Minimum Alcohol Pricing and EU Law Update – 26 July 2012

Angus MacCulloch

Since the original post, on 28 March 2012, it has become clear that drinks industry organisations are likely to use litigation to challenge any attempt by to introduce minimum alcohol pricing in either Scotland or England.

While competition law is still likely to be a factor in such litigation it has also become apparent that there are specific provisions in some sectors which will probably play an important role in any proceedings. Where an individual sector or industry is subject to detailed European regulation the general Treaty provisions are less likely to be decisive.

An example of this in relation to minimum pricing was seen in Case C-197/08 Commission v France. In this case the French Government were attempting to set a minimum price for tobacco products at 95% of the average price. This was challenged, not as being contrary to the free movement or competition provisions, but as being proscribed by Art 9(1) of Directive 95/59/EC on taxes which affect the consumption of manufactured tobacco. Art 9(1) sets out that manufacturers, of tobacco products, ‘shall be free to determine the maximum retail selling price for each of their products’. The French scheme was deemed to be incompatible with Art 9(1) as it undermined the competition, on the basis of costs, which the Directive was designed to protect [37-38]. The Court made it clear that the France could seek to protect health by increasing the duty on all tobacco products [52].

It is interesting to note that there are no such provisions on freedom of pricing in the Directives regarding taxation on alcoholic beverages, Directives 92/83/EEC & 92/84/EEC. On the face it that would preclude an argument similar to that in Commission v France from a minimum price for alcohol, but other sectoral legislation may come into play.

Because of its special nature wine is regulated as an agricultural product under the CAP. This means that it is subject to regulation under the Single Common Market Organisation via Regulation 1234/2007/EC (as amended by Regulation 491/2009/EC replacing Regulation 479/2008/EC). The Single CMO also has rules designed to protect competition in agriculture, setting out, in relation to wine, in Art 113c(1) that, in order to stabilise the operation of the common market, Member States may lay down marketing rules, but they shall not, under (b), ‘allow for price fixing’. This provision appears to disallow MS measures which would fix the price of wine, but not of other types of alcoholic beverage. This provision clearly is designed to ensure that competition is maintained in the marketing of wine; especially as the marketing rules foreseen under Art 113c may originate from recognised industry bodies (set out in Arts 123 & 125o). It is clear that very similar reasoning that in Commission v France could be applied to the prohibition of price fixing, in relation to wine, under Art 113c.

There is no apparent derogation provision in the Regulation to allow for health based exception to the rule in Article 113c, but the Commission may be able to use other provisions to allow the UK some form of derogation. This would, of course, complicate the matter and take a unitary system of minimum alcohol pricing out of the Scottish or UK Governments hands.

To conclude it seems that the while the main Treaty provisions on free movement and competition my not block the adoption of alcohol minimum pricing there may be several other, more detailed and obscure, provisions which may yet become important in future litigation.

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