Out-Law News 3 min. read

Supreme Court backs Scottish minimum alcohol pricing plans

Plans to introduce a minimum unit price (MUP) for alcohol sold in Scotland are proportionate means of tackling alcohol-related harm, the UK's highest court has ruled.

The Supreme Court's decision clears the way for the Scottish government to consult on and then introduce the policy, which has been on hold since legislation was passed by the Scottish parliament in 2012 due to an ongoing legal challenge by a number of trade bodies, including the Scotch Whisky Association (SWA).

The Scottish government has committed to a review of the policy after five years while a 'sunset' provision, included in the legislation, means that it will expire after six years unless renewed by a ministerial decision which receives the positive approval of the Scottish parliament. This was a "significant factor" in the Supreme Court's ruling that the policy was proportionate, according to licensing law expert Audrey Ferrie of Pinsent Masons, the law firm behind Out-Law.com.

"The Supreme Court has supported the decisions of the Lord Ordinary and the First Division of the Court of Session that, on an objective examination of the material before them, the proposed system of minimum pricing is proportionate as required by EU law," she said.

"A key point was whether taxation would achieve the same objectives. The view of the Lord Ordinary, now upheld by the Supreme Court, is that taxation would 'impose an unintended and unacceptable burden on sectors of the drinking population whose drinking habits and health do not represent a significant problem in societal terms'. The focus is on the impact on lower income and more deprived groups, who it is considered will benefit more in health terms," she said.

Importantly, the Supreme Court held that it was for the Scottish government to decide as a matter of general policy to target alcohol-related harm. "The courts should not interfere lightly with that right," she said.

"From a licensing perspective, when the regime is brought into effect, an additional condition will be inserted into all licences, both on and off sale, that an alcohol product must not be sold at a price below the statutorily determined minimum price per unit of alcohol," she said.

The Alcohol (Minimum Pricing) (Scotland) Act was passed in May 2012 by the Scottish parliament. It prohibits the sale of alcohol below a minimum price, calculated on the basis of the drink's alcoholic content. The Scottish ministers have proposed an MPU of 50p, subject to consultation and an up-to-date business and regulatory impact assessment.

The SWA, along with other European wine and spirits trade bodies, began a legal challenge against the policy in 2012. Although this was rejected by the Outer House of the Court of Session in May 2013 the Inner House, which is Scotland's highest civil court, referred the case to the Court of Justice of the European Union (CJEU) on appeal after finding that it "raised questions of European law". The CJEU ruled in 2015 that the policy was incompatible with EU law "if less restrictive tax measures can be introduced", but left this final test to the Scottish courts.

The Inner House backed the planned policy in its ruling of October 2016.

The Supreme Court, sitting as a panel of seven judges, said that it was "ready to accept" that a general increase in excise duties or VAT across narrowly defined bands of alcoholic strength was permitted by EU law as an alternative, in disagreement with the lower courts. However, tax increases would not be as effective at targeting the health hazards of cheap alcohol in particular, as intended by the policy.

"[T]axation would impose an unintended and unacceptable burden on sectors of the drinking population, whose drinking habits and health do not represent a significant problem in societal terms in the same way as the drinking habits and health of in particular the deprived, whose use and abuse of cheap alcohol the Scottish parliament and government wish to target," said Lord Mance, giving the judgment of the court. "In contrast, minimum alcohol pricing will much better target the really problematic drinking to which the government's objectives were always directed."

The judge cited new research by the University of Sheffield, published in April 2016, which indicated that tax increases by as much as 36% in some cases would be needed to deliver the same beneficial impacts as a 50p MUP.

"As to the general advantages and values of minimum pricing for health in relation to the benefits of free EU trade and competition, the Scottish parliament and government have as a matter of general policy decided to put very great weight on combatting alcohol-related mortality and hospitalisation and other forms of alcohol-related harm. That was a judgement which it was for them to make, and their right to make it militates strongly against intrusive review by a domestic court," he said.

The court acknowledged that the policy was an "experimental" one. However, this was catered for by the review and 'sunset' clause provisions, the judge said.

Scottish health secretary Shona Robison welcomed the decision, and confirmed that she would make a statement to the Scottish parliament shortly setting out the government's next steps.

"Given the clear and proven link between consumption and harm, minimum pricing is the most effective and efficient way to tackle the cheap, high strength alcohol that causes so much damage to so many families," she said. "We will proceed with plans to introduce minimum unit pricing as quickly as possible."

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