‘Counting every sip of my whiskey?’ The CJEU rules on minimum alcohol price

Dr. Agne Limante, Research Fellow, Law Institute of Lithuania

 While most Europeans were buying presents and wine for Christmas eve, on 23 December 2015 the Court of Justice of the European Union delivered a long awaited judgment in Scotch Whisky Association case[1] which related to a plan of the Scottish government to introduce a minimum unit alcohol price. In short, the Court ruled that introducing a minimum unit alcohol price would breach EU law if other tax options exist.

Factual circumstances and the CJEU ruling

In May 2012, seeking to pursue the objective of the protection of human life and health by means of increasing the price for the consumption of alcohol, the Scottish parliament approved the minimum unit price for alcoholic drinks (MUP). However, the measure was not implemented as the Scotch Whisky Association and other alcohol lobby groups brought a judicial review action before the national court arguing, inter alias, that such measure would be against the Regulation (EU) No 1308/2013 (Single CMO Regulation )[2] and EU free movement law.[3] When the case reached the appeal court, it decided to stay the proceeding and to refer to the CJEU several preliminary questions.[4]

For a while the questions referred were pending before the CJEU – it usually takes around 1.5 years until the preliminary rulings are issued. This was exactly the case here. The request for a preliminary ruling was received at the Court in July 2014, Advocate General Bot issued his Opinion in the beginning of September 2015[5] and on 23 December 2015 the judgment of the CJEU was rendered. Its main conclusions were as follows.

The Court firstly evaluated the argument that setting minimum alcohol unit price is in breach of the Single CMO Regulation (this argument was relevant to wine producers only, since wine is regulated under CAP). The Court noted that the Single CMO Regulation contains neither provisions that permit the fixing of the retail selling prices of wines, either at national or EU level, nor provisions that prohibit Member States adopting national measures fixing such prices (para 17). Despite that, according to the Court, such measures as those in question are incompatible with the principle that is the foundation of that regulation – the free formation of selling prices of agricultural products on the basis of fair competition – unless they could be justified (para 24-28).

The Court then proceeded by analyzing whether MUP is in line with Articles 34 TFEU and 36 TFEU. The Court found it easy to qualify that MUP falls under the concept of ‘measures having equivalent effect to quantitative restrictions on imports’, within the meaning of Article 34 TFEU, as defined in the Dassonville case[6] (para 32).[7] However, the Court acknowledged that MUP could be justified on grounds of the protection of the health and life of humans under Article 36 TFEU, if it would be proved to be (i) appropriate for securing the achievement of the objective pursued and (ii) would not go beyond what is necessary in order to attain it (proportionality).

As regards the appropriateness, the CJEU agreed with the Advocate General that it does not seem unreasonable to consider that the introduction of MUP is capable of reducing the consumption of alcohol, in general, and the hazardous or harmful consumption of alcohol, in particular (by increasing the price of cheap alcoholic drinks). In addition, the suggested measure reflected the Government’s concern to secure the attainment of the said objective in a consistent and systematic manner since it formed part of a more general political strategy designed to combat the devastating effects of alcohol.

To evaluate proportionality was not, however, such a straight forward case. The main question here was whether increase in taxation (resulting in increase in the prices of alcoholic drinks) would not be similar in effectiveness while less restrictive in regard to free movement of goods. The Court was clear that a fiscal measure which increases the taxation of alcoholic drinks is liable to be less restrictive of trade in those products within the EU than a measure imposing MUP (para 46). The Court also implied that increased taxation should not be less effective and could even be capable of procuring additional benefits as compared with the imposition of MUP. However, it left it for the national court to give the final ruling: to determine whether increased taxation on alcoholic drinks or other measure, would be capable of protecting human life and health as effectively as MUP, while being less restrictive of trade.

Interestingly, the analysis above shows that in this case, leaving aside the question of whether MUP could be classified under ‘selling arrangements’ (Keck case[8]), the Court decided to follow the line of ‘market access’ test. The reasoning of the Court revolved around the idea of the effect of minimum alcohol pricing on competition between the EU producers – or to be more precise, on the possibility of such a measure impeding market access. The producer who can produce the product (alcoholic drink in this case) in other Member States cheaper due to lower production or labour costs, loses his competitive advantage – such a producer is not allowed to compete by offering his products cheaper than the set minimum unit price.

Further steps

Following this preliminary ruling of the CJEU, the case will proceed to the national court (Edinburgh’s Court of Session) which in 2016 will have to give its final judgment on whether a minimum unit price is justified. This decision could further be appealed to the UK Supreme Court.

The CJEU suggested that higher taxes could reduce alcohol use while maintaining fair market competition and be a proper alternative to MUP. Nevertheless, it is important to highlight that the Court did not state that the minimum unit price is against EU law. It only ruled that other measures should be considered first, in particular whether increasing taxation could be an effective route to reach intended targets. The Government remains entitled to argue that the increased taxation was not sufficient and did not succeed to reduce alcohol consumption in the country.[9] Edinburgh’s court is thus free to rule that the Government may introduce minimum pricing provided it receives enough evidence that MUP is more effective than taxation.

Implications of the judgment to wider Europe

The CJEU judgment in Scotch Whisky Association, together with the upcoming judgment of the national court, appears to form an important precedent for the governmental strategies in the area of alcohol consumption control. Since most EU countries are running programs to lower the use of alcohol, the judgments in this case are likely to suggest to other states whether MUP or similar measures could be an option.

Most interested in the case will probably be Ireland who has has also approved the introduction of minimum unit price, But other countries, not even considering MUP yet, could find this case important.

Lithuania, for example, recently took several steps intended to target heavy drinkers, however, it chose a different approach. An interesting example from this country is limitations in alcohol packaging. Lithuania, targeting  the cheapest alcoholic drinks and hard drinkers, limits the sale of alcohol in plastic bottles – drinks of over 7.5% may not be sold in bottles larger than 0.5 litre, while less strong alcohol – in larger than 1 litre plastic bottles.[10] There are no similar restrictions on drinks in other types of packing. Seeing this from the CJEU case law perspective, such a measure is a measure having equivalent effect to quantitative restriction (Article 34 TFEU) as it limits the packing of the products. However, Lithuania claims it is proportional and targets heavy and regular drinkers buying the cheapest alcohol in big quantities – something quite common in its country side. So far Lithuania has not yet seriously considered introducing MUP, but this might come into the state’s plans should Edinburgh’s court rule in favour of it.

 

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[1] Scotch Whisky Association, C‑333/14, EU:C:2015:845.

[2] Regulation (EU) No 1308/2013 of the European Parliament and the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007. OJ 2013 L 347, p. 671.

[3] The Scotch Whisky Association & Ors, Re Judicial Review [2013] ScotCS CSOH_70 (03 May 2013).

[4] The Scotch Whisky Association & Ors v The Lord Advocate & Anor [2014] ScotCS CSIH_38 (30 April 2014).

[5] EU:C:2015:527.

[6] Dassonville, 8/74, EU:C:1974:82. According to it, such measures include ‘all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade’.

[7] Already in eighties, in van Tiggele & Tasca case (82/77) the Court considered that the then Article 30 of the EEC Treaty must be interpreted to mean that the establishment by a national authority of a minimum retail price fixed at a specific amount and applicable without distinction to domestic products and imported products constitutes a measure having an effect equivalent to a quantitative restriction on imports which is prohibited under the said Article 30.

[8] Keck and Mithouard, C‑267/91 and C‑268/91, EU:C:1993:905. The Court here considered that the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to constitute an obstacle to inter-EU, so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and the marketing of products from other Member States.

[9] Several researches were performed in the related fields. See, for example, University of Sheffield. Alcohol Minimum Price Modelling Research, 2012. Available at: https://www.shef.ac.uk/polopoly_fs/1.156503!/file/scotlandjan.pdf.

[10] Such regulation was a reaction to a practice to sell cheapest beers in 2 liters plastic bottles for a very low price.