In the case of The Scotch Whisky Association C-333/14, Advocate General Bot has considered the legality of Scotland’s minimum alcohol pricing and concluded that it may be contrary to EU law.
The Alcohol (Minimum Pricing) (Scotland) Act 2012 (AMPSA), sought to create minimum unit pricing in the retail sale of alcoholic drinks in Scotland. By way of Ministerial Order, the price for a unit of alcohol was set at 50p.
However, before AMPSA came into force, the legality was challenged by the drinks industry. Judicial review proceedings were brought in Scotland by The Scotch Whisky Association and others (SWA).
SWA argued that the Scottish legislature did not have sufficient competence to introduce AMPSA and, even if it did, AMPSA was contrary to the EU principle of free movement of goods. They claimed that the legislation would have an equivalent effect to a quantitative restriction on imports and was contrary to Articles 34 and 35 of the EC Treaty.
By its decision of 3 July 2014, the Court of Session decided to stay the proceedings and referred questions to the Court of Justice of the European Union (CJEU) for preliminary ruling to determine whether the establishment of a minimum price was compatible with EU law.
The Advocate General’s opinion
The Advocate General examined the rules at issue and considered that the proposed “minimum price per unit” was a measure having equivalent effect to a quantitative restriction on imports and contrary to the free movement of goods (Article 34 EC Treaty). The prohibition of retail sale below a minimum price deprived traders from other Member States of the possibility of marketing their products at a selling price reflecting their lower cost price and impeded their access to the market.
He went on to consider whether the restriction could be justified by assessing the suitability of the measure for the objective sought (Article 36 EC Treaty). In particular, he considered whether the objective of protecting public health could be attained by alternative means i.e. a higher tax on alcoholic beverages, while being less restrictive of trade.
The Advocate General commented that whilst it was ultimately for the national court to identify the objective of the measure in question and examine the merits of the alternative measure of “increased taxation”, he felt it was difficult to justify the rules at issue. He considered that the minimum pricing was less consistent and effective than an “increased taxation” measure, and could be perceived as discriminatory.
He concluded that a Member State could choose rules imposing a minimum price per unit of alcohol, which restricts trade and distorts competition, but only if that has additional advantages or fewer disadvantages than the alternative. In his view, the alternative measure of increased taxation, was capable of providing additional advantages by contributing to the general objective of combating alcohol abuse. Accordingly, he considered that the proposed minimum price per unit of alcohol measure was not a proportionate way of ensuring public health and contrary to EU law.
The request in this case was unusual as AMPSA had not entered into force, however, that did not affect the admissibility of the request. The CJEU has, on previous occasions, recognised the admissibility of questions referred to it for preliminary ruling in preventative actions. Advocate General Bot commented that it is open to individuals to challenge the validity of legislation even where it has not been the subject of implementing measures.
The CJEU’s decision is expected shortly. However, it remains to be seen whether it will follow the approach taken by Advocate General Bot. If the CJEU agrees, then the matter will be referred back to the national court and the Scottish Ministers will need to reconsider the appropriate measure to promote public health and reduce the consumption of alcohol.
A copy of the Advocate General’s opinion is available to read here.