On 23 December 2015, the Court of Justice of the European Union (ECJ) – Europe’s highest court – ruled that a Scottish law establishing minimum unit pricing for alcoholic drinks may violate European Union law.

The case dealt with the The Alcohol (Minimum Pricing) (Scotland) Act 2012 (2012 Act), which imposes minimum unit pricing (MPU) on the retail sale of alcohol beverages in Scotland.

The stated purpose of the 2012 Act is to protect human life and health by increasing the price of low-cost, high-strength alcohol beverages, with a view to decreasing consumption.  To achieve this objective, the 2012 Act and a subsequent 2013 order prescribed that the MPU for alcohol beverages would be 0.50 GBP. The minimum sale price for alcohol beverages would then be determined by a formula that included the MPU as well as the strength and volume of the alcohol beverage.

The 2012 Act was challenged in court in Scotland, and its implementation has been delayed pending the outcome of the case. In the course of the proceedings, the Inner House of the Court of Session (the Scottish Court) referred to the ECJ certain questions concerning the interpretation of EU law. In particular, the Scottish Court asked whether the effect of the 2012 Act is to restrict the free movement of goods – a cornerstone of EU law – and if so, whether this can be justified in order to protect human life and health.  The Scottish Court also asked whether the 2012 Act can be justified when alternative tax measures are available, which would not impact the free movement of goods to the same extent.

Responding to those questions, the ECJ ruled that:

  • The 2012 Act is likely to impede access to the UK market for alcoholic products produced in other EU Member States, and thus restrict the free movement of goods. Nevertheless, such a restriction may be permissible as long as it is an appropriate means of protecting human life and health and is proportionate to this objective.
  • In this respect, the ECJ ruled that a Member State cannot reject alternative measures (g.,taxation measures) that may achieve the same objective and “may be less restrictive of trade and competition within the European Union.” The ECJ observed that a tax measure that increases the overall price of alcohol beverages could also protect human life and health, while still allowing suppliers the freedom to establish their prices. This suggests that the 2012 Act may not be seen as proportionate to its objective.
  • Ultimately, in light of the ECJ’s interpretation, it is for the Scottish Court to determine whether the MPU is justified.

The ECJ’s decision expresses a clear view that the 2012 Act restricts the freedom of goods, and that it may not be justified since other, less restrictive measures – e.g., excise taxes – could achieve the same health of objective, while not impeding trade and competition. This will undoubtedly create hurdles for proponents of the 2012 Act. The final chapter is not yet written, however, as the Scottish Court will ultimately decide the issue, and its final decision can be appealed to the UK Supreme Court.