Minimum alcohol pricing legislation in Scotland is lawful, Supreme Court rules

Legislation in Scotland for the introduction of minimum alcohol pricing does not breach EU law and is a proportionate means of achieving a legitimate aim, the Supreme Court has ruled.

In Scotch Whisky Association and others v The Lord Advocate and another (Scotland) [2017] UKSC76 the appellants had sought to challenge the lawfulness of The Alcohol (Minimum Pricing) (Scotland) Act 2012.

The 2012 Act amends schedule 3 to the Licensing (Scotland) Act 2005 by inserting in the licence which any retail seller of alcohol in Scotland must hold, an additional condition that an alcohol product must not be sold at a price below a statutorily determined minimum price per unit of alcohol. The minimum price is to be set by secondary legislation. The current proposal is 50 pence per unit of alcohol.

The Scottish Ministers agreed not to bring the 2012 Act into force or make any order setting a minimum price until determination of these legal proceedings.

The remaining ground of the appellants’ case before the Supreme Court was that minimum unit pricing was disproportionate under EU law.

The appellants’ case had been rejected at first instance and – following a reference to the Court of Justice of the European Union – then by the First Division of Scotland’s Inner House.

The respondents accepted that minimum pricing would affect the market and EU trade in alcohol. The issue before the Supreme Court was whether they could justify that market interference.

The case was heard by a seven-justice panel comprising Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr, Lord Sumption, Lord Reed and Lord Hodge. Lord Mance gave the only judgment, with which the other judges agreed.

The appellants had called for less restrictive measures – such as an excise or tax – to achieve the same aim.

Lord Mance said he was ready to accept (contrary to the view on which the courts below proceeded) that the relevant EU directives would permit additional excise duties or VAT levied at different rates by references to narrowly defined bands of alcoholic strength.

However, he also concluded that:

• Minimum pricing targeted the health hazards of cheap alcohol and the groups most affected in a way that an increase in excise or VAT did not. The latter would be felt across the board in relation to the whole category of goods to which it applied and unnecessarily affect groups which were not the focus of the legislation;
• Minimum pricing was easier to understand and simpler to enforce. It would not be open to absorption (eg by selling alcohol below cost in order to attract other business onto their premises).

Lord Mance also said the courts should not second-guess the value which a domestic legislator puts on health. As such, there was limited scope for the criticism made by the appellants about a lack of EU market impact evidence.

A ‘sunset clause’ indicating the provisional nature of the proposed regime was a significant factor in favour of upholding it, the judge added, saying that a submission that the Scottish Government should have gone further than it did to assess market impact was not realistic.

Following the ruling, the Scottish Government said that prior to implementing the policy, ministers would now conduct a consultation on the proposed 50 pence per unit price and refresh the Business and Regulatory Impact Assessment (BRIA) that is required by the Scottish Parliament.

It added that it anticipated setting the minimum unit price at 50 pence per unit, subject to the outcome of the consultation and the refreshed BRIA.

Shona Robison, Health Secretary in the Scottish Government, said: “This is a historic and far-reaching judgment and a landmark moment in our ambition to turn around Scotland’s troubled relationship with alcohol. In a ruling of global significance, the UK Supreme Court has unanimously backed our pioneering and life-saving alcohol pricing policy.

“This has been a long journey and in the five years since the Act was passed, alcohol related deaths in Scotland have increased. With alcohol available for sale at just 18 pence a unit, that death toll remains unacceptably high.

“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."

Robison said the Scottish Government would proceed with plans to introduce minimum unit pricing "as quickly as possible". She said she intended to make a statement to the Scottish Parliament shortly setting out its next steps, including its preferred implementation timetable and how it would engage with retailers and industry.

Responding to the Supreme Court’s decision, Karen Betts, Scotch Whisky Association chief executive, said: "We accept the Supreme Court's ruling on minimum unit pricing (MUP) of alcohol in Scotland. Looking ahead, the Scotch Whisky industry will continue to work in partnership with the government and the voluntary sector to promote responsible drinking and to tackle alcohol-related harm.

"We will now look to the Scottish and UK Governments to support the industry against the negative effects of trade barriers being raised in overseas markets that discriminate against Scotch Whisky as a consequence of minimum pricing, and to argue for fair competition on our behalf. This is vital in order that the jobs and investment the industry provides in Scotland are not damaged. At home, we hope to see an objective assessment of the impact of MUP."

[This article is based in large part on the Supreme Court press summary]