Minimum alcohol pricing: Five countries oppose Scottish drink plan

Wine-producers are warning the plans could devastate the industry

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Five European wine-producing nations are trying to block Scotland's plans for minimum alcohol pricing.

France, Spain, Italy, Portugal and Bulgaria have said the policy is illegal, unfair and ineffective and could have a devastating impact on the wine and spirits industry.

They argue that it breaches European free trade law by discriminating against imported alcohol products.

The Scottish government insisted minimum pricing was "perfectly legal".

The European Commission (EC) is currently considering the Scottish government's request to be granted an exemption from trade regulations to enact the minimum price law which was approved by the Scottish Parliament last year.

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Deep in the heart of Portugal's Bairrada region, the lush green grapes are swelling slowly in the summer sun. It is a tranquil scene but this is the frontline”

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Of the 12 countries which have written to the Commission to express their views on the matter, only Ireland explicitly supported minimum pricing.

Copies of four legal opinions lodged with the EC, along with comments from seven other EU member states, were released to the BBC after a request under open government rules.

Italy refused permission for its opinion to be made public but the BBC has obtained it from another source.

Under European law, countries are allowed to restrict imports on public health grounds but only if doing so does not constitute a "means of arbitrary discrimination or a disguised restriction on trade between member states".

In practice a government which wants to introduce such a restriction must prove that the policy is absolutely necessary and that there is no, less-restrictive, alternative.

The legality of the Alcohol (Minimum Pricing) (Scotland) Act, which was passed by the Scottish Parliament in May 2012, is already being challenged in court by the Scotch Whisky Association (SWA) and two other trade bodies, spiritsEUROPE and the Comité Européen des Entreprises Vins, which represent European spirits and wine producers.

Wine glasses Wine-producing countries have highlighted concerns over the impact on exports

On 3 May, the SWA lost the first round of the legal battle when the Court of Session in Edinburgh ruled that the minimum pricing law, which concerns alcohol sold in supermarkets and shops, was legal.

But the SWA is now appealing against that decision, and Scottish government ministers have decided to wait for the outcome of that process before enacting the policy.

It could end up being considered by the Supreme Court in London and even the European Court of Justice in Luxembourg.

An SWA spokeswoman said the policy would damage its trade and damage overseas producers who rely on importing to Scotland and the UK.

She added: "The Scottish Court of Session failed to give any consideration to the effect of minimum unit pricing on producers in other European Union member states."

The association said it would continue to oppose the measure through the courts.

'Targeted' impact

A senior Scottish government source said it was likely to be at least another 12 months before a minimum price could actually be applied.

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The problem drink is cheap booze, cheap vodka, cheap cider”

End Quote Alex Neil Scottish Health Secretary

If it is eventually brought in, the price per unit of alcohol in Scotland is to be set at 50p, meaning a bottle of wine with an alcoholic strength of 12.5% would cost at least £4.69.

Ministers insist the measure is proportionate and necessary to tackle an alcohol abuse problem which puts a strain on police, courts, hospitals and families, costing Scotland an estimated £3.6bn each year.

Scottish Health Secretary Alex Neil pointed out that the only European court to consider the issue so far had approved minimum pricing.

He said: "The Court of Session in the dispute between the Scottish government and the Scotch Whisky Association resoundingly ruled in our favour.

"It's perfectly legal within European rules to introduce minimum unit pricing."

Mr Neil insisted that, unlike taxation, minimum pricing targeted "problem drink" and "problem drinkers", adding: "The problem drink is cheap booze, cheap vodka, cheap cider... and that's where the impact of minimum unit pricing will be.

"It won't be on deluxe whisky or a good wine from France."

Consumption 'down'

But Mr Neil has a tough job persuading some EU member states.

In its legal opinion, Portugal claimed that minimum pricing would have "a dramatic impact" on its export market to the UK "causing grave consequences to Portuguese companies and the sector in general".

Woman on bench Scottish ministers want the pricing measure to tackle problem drinking and address health costs

Lisbon said the policy was "clearly discriminatory" because continental European wine-producers have lower production costs and lower prices than British manufacturers.

"The effect of the minimum price is, in fact, to protect the domestic wine market and national producers against the competition of imported wines," said its legal opinion, adding that this "sets a dangerous precedent" which "may lead to the weakening of the EU".

It went on to claim that "there is nothing to indicate that (minimum pricing) would result in decreased alcohol consumption" and "recent statistics show that inappropriate consumption is decreasing in Scotland".

France said the UK was its biggest foreign market for wine, accounting for 17% of French wine exports, worth 1.2bn euros annually, and the "risk of distortion" from the Scottish bill meant the sector "could suffer serious losses".

It pointed out that "the average price of a bottle of wine produced in the United Kingdom is higher than the average price of imported wine" and said that minimum pricing was "incompatible" with EU law as it "closes the competitiveness gap, discourages efforts at market entry and... creates a distortion of competition".

'Not justified'

Paris also claimed that the Scottish government's objectives could "be attained by way of other measures which are less restrictive on trade", for example "a prevention campaign or taxation".

If minimum pricing went ahead, it argued, "the effect would be disastrous on the balance of European trade".

The Treaty on the Functioning of the European Union

  • Article 34: Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited
  • Article 35: Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States
  • Article 36: The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports

SOURCE: EUR-Lex

Bulgaria said that the policy would "create many obstacles to trade for Bulgarian wine and spirit producers".

It added: "The products that will be particularly affected are those in the lowest price bracket, into which Bulgarian wines fall."

Spain agreed that the measure "may be detrimental to the marketing of imported products" and added that it "cannot be justified on the grounds of public interest".

Italy said that fixing a minimum price "would be inequitable and discriminatory" and "is absolutely not justified as a health protection measure which could take advantage of derogation from Community rules".

It added: "In view of the importance of the United Kingdom market for Italian wine products, great concern is caused by setting a minimum price."

Rome described the policy as representing "a serious interference in the economic activities of all operators involved in the food sector".

Therefore because of the "overall negative impact and the effect of distorting competition... Italy expresses its firm opposition" to the plans.

Ireland, which said it was preparing proposals to develop a similar policy, pledged its support, saying that alcohol misuse was doing enormous harm to Irish society and was "responsible for at least 88 deaths every month in 2008" including those of one in every four young men.

Whisky shop The Scottish whisky industry has already raised a challenge to the plans

"Ireland's strong view is that minimum pricing is a proportional measure," its comment to the EC stated.

The Commission's own legal opinion was made public last year and warned that the policy appeared to breach European law. It too proposed that higher taxes should be considered as an alternative.

In it, lawyers for the Commission cite the example of French brandy and Scotch whisky.

They say 82% of French brandy and just 3% of malt whisky is sold below the proposed minimum price of 50p per unit of alcohol.

Under the plans a 70cl bottle of both products at 40% ABV would cost at least £14, a dramatic rise for most brandies but no change for most malts.

Thus "the competitive advantage in the costs of French brandy production... is removed by minimum pricing".

Table wines

Other countries made similar points in their comments on the policy.

Poland said the law would "place Scottish-made products in a privileged position" while restricting competition and promoting the "development of illegal production and sale of cheaper alcohol".

It said "... the price of 63% of table wines, the majority of which are imported" would rise "as will the price of 92% of vodkas, a significant proportion of which will be imported".

And Warsaw insisted that "more effective and less restrictive measures are available", quoting the Scottish government's own data which indicates that alcohol-related hospitalisation and mortality are falling as is alcohol consumption among Scottish adults.

Therefore, argued Poland, the evidence against minimum pricing came from Edinburgh itself because "the Scottish government has now successfully introduced a broad range of alternative, less restrictive but effective measures which are less discriminatory than a minimum price".

Meanwhile, Vienna pointed out that a minimum price for cigarettes in Austria was abolished by the European Court of Justice in 2010 on account of its incompatibility with EU law, adding that while minimum pricing for alcohol "appears to be welcome from a health policy point of view... on its own (it) is unlikely to resolve alcohol problems".

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