Minimum price of 50p on alcohol sales approved by the Supreme Court – for Scotland

17 November 2017 by Rosalind English

Scotch Whisky Association  v Lord Advocate and Another (Scotland)  [2017] UKSC 76 – read judgment

The Supreme Court has ruled that the introduction of minimum pricing into the sales of alcohol in Scotland will not constitute a disproportionate measure interfering with the free movement of goods and competition in the EU. The initial legislation that paved the way for minimum pricing was approved by the Scottish parliament five years ago but has been under legal challenge since. The Scottish Parliament had decided to address the health and social consequences arising from the consumption of  cheap alcohol by a minimum pricing regime. They did this by inserting in the Scottish licensing legislation an additional condition that an alcohol product must not be sold at a price below a statutorily determined minimum price per unit of alcohol. The minimum price is to be set by secondary legislation. The current proposal is 50 pence per unit of alcohol.

The Scotch Whisky association sought judicial review challenging the lawfulness of the relevant Act. They contended that the minimum unit pricing was disproportionate under EU law.

The Scottish Ministers (the respondents in this case) argued that taxation, by contrast, would impose an “unintended and unacceptable burden” on sectors of the drinking population whose drinking habits and health do not represent a significant problem in societal terms in the same way as the drinking habits and health of the deprived, whose abuse of cheap alcohol the Scottish Parliament wished to target.

The case was referred to the Court of Justice of the EU for a preliminary ruling, following which ruling the Supreme Court heard the appeal. The Supreme Court unanimously dismissed the appeal, Lord Mance giving judgment. Minimum pricing was not in his view a disproportionate means of achieving a legitimate aim.

Before the CJEU came up with its preliminary ruling, AG Bot analysed the question of proportionality via three steps:
(1) appropriateness
(2) necessity
(3) balancing of interests.
The CJEU conducted a two-stage analysis involving essentially the same elements. The test measured the justification of the measure to achieve a legitimate objective, in other words the protection of health under Article 34 TFEU, and whether it were possible to achieve this objective by measures that were less restrictive of the free movement of goods.

Reasoning behind the Supreme Court’s judgement

The Court accepted as the CJEU did that the aim of the respondents’ measure was not that alcohol consumption be eradicated or that its costs should be made prohibitive for drinkers. The aim was to strike at alcohol misuse and overconsumption manifesting themselves in particular in the health and social problems suffered by those in poverty in deprived communities. The Court rejected the Scotch Whisky Association’s submission that a tax would be a less restrictive way of achieving this objective.  Minimum pricing targets the health hazards of cheap alcohol and the groups most affected, in a way that an increase in VAT does not. An extra levy on tax would be felt across the board and

unnecessarily affected groups which are not the focus of the legislation [34-37]

It was clear to the Court that concern about the health and social harms resulting from extremely heavy drinking in deprived communities was an element of targeted thinking behind the 2012 Act.  Furthermore minimum pricing is simpler to enforce. It would not be open to absorption, for example by selling alcohol under cost in order to attract other business onto their premises.

As far as the proportionality of the measure itself is concerned, Lord Mance stressed that the courts, whether the CJEU or the domestic courts, should not second-guess the value that a domestic legislator puts on health. In the light of this, there was limited scope for the criticism made by the appellants about the lack of EU market evidence taken into account by the Scottish ministers when passing this legislation. The Whisky Association objected that the respondents had failed to produce appropriate evidence to justify the infringement of the EU legal prohibition on restrictions and measures inhibiting free trade.

But this was not incumbent on the Scottish ministers when formulating the policy. The comparison to be taken is between two incomparable values: (1) health and (2) the market and economic impact on producers, wholesalers and retailers of alcoholic drinks across the EU. The Court considered it legitimate

to balance any possible health advantages across the board against the unwanted burden which increased taxation across the board would impose on drinkers falling within the hazardous and harmful categories [of alcohol consumption] who are not (for reasons of affluence or whatever) at extreme risk and on moderate drinkers who are at no risk at all.

The role of a domestic court, evaluating the consistency with European law of a measure such as the 2012 Act, is not to examine or adjudicate upon the legislative process and reasoning which led to the measure, but “to examine the legislation itself in its context”. The Scottish Parliament and Government had decided to put very great weight on combatting alcohol-related mortality and hospitalisation and other forms of alcohol-related harm.

That was a judgement which it was for them to make, and their right to make it militates strongly against intrusive review by a domestic court

Finally the requirement within the legislation which triggered a review after five years, and the so called “Sunset Clause” that would cause it to expire after six years unless renewed by a ministerial decision,  showed that the proposals were explicitly provisional. The authorities would have to take stock of its effectiveness after a period of years. This requirement was relevant to the issue of proportionality.

The Insitute of Economic Affairs, a free market think tank,  did not welcome the Supreme Court’s conclusion, calling it “disappointing” and saying that minimum pricing was a policy that “clobbers the poor and exempts the rich”. Anti alcohol campaign groups on the other hand say that minimum pricing should be introduced in England and Wales as well, although attempts under David Cameron were defeated by concerted lobbying from the drinks industry.

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