Whisky makers expected to challenge minimum pricing rules

Whisky shop.JPG

This article is part of our special report Reviewing Europe’s alcohol harm strategy.

Moves by Scotland and England to impose minimum prices on alcohol are set for legal challenge if introduced, industry sources have told EURACTIV.

Last month the UK joined Scotland in signalling that minimum prices would be imposed at supermarkets in England and Wales in an attempt to stifle cheap offers thought to allure binge drinkers.

The Scottish government is poised to become the first government in Europe to deliver minimum pricing, and the Irish government has expressed and interest in such a move too.

A spokesman for the Scotch Whisky Association told EURACTIV that it, "in common with others in the industry," was in the process of detailed consultation with legal advisors with a view to a challenge.

A breach of trade rules?

The Scotch Whisky Association believes minimum pricing in Scotland breaches European and global free trade rules, by interfering with free trade and open competition. It argues that it would also damage its diplomatic efforts to force other countries to drop tariffs that discriminate against Scotch.

Sources within the spirits industry told EURACTIV that the move was seen as particularly damaging to efforts to unblock prohibitive tariffs in potentially lucrative markets such as India. The imposition of "health taxes" in Europe would provide cover for such markets to continue to slap large tariffs on spirits arriving from Europe if they cited similar health justifications.

The spokesman for the Whisky Association said that the first challenge would likely come after the imposition of the minimum pricing when the anti-competitive impact on traders begins to bite.

Governments prepare for challenge

Meanwhile the governments of both Scotland and the UK appear to be bracing themselves for legal challenge.

Scottish Health Minister Nicola Sturgeon recently told a committee of the Scottish Parliament that it was "almost certain" that the pricing plans will be challenged in the Scottish courts.

"I work on the basis there will be a legal challenge. My job is to make sure that we have legislation that can meet that challenge, and I am confident that it can."

Meanwhile UK Public Health Minister Anne Milton warned in January that a minimum price per unit could be open to legal challenges and might fall foul of European competition law.

“We think it is very good that the UK is moving ahead on this,” said Mariann Skar, secretary-general of the European Alcohol Policy Alliance. “We agree with the commission that the money should go to the government so you would get more but the main thing is to increase the prices.”

Pierre-Olivier Bergeron, secretary-general of the Brewers of Europe, was doubtful as to the effect that minimum pricing would achieve. “My intuition is that a price hike may impact purchasing behaviour of medium consumers rather than binge drinkers. So if the target was binge drinking by youth, it is precisely that category that will seek alternative channels. I conceptually understand that it might seem to be a good to encourage consumers to drink less this way, but am unconvinced by how successful it will be in practise.”

"Scotland is the greatest country on Earth as far as I'm concerned, but that doesn't mean I'm blind to the shortcomings we have. [How] you judge a country is how it copes with shortcomings," said Scottish First Minister Alex Salmond.

Europeans have the highest per-capita consumption of alcohol and drinking causes nearly one in 10 cases of ill health and premature death. 

EU rules on excise duties fix minimum tax rates for different categories of alcoholic drinks.

Member states must apply at least this minimum, but there is nothing in EU rules prohibiting countries from setting minimum prices for alcohol, so long as these prices are compatible with EU rules, such as no discrimination between imported goods and domestic goods, and no restriction on the free movement of goods.

The European Commission’s informal alcohol strategy will be evaluated later this year. The policy objective of the strategy is to reduce the health and social harm due to alcohol consumption.

  • Autumn 2012: Scotland set to fix minimum prices for alcohol sales
     

 

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