Scottish legislation introducing a minimum price per unit of alcohol is contrary to EU law if less restrictive tax measures can be introduced, the Court of Justice of the European Union ruled today.
Giving judgment on the challenge to the Alcohol (Minimum Pricing) (Scotland) Act 2012 brought by the Scotch Whisky Association and other alcohol producers, the court adopted the approach previously taken by Advocate General Yves Bot in stating that taxation was the preferred way to control alcohol consumption for health reasons. It sent the case back to the Court of Session to hear evidence on whether this could be achieved.
The court ruled that the effect of the Act was significantly to restrict the market. It recognised first of all that the regulation relating to the common organisation of the market in wine did not preclude the imposition of a minimum price per unit (MPU) for the retail selling of wines, or prevent member states applying national rules that pursued an objective relating to the general interest such as the protection of health, provided that such rules are proportionate.
However, the fact that such a measure prevented the lower cost price of imported products being reflected in the selling price, and was thus liable to impede access to the UK market of alcoholic drinks produced in other member states, was sufficient reason to conclude that the measure constitutes an obstacle to the free movement of goods. "According to the court’s case law, such a measure may be justified on grounds of the protection of health only if it is proportionate to the objective pursued."
The court also noted that the Act pursues a twofold objective, namely to reduce not only the hazardous consumption of alcohol, but also, more generally, the Scottish population’s consumption of alcohol. "Although the imposition of an MPU intended to increase the price of cheap alcohol is an appropriate means of reducing the consumption of alcohol, a practice such as that adopted in Scotland is not justified where it is possible for health to be protected equally effectively by less restrictive tax measures", it stated.
A fiscal measure that increased the taxation of alcoholic drinks was liable to be less restrictive than a measure imposing an MPU since, unlike where there was a minimum price, traders retained the freedom to determine their selling prices. It was ultimately for the national court to determine whether measures other than that provided for by the Scottish legislation, such as increased taxation on alcoholic drinks, were capable of protecting human life and health as effectively as the current legislation, while being less restrictive of trade in those products within the EU.
The fact that the tax measures might more broadly secure the objective of health protection could not justify the rejection of such measures, the court added. In the light of the twofold objective pursued by the Scottish legislature, "a taxation measure that entails a generalised increase in the price of drinks and that contributes to achieving the general objective of combating alcohol misuse (affecting not only hazardous or harmful drinkers, but also moderate drinkers) would justify that taxation measure being preferred to an MPU".
Sending the case back to the Inner House of the Court of Session, which had asked for a preliminary ruling on EU law, the judges concluded: "Further, the Scottish court will have to examine objectively all the evidence provided by the Scottish Government, and must not to that end confine itself to examining the information that was available when the legislature passed the legislation at issue." However the Scottish Government does not have to "prove, positively, that no other conceivable measure could enable the legitimate objective pursued to be attained under the same conditions".
Welcoming the ruling, David Frost, Scotch Whisky Association chief executive, said: “The SWA always said European Union law issues were central to this case, and so it has proved. This settles EU law issues once and for all."
He added: “This ruling opens the way to moving the debate on and allowing us to address alcohol misuse with practical measures that actually work. Alcohol-related deaths have fallen by a third over the last decade in Scotland, which suggests we are already on the right path. We remain committed to working closely with the Scottish Government and everyone else with an interest.”
Cabinet Secretary for Health, Shona Robison responded to the decision: “This ruling from the Court of Justice of the European Union indicates, importantly, that it will be for the domestic courts to take a final decision on minimum unit pricing.
“While we must await the final outcome of this legal process, the Scottish Government remains certain that minimum unit pricing is the right measure for Scotland. We believe it is the most effective mechanism for tackling alcohol misuse and reducing the harm that cheap, high-strength alcohol causes our communities.
“We maintain that minimum unit pricing would target heavy drinkers as they tend to drink the cheap, high strength alcohol that will be most affected by the policy."