LGA publishes guidance on legal issues around Reducing the Strength schemes

The Local Government Association has published guidance for licensing authorities on ‘Reducing the Strength’ schemes and competition law issues.

The guidance, which can be viewed here, covers:

  • Alcohol consumption and street drinking; defining street drinking; tackling street drinking;
  • Setting up a ‘Reducing the Strength’ project: core principles of good schemes; designing and launching a scheme – step by step guide;
  • Legal issues: competition law and Reducing the Strength schemes; licensing conditions and Reducing the Strength schemes.

The publication also includes case studies on projects in Suffolk and Portsmouth.

In the introduction, the LGA said the Reducing the Strength models used so far varied from place to place, but tended to target alcohol products above 6.5% by volume (abv). Some had also focused on a slightly lower abv or lower cost products.

The Association noted that a number of concerns had been raised about the schemes, particularly by retailer and producer associations.

“The primary concerns raised have been whether such schemes breach competition law and/or whether councils have breached the Licensing Act by seeking to put in place blanket licensing conditions,” the LGA said.

“Concerns have also been raised about whether more recent schemes have adopted the evidence based, holistic approach of the original Suffolk scheme, which aimed to tackle a particular problem in a specific area through a joined up approach with other agencies.”

The Association added: “Finally, there are concerns about unintended consequences, such as the removal of products that were not a target for such schemes.”

The LGA said the aim of its guidance was “to help ensure that Reducing the Strength schemes are designed and established in a way that addresses these concerns and complies with relevant legislation”.

The guidance said that the activities of councils and their staff themselves were unlikely to be caught by competition law specifically.

“Local retailers, however, clearly are undertakings within the meaning of Competition Law," it noted. "They must, therefore, ensure that they are not engaging in anticompetitive behaviour otherwise they could face significant penalties, including significant fines."

The Association said the key point was to ensure that retailers were aware they must make individual and independent decisions about whether to participate in schemes of this kind.

“Specifically they should avoid engaging in any form of co-ordinated action or in agreements or concerted practices that would reduce or prevent competition between them. In particular, retailers should avoid sharing sensitive commercial information (eg about prices, costs, volumes, future commercial strategies) with competitors,” the guidance highlighted.

“If the scheme involves retailers discussing such schemes with other businesses, the businesses should take care not to allow such discussions to stray into talking about sensitive commercial matters, ie anything which could lead them open to the charge of colluding on issues such as pricing or commercial strategies (including which products to stock).”

The LGA said this risk was mostly likely to emerge at the startup of a scheme, as councils worked with retailers to seek their participation, and should be considered in the design and implementation of the scheme.

“The easiest way to avoid this risk is to engage bilaterally with individual retailers, rather than with groups of retailers together,” it suggested.

The guidance advised councils, if they do meet with retailers jointly when setting up a scheme, to set out the competition law risk upfront and not to invite them to indicate publically if they will sign up to the scheme there and then.

“It is acceptable to ask them to inform you privately if they will join up, but a public commitment in advance of a scheme being launched could be interpreted as collusion,” the Association said.

The guidance also suggested it was sensible to be mindful of the competition law risk when thinking about communicating the launch of the scheme.

“It is fine to hold a launch event and develop branding for the scheme and once the scheme is live, you may wish to name businesses involved and provide branding and promotional materials for participating businesses to display if they wish. However, participating businesses should not be named or advertise their participation before the scheme is formally launched.”

Councils should also avoid encouraging people to sign up by naming other businesses which are participating or plan to participate. “Retailers should be convinced to join by the public policy message only.”