Scotland politics

Minimum alcohol pricing: Summary of the European Commission position

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

The European Commission's own legal opinion was made public last year.

Summary of the opinion from the Commission

Member states are not prohibited from setting minimum retail prices for alcoholic beverages but such a measure must comply with EU law, including the Treaty's rules on the free movement of goods: Articles 34-36 of the Treaty on the Functioning of the European Union.

Even though minimum pricing would be applied equally to domestic and imported products, it would not necessarily affect them in the same way.

For example, the price of French brandy would have to increase. The competitive advantage in the costs of French brandy production - maturing for six months to one year compared with at least three years for Scotch whisky - is removed by minimum pricing. A 70cl bottle of both products at 40% vol, would cost at least £14. Currently, 82% of French Brandy and only 3% of malt whisky is sold below that price.

The policy would also create a barrier to entry into the Scottish market. New products, which typically need to offer discounts to consumers to establish themselves, would not be able to do so.

For example, discounting and multi-pack offers popular with Irish and Swedish cider producers trying to establish a foothold in the UK's strong domestic cider market would no longer be possible.

Minimum pricing could be justified on the basis of Article 36 if there was an overriding requirement in the public interest but only if Scotland could prove that it was necessary and proportionate. i.e. the objective could not be achieved by any other means less restrictive of trade.

The Commission accepts that minimum pricing is aimed at tackling serious public health and social problems in Scotland as part of an overall strategy including 40 separate measures.

An increase in alcohol prices generally leads to a decrease in alcohol consumption however there are doubts about the policy's "compatibility with the principle of proportionality".

Increasing alcohol taxation is probably a "more suitable measure" in terms of free trade and "a better option" in terms of the policy goals.

Minimum pricing may create incentives for supermarkets to sell more alcohol as they will make higher margins on affected products. This would not be the case from an increase in duty.

There are other additional measures which the Scottish government could adopt, for example targeting specific geographic areas where the problem is most acute.

The Commission concludes that minimum pricing "may create obstacles to the free movement of goods within the internal market contrary to article 34 TFEU and appears to be disproportionate under article 36 TFEU. The UK authorities are invited to abstain from adopting the draft legislation at issue".

The policy "would be in breach of Article 34 TFEU were it to be adopted without giving due consideration to the above remarks".

Read the full opinion.