Scotland politics

Minimum alcohol pricing: Position of Italy

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

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

The Italian health authorities are, in general terms, in favour of pricing policies which, as indicated in the European Action Plan to reduce the harmful consumption of alcohol 2012-2020, are one of the measures designed to achieve that objective. Nevertheless, they take on board the views of the other departments with relevant competence regarding the possibility of identifying more appropriate measures than those proposed by Scotland in order to avoid market distortions.

The regulation notified to the Commission by the Scottish government anticipates setting a minimum price of 50 pence per unit of alcohol for the sale of alcoholic drinks to final consumers.

Unit of sale means 8g of alcohol per glass, irrespective of the nature of the alcohol product.

That regulation aims to stop any alcohol product being sold to the final consumer at a price below the minimum price. The purpose is to reduce consumption of alcohol products across the Scottish population in order to improve public health. In particular, the aim is to reduce consumption of cheaper alcohol products relative to their strength because this type of product is the more likely choice of problem drinkers and harmful to civil society.

The sensitivity demonstrated by the Scottish government towards alcohol consumption and the need for specific social measures and projects targeting an improvement in the population's living conditions and protection of human health is fully shared.

Notwithstanding this, neither the social effectiveness of a measure establishing a "minimum price for alcoholic substances" nor the contribution this could make achieving the established objective seem clear. It has in fact been amply demonstrated that no significant results have been achieved through "prohibition" or the use of "price increases" to regulate the consumption of potentially harmful substances and/or products. It is therefore considered that the measure in question cannot be made to fall within the scope of other measures adopted by the Scottish government with a view to structural change in consumers' approach to alcoholic drinks.

Moreover, fixing a minimum price, a horizontal measure, would be inequitable and discriminatory, because it takes no account of the way consumers consume alcoholic beverages and could have the effect, in particular, of penalizing moderate consumers of alcohol products.

It is therefore considered that the planned Scottish regulation is absolutely not justified as a health protection measure which could take advantage of derogation from Community rules.

As is well known, the establishment by law of a minimum selling price affects free movement and has the effect of altering competition both between local producers and those from other countries and between producers of the same categories of product, given that part of the pricing policy would be invalidated by the minimum threshold.

The possibility cannot be excluded that, if the Scottish measure were to go ahead with these specific rules, England, Northern Ireland and Wales would also be obliged to adopt a similar regulation, along with neighbouring states, in order to avoid consumers going from one country to another in search of alcohol products at a better price.

With regard to the wine sector, concern is heightened because setting a minimum selling price seems to be contrary to the principles laid down by the WTO, and any measure designed to achieve that end should be adopted within that regulatory framework, with specific references to the impact it could have on the entire production sector.

In view of the importance of the United Kingdom market for Italian wine products, great concern is caused by setting a minimum price that could cause confusion amongst consumers as regards the quality level of products if the price rise were absorbed in the medium/high quality bands. Alternatively, the gap between the prices of products of very different quality but with similar alcohol content could be narrowed, resulting in an even heavier impact on the free movement of goods.

In short, this proposal is unusual because, normally, legal action to protect consumer interests is designed to control prices by setting the maximum retail price of goods, rather than setting a minimum price to be applied to the final consumer.

Subjecting the market to price controls imposed by the authorities, as proposed here, means changing the normal operation of the market in which prices are determined by supply and demand, with repercussions on the freedom of economic initiative and competition between operators and contravening the principles of free movement of goods and services.

All the economic rules are being twisted because, above all at times like the present when there are serious economic problems, a measure that affects the ratio between product quality and service quality will distort the competitive relationship between lower quality products served at less efficient facilities and high quality products served under better conditions for consumers.

Setting a minimum price undoubtedly favours the lowest quality product which could enjoy higher economic margins.

It is therefore felt that this represents a serious interference in the economic activities of all operators involved in the food sector, from producers through to final retailers of the product, altering economic relationships on the market.

Concern arises not only from the consideration that the measure could harm the sale of Italian alcohol products and wine in particular, of which Italy is a leading global exporter. Mutatis mutandis, the principle followed by the Scottish Parliament (with which Wales, England and Northern Ireland could also be obliged to comply) is liable to be applied to any other kinds of food product of which - for health or other reasons - it might be wished in future to discourage consumption at national level. This would set a dangerous precedent in regulatory terms.

Moreover, it is pointed out that countries where consumer prices have always been very high as a result of consistent fiscal measures are those where the greatest health problems related to alcohol abuse are still found.

This being stated, having regard to the Scottish initiative's overall negative impact and the effect of distorting competition that it could have not only in the alcohol market but also in the market for food products in general, with serious repercussions on trading in the internal market, Italy expresses its firm opposition to the final adoption of the draft measure corresponding to notification 2012/0394/UK.