Scotland politics

Minimum alcohol pricing: Position of Denmark

Opinions of European Union member states on Scottish government plans for minimum alcohol pricing have been released to BBC Scotland.

Position of Denmark on Notification 2012/0394/UK on the draft Alcohol (minimum price per unit) (Scotland) Order

The UK has notified a draft Order on the establishment of minimum prices for alcoholic drinks in Scotland. Under the Order, an alcoholic product may not be sold to consumers at a price that is lower than a set minimum price.

The objective of establishing minimum prices is 'to reduce alcohol consumption across the Scottish population to improve public health and attain social benefits in the areas of crime, public services, productivity and the economy as a whole'.

It is recognised that overall, improving public health is worthy of protection under EU law on the free movement of goods; TEUF Articles 34 and 36. It is also recognised that pricing regulation, as proposed, can be an effective instrument to reduce alcohol consumption.

However, a measure of this nature must, in addition to being justified by protective considerations, also be non-discriminatory, necessary, and proportionate.

The Scottish authorities are therefore requested to explain the conformity of the proposal with TEUF Article 34, including whether or not the establishment of minimum prices will result in an uneven playing field for domestically produced goods and imported goods from other Member States.

As stated in Paragraph 14 of the judgement of Case 82/77, van Tiggele, 'Thus imports may be impeded in particular when a national authority fixes prices or profit margins at such a level that imported products are placed at a disadvantage in relation to identical domestic products either because they cannot profitably be marketed in the conditions laid down or because the competitive advantage conferred by lower cost prices is cancelled out.'

By extension of the above, the Scottish authorities are requested to specifically explain how minimum prices are set, including whether or not the minimum prices take domestic production costs into account.

From a competitive perspective, it must also be mentioned that the establishment of a minimum price on the present basis will reduce competition in the area. By establishing a minimum price, the Scottish authorities thus reduce competition through one of the key competitive factors in the market economy.

It must be added here that the minimum price is expected to cover up to 3/4 of the alcohol sold in Scotland. When minimum prices cover such a large proportion of the market, the anti-competitive effect of the Act becomes even more pronounced.

The proposal will also result in greater difficulties for the most efficient producers of alcoholic beverages to gain market share by competing on price.

It is also worth noting that the minimum prices seem to largely affect the private label products that have helped to put competitive pressure on competing products, particularly the established brands.

By removing this competitive pressure, it must be assumed that market prices (for alcoholic beverages) will rise in general and thus also affect products which are not directly subject to the minimum prices.