Cheap alcohol a thing of the past (at least for six years)?

15 November 2017

This morning the UK Supreme Court called time on a long-running legal challenge to the Scottish Parliament’s decision to introduce minimum alcohol pricing north of the border. Its final ruling followed two appeals and a reference to the Court of Justice of the European Union. The case partly made headlines because it pitted Scottish legislators against the country’s powerful Whisky industry, but the implications go well beyond the ‘water of life’, affecting alcohol products generally.

Now that the concept of minimum pricing has been given the legal green light, it will be interesting to see whether ‘experimental legislation’ like this is taken up in other jurisdictions, including England and Wales.

The case of Scotch Whisky Association and others v The Lord Advocate and another [2017] UKSC 76 arose out of the decision by the Scottish Parliament to introduce legislation, in the form of the Alcohol (Minimum Pricing) Scotland Act 2012 (the “Act”), setting a minimum price per unit of alcohol in Scotland. That legislation has been on hold ever since it was made, pending the resolution of this legal challenge. Now the challenge is over, the Scottish Ministers can set the minimum unit price (expected to be 50p) by secondary legislation.

Why introduce minimum pricing?

The intention of the minimum pricing provisions in the Act is to increase the price of cheap alcoholic drinks thereby “reducing, in a targeted way, both the consumption of alcohol by consumers whose consumption is hazardous or harmful, and also, generally, the population’s consumption of alcohol”. It is one of a variety of measures introduced by the Scottish Government since 2009, in light of research evidencing serious health and social harms resulting from extremely heavy drinking in deprived communities in Scotland. The intention is not to target and discourage all drinkers, or to reduce consumption to the maximum extent possible regardless of potential economic or social consequences. The purpose is narrower: to deal with alcohol misuse and, in particular, overconsumption of cheap booze in communities facing poverty and deprivation. The Supreme Court noted a substantial rise in the ill effects of alcohol consumption in Scotland over the past 30 years, with chronic liver disease and cirrhosis mortality rates now being “way above” those in England and Wales, and other European countries. Those in poverty were found to be by far the most heavily affected by extreme drinking and consequent health and social problems.

Who is considering introducing minimum pricing?

Notwithstanding that the problem in Scotland is especially concerning; a ‘comprehensive’ Public Health England/Sheffield University review commissioned by the UK Government late last year proposed that minimum pricing should be introduced comprehensively in the UK. Press coverage at the time reported that drink is now the biggest killer of those aged 15-49 in England. So far only Scotland has legislated on the issue but the Welsh Government recently announced plans to introduce its own minimum unit price, and at the end of last month the Guardian published an open letter in which fifty MPs, health professionals and others called on the UK Government to do the same, to “save lives, relieve pressure on our NHS and fulfil its commitment to even out life chances”.

Now that the Supreme Court has upheld the Scottish legislation, it will be interesting to see whether pressure mounts on England to follow suit.

What was the relevant test in this case?

The Scotch Whisky Association and two European alcohol industry bodies sought to overturn the Act and render minimum pricing unlawful on the basis that it was incompatible with EU law. They argued that minimum pricing was equivalent to a quantitative restriction on imports, and (in relation to wine) that it also undermined the common agricultural policy (the “CAP”) requirement that supplies reach consumers at reasonable prices (in conflict with articles 34 and 39 of the Treaty on the Functioning of the European Union).

In considering these arguments, the Supreme Court had the benefit of a judgment of the Court of Justice of the European Union (the “CJEU”), given in response to a reference made earlier in the proceedings. The Supreme Court concluded in light of the CJEU’s judgment that both the ‘quantitative restriction’ and CAP grounds of challenge came down to proportionality, and that the legal tests to be applied in relation to each of these grounds were equivalent. The test was in essence: that the minimum pricing measure must be appropriate for attaining the objective pursued, and must not go beyond what is necessary to attain that objective.

In confirming this two stage test, the Supreme Court emphasised that the CJEU had deliberately subsumed another question – whether the measure is disproportionate to the benefits secured – into the question of necessity, rather than addressing it independently as a third stage of the test. The Supreme Court also rejected the idea that the national authorities must prove that no other conceivable measure could achieve the relevant objectives. Rather, a court must instead examine objectively whether it may reasonably be concluded from the evidence submitted that the means are appropriate and cannot be attained by less restrictive measures. The court is a reviewing body, not a primary decision-maker and, as also signalled by the CJEU, this requires the court to show significant restraint and respect for national authorities’ choice of measures to protect health.

What conclusions did the Supreme Court reach?

The Act was a targeted rather than a general piece of legislation, focussed on specific legitimate objectives which were “more refined than might at first sight appear” (i.e. those described above).

On the question of proportionality, the focus was on whether less restrictive measures could achieve the same objectives. The main alternative that had been put forward by the Scotch Whisky Association and other Appellants was some form of excise or tax on alcohol. However, on the evidence before the court this would have less targeted effects. Whereas minimum pricing would target cheap alcohol products by reference to their alcohol content, an increase in excise or VAT would fall across the board on the whole category of goods to which it applied, and would be directed at a different outcome – to reduce alcohol consumption across the board. It was legitimate for the legislators to take into account that, by comparison to minimum pricing:

taxation 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 in particular the deprived, whose use and abuse of cheap alcohol the Scottish Parliament and Government wish to target.”

In addition, even if the overall health and social impact of a tax or excise increase was equivalent, the effect on those in poverty (i.e. the target group) as compared to that of minimum pricing would not be the same. Furthermore, minimum pricing is easier to understand, harder to offset and simpler to enforce.

The Supreme Court finally considered the implications of the lack of market analysis on how the EU market would be affected by proposed minimum pricing, and asked itself how far the question of whether the measure would be disproportionate to the benefits secured bore on the issues in the case. The court concluded that it is impossible to compare health (in terms of mortality and hospitalisation and reducing socioeconomic inequalities) on the one hand, with the market and economic impact on producers, wholesalers and retailers of alcoholic drinks across the EU on the other. It is not appropriate for the court to second-guess the value which the Scottish Parliament may decide to place on health. It was evident that:

the Scottish Parliament and Government have as a matter of general policy decided to put very great wright on combatting alcohol-related mortality and hospitalisation and other forms of alcohol-related harm. This was a judgment which it was for them to make, and their right to make it militates strongly against intrusive review by a domestic court.”

Given that conclusion, there was very limited scope to criticise the Scottish Government for not carrying out more EU market analysis. Any attempt to assess this would involve incalculables and was essentially unpredictable.

Finally, the Act contained provision for a re-evaluation and report by the Scottish Ministers after five years, and a ‘sunset’ clause providing for automatic termination after six years unless otherwise ordered and affirmed by the Scottish Parliament. Minimum pricing was therefore an “explicitly provisional” and “experimental” system, recognising the difficulty of predicting the precise reactions of markets and consumers to it. The Supreme Court considered this to be “a significant factor in favour of upholding the proposed minimum pricing regime”.                      

Key features of the legislation

Assuming minimum pricing is now on the rise, Scottish policymakers and legislative drafters have provided a useful example of how to craft lawful minimum pricing legislation. This appears especially relevant for other common law jurisdictions, especially England and Wales, but potentially provides guidance for EU member states generally. Key to the Supreme Court’s finding that the legislation was proportionate were: (a) the specific and refined objectives pursued; (b) the greater effectiveness of the measures in pursuit of these than the main alternatives; (c) the simplicity and enforceability of the measures; (d) the offsetting of uncertainties through a sunset clause. Legislators and policymakers may also take comfort from the deference afforded to the Scottish Parliament by both the CJEU and the Supreme Court on matters of judgement regarding the proper weight attributable to competing policy objectives.

Further information

Lawyers from Kingsley Napley are regularly blogging about a range of legal issues, including public law matters and the impact of Brexit. Follow our Public Law blog and Brexit blog  for the latest commentary.

Should you have any questions about the issues covered in this blog, please contact Adam Chapman or a member of our Public Law team.

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