Analysis: Legal challenge to Scotland’s minimum alcohol price plan

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From BBC News

A judicial review of the Scottish government’s minimum pricing legislation is scheduled to begin at the Court of Session in Edinburgh on Tuesday.

The Scottish Parliament passed the Alcohol (Minimum Pricing) (Scotland) Act 2012 on 24 May 2012.

Scotland’s then health secretary Nicola Sturgeon described it as an “historic moment”, adding that “tackling alcohol misuse is one of the most important public health challenges that we face in Scotland”.

The minimum price itself was not contained in the bill (it will be specified through regulations) but the Scottish government said it would initially be set at 50p per unit, meaning the cheapest bottle of wine would be  £4.69 and a four-pack of lager would cost at least  £3.52.

The bill received royal assent on 29 June 2012.

But Ms Sturgeon’s spokesman indicated that the measure would not actually come into force until April 2013 at the earliest. This was to allow for a period of consultation with the European Commission, amid claims that the plans were contrary to EU law on free trade.

Trade rules

The Scottish government said it believed the plans were legal – arguing in essence that measures to tackle serious public health problems are exempt from competition regulations – and that it was hopeful of securing approval from the EC to go ahead.

But on the 19 July 2012 the Scotch Whisky Association (SWA) confirmed it would challenge the legality of the plans in the Scottish courts, claiming that the legislation breached EU trade rules by distorting the drinks market.

It claimed the policy would push up the price of 85% of blended Scotch whisky and that it could cost the industry some  £500m in exports.

The Scotch Whisky Association and the European Spirits Organisation have now been granted judicial review of the legislation. The case will be heard at the Court of Session in Edinburgh in a six-day hearing scheduled to begin on 23 October. The judgment will be reserved to a later date.

The petition submitted by the two bodies argues that the minimum pricing legislation is “not law” for the following reasons:

  • i) It is outwith the competence of the Scottish Parliament because it deals with matters reserved to Westminster, ie “the regulation of…the sale and supply of goods and services to consumers”
  • ii) It purports to (illegally) modify Articles 4 and 6 of the Acts of Union 1706 and 1707 so far as they relate to freedom of trade
  • iii) Its provisions are incompatible with the EU’s “general principles of free trade and undistorted competition”, specifically Article 34 of the Treaty on the Functioning of the European Union which provides that “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States”; agreements with the World Trade Organisation; GATT 1994 Article III.4 on the grounds that imports would receive less favourable treatment than competing domestic products; and the Common Agricultural Policy.

The petitioners argue that ministers should be prevented from implementing the Act while the judicial review and any other legal challenge, including any challenge in the European courts, is considered.

In a response to the petition, the Lord Advocate Frank Mulholland argues that:

  • i) The purpose of the legislation is “directed to public health and social benefits concerns” and therefore is within the devolved parliament’s competence
  • ii) Articles 4 and 6 of the Acts of Union “did not proceed, and have never been considered to proceed, upon the footing that the law must be identical in Scotland and in England and Wales on matters affecting trade” and the minimum pricing legislation does not modify the Acts
  • iii) The measures are justified in EU law on the grounds that they relate to “public health, social problems and crime”. They “apply to domestic and imported products alike…There is strong and well established evidence that consumption of alcohol in Scotland is excessive and that this gives rise to health and social problems.” Evidence suggests that increasing the price of cheap alcohol is likely to achieve a reduction in harmful consumption of alcohol. “Neither WTO not GATT has direct effect in EU law”, nor is the Common Agricultural Policy relevant.

Meanwhile, a separate process is unfolding in Brussels where the European Commission has sought the opinions of member states on the Scottish government’s plans.

Five countries have issued detailed opinions. They are all major wine producers: Bulgaria, Italy, Portugal, Spain and France. Eight member states have commented (Bulgaria, Austria, Poland, the Netherlands, Denmark, Romania, Germany and Ireland).

While the contents of the opinions and comments are confidential they have been widely reported as being hostile. The EC itself has said “what we can say is we have a problem with the compatibility of minimum pricing plans under community law”.

The opinions, along with the opinion of the Commission itself, have been sent to the Scottish government which now has until December 27 2012 to respond.

Outcome awaited

It will then receive a response from the EC. If member states are unhappy with the EC’s final response they could choose to challenge the legality of the measure at the European Court of Justice in Luxembourg.

The UK government, which is proposing minimum pricing for alcohol in England and Wales, indicated on 1 October 2012 that it would support the Scottish government in arguing for the legality of the measure in the courts. The UK’s Advocate General, Lord Wallace of Tankerness, said ministers would not “sit on the sidelines”.

A Scottish government spokesman said on 4 October that they would wait for the outcome of the Court of Session hearing before deciding how to proceed. They would not introduce the measure before the court had ruled, even if this delayed it beyond April.

The spokesman said they had not yet decided how to respond if the measure ended up being challenged in the European Court of Justice.