Pricing – Court of Session and CJEU

Lord Doherty in his CoS judgement agreed that MUP was a restriction on trade under Article 34 TFEU, however he considered that it was a proportionate and therefore justified restriction under Article 36 TFEEU, which permits measures restrictive of trade to stand if they are both appropriate and necessary to pursue legitimate aims under a ground of general interest. Lord Doherty dealt with legitimate aims and appropriateness in fairly short order. MUP is a public health oriented measure, the protection of public health being a ground of general interest, which aims to reduce excessive alcohol consumption through targeting harmful and heavy drinkers, which were considered to be legitimate aims. The evidence presented to the court was held to show that harmful drinkers bought cheap alcohol irrespective of their income, leading to the conclusion that MUP was appropriate to pursue the legitimate aims. Necessity, whether the aims could be as effectively achieved by a less restrictive measure, was considered in more detail. Lord Doherty supported arguments that MUP would not be as effective as other interventions such as tax increases on account of the fact that they would not be able to target cheap alcohol in as precise a way as MUP. In light of this superior comparative effectiveness, and the discretion afforded to national authorities when acting in defence of public health, MUP was also held to pass the necessity test.

Despite a Detailed Opinion given by the European Commission that minimum pricing appeared disproportionate because measures such as tax could achieve the pursued aims less restrictively, the CoS was correct in its judgement. The Commission opinion does not take into account the fact that varying levels of alcohol consumption cause varying levels of harm, and that the point of the Scottish policy is to target the alcohol consumed by the heaviest drinkers. This requires a tailored intervention that on the evidence only MUP can provide effectively. The CJEU would be unlikely to offer a conflicting view to the CoS if the case is referred. The Court has a history of allowing Member States a wide margin of discretion over the extent and methods of public health protection – Aragonesa and Commission v Portugal are both examples of the long line of case law establishing that in the absence of EU harmonisation, how and to what extent Member States protect public health on their territory is down to them, providing their interventions are proportionate. The CJEU has furthermore consistently held that the evaluation of factual situations for the purpose of assessing proportionality is for the national court to make. In cases such as Gourmet, Greenham and Mickesson and Roos the Court has persistently insisted that ascertaining what the facts of the situation are and whether they show that the proportionality test has been made out is an exercise that the national courts are in a better position than the CJEU to perform. Since the CoS has already performed this exercise and is satisfied on the evidence that MUP fulfils all the elements of the proportionality test, it is therefore extremely likely that, given the consistency in the case law, the CJEU would defer to that judgement.

Wider regulatory issues raised by Minimum Unit Pricing

An initial consequence of success for minimum pricing in Scotland is that further states may also decide to implement the policy. Several Member States submitted detailed opinions to the Commission following notification of Scotland’s policy. Many of these opinions were, in fact, prompted by complaints of national alcohol producers concerned that their own states would move to adopt similar policies that would reduce their profitability, and obligingly criticise the Scottish policy. Levels of interest on this scale would only arise if the spread of MUP were considered a genuine possibility, and thus it is imperative that the Scottish policy is properly monitored to determine whether it is indeed having the expected effects. The graver concern for the industry though is that success for hard legislative measures such as MUP could demonstrate that alcohol production and sale requires stricter legislative measures, potentially even at the expense of currently favoured self-regulation. The industry has worked hard to convince governments and regulators that self-regulation works and that they can be seen as partners in the fight against alcohol related harm. It is therefore unsurprising that the industry do not want and are actively hostile towards any legislative control of alcohol, and fear the potential for policies such as MUP to prompt even less desirable forms of regulation, and, in the worst case, dismantle the industry’s hard work by highlighting that the industry is not in fact capable of regulating itself. If MUP is successful in Scotland, questions will have to be asked as to whether faith in self-regulation, which evidence shows as ineffective at controlling alcohol marketing, can be maintained in the face of demonstrably effective legislative policies.

Conclusion

The Scottish MUP saga is unlikely to conclude any time soon. With the appeal to the Inner House of the CoS lodged on 6 February 2014, the litigation is unlikely to conclude before 2015 or 2016, later if a reference is eventually made to the CJEU. This post attempted to contribute to the speculation that will doubtless accumulate in that time by offering a defence of the initial decision of the CoS. MUP and other legislative policies hold the potential to make tangible difference in the fight against alcohol related harm. It is time that hard action in public health policy is more widely employed, and there is great potential for MUP to provide the necessary impetus for this.

Oliver Bartlett

PhD Candidate, Durham Law School

This Post is a summary of an article published in the European Journal of Risk Regulation 1/2014 73-78.

 

 

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