Scotland proposed a floor price for each unit of alcohol sold in shops and other licensed premises. The trade bodies challenging it accepted that protecting health was a legitimate aim. Their strongest objection was that a tax increase could achieve the same aim while interfering less with trade. The outcome turned on whose consumption each measure would affect.
The Alcohol (Minimum Pricing) (Scotland) Act 2012 provided for ministers to set the minimum. In 2017 the figure proposed was 50 pence per unit. Implementation was on hold pending the litigation. The legislation provided for evaluation after five years and expiry after six unless the Scottish Parliament approved its continuation.
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The Scotch Whisky Association and two European trade bodies challenged the legislation under the Scotland Act 1998. Following a reference to the Court of Justice, the Inner House rejected the challenge. The Supreme Court considered the evidence in the light of the European court’s answer.
The EU objection
It was accepted that minimum pricing would affect trade between member states, including imports of wine and beer, and so was a measure equivalent to a quantitative restriction under article 34 of the Treaty on the Functioning of the European Union. The respondents relied on article 36, which permits restrictions justified by the protection of human health and life, so long as they are not arbitrary discrimination or a disguised restriction on trade. No such discrimination or disguise was suggested. For wine, the petitioners also relied on the Single CMO Regulation, which organises that market on the basis of open access and effective competition. They argued that this required a stricter test than articles 34 and 36.
The Court of Justice held that a member state may protect health even where that interferes with free price formation, but the measure must be appropriate and must not go beyond what is necessary. It treated the objectives of the common agricultural policy as part of that necessity question, not as a separate and heavier exercise. It did not adopt the Advocate General’s further stage of asking, in the strict sense, whether the health gain was worth the damage to free movement. The national court does not remake the policy. It asks whether it may reasonably be concluded from the evidence that the means are appropriate and that the aim cannot be attained by measures less restrictive of free movement. The authorities must justify the restriction, but need not prove that no other conceivable measure could achieve it under the same conditions. Uncertainty about the effects, and the sunset clause, may be taken into account.
A targeted health aim
The evidence distinguished consumption in the wider population from hazardous or harmful drinking. The parties agreed that the proposed floor could reduce both. The dispute concerned the availability of a less restrictive measure with the same targeted effect.
The policy materials showed a particular concern with the health and social harm associated with cheap alcohol in deprived communities. That objective had been identified before the litigation. The government had never set out to maximise the reduction in all alcohol consumption at any price.
Later Sheffield evidence sharpened that picture. Most hazardous and harmful drinkers were not in poverty, but those in poverty drank more, tended to buy cheaper alcohol, and suffered far more alcohol-related deaths and hospital admissions. A 50 pence minimum was modelled as reducing consumption by harmful drinkers in poverty much more than consumption by harmful drinkers who were not in poverty. Lord Mance held that the respondents could use this evidence to explain how the Act would address harm already identified when it was passed.
Why a tax was not equivalent
The comparison was with higher excise duty or tax. Lord Doherty had held that the respondents had not shown a tax to be as disruptive of EU trade as minimum pricing, so the Court proceeded on the basis that a tax would interfere less with trade. That did not make it an equivalent health measure. A minimum price is fixed by the alcohol content of cheap products. A duty or VAT increase is felt across the relevant category, including drinks already sold above 50 pence a unit.
Modelling before the Court suggested that a general tax increase large enough to achieve a comparable reduction in deaths would have a different distributional effect. It would cost moderate drinkers more while having less effect on harmful drinking among people in poverty. These were predictions the Court assessed in 2017.
The Court of Justice had said that additional benefits from a broader tax response cannot, in themselves, justify rejecting that alternative. Lord Mance treated the words “in itself” as leaving room for the respondents’ case that they were not seeking the maximum possible fall in consumption regardless of cost. A desire to spare moderate drinkers is not itself a ground under article 36. The point was that the aim had never been an across-the-board reduction. It was legitimate to balance any wider health gain against the burden a general tax would place on moderate drinkers and on drinkers who were not at the extreme risk associated with cheap alcohol and deprivation.
Trade effects
It was accepted that minimum pricing would distort competition and EU trade by lifting prices below the minimum. The petitioners said the Scottish Government had not properly analysed that impact. Lord Mance doubted whether a court should weigh individual lives and hospital admissions against trade effects, since member states decide, within the limits of the Treaty, what degree of health protection to assure. He nevertheless considered the evidence. The First Division had described the EU-market effect as relatively minor, a conclusion that was not challenged: the on-trade was unlikely to be affected; some cheaper wine and brandy from other member states might lose an edge, but the greater impact on spirits would be domestic.
Future prices and purchasing decisions could not be predicted precisely. The Court took account of the effects on cheaper imported products and of the statutory review and expiry provisions. They allowed ministers and Parliament to revisit the policy in the light of experience.
Verdict: All seven justices dismissed the appeal. On the evidence before the Court, the minimum-pricing scheme was a proportionate health measure compatible with EU law. It remained for ministers to implement the legislation and set the price.
Source: Scotch Whisky Association and others v The Lord Advocate and another [2017] UKSC 76
