Scotland has amongst the highest rates of alcohol-related harms in Western Europe and over the last three decades has observed an approximate 3-fold increase in alcohol-related mortality.1 The Scottish Government has identified the affordability of alcohol as a key component for an effective strategy in addressing these harms. While increases in alcohol duty can be used to reduce affordability, responsibility for determining alcohol duty lies with the UK rather than Scottish Parliament so the introduction of a minimum unit price (MUP) is being considered as a more targeted alternative. Its potential introduction raises a number of important legal considerations that bear relevance to future public health legislative measures across the European Union. In this article, we outline some of the main considerations as illustrated by the case study of MUP in Scotland and discuss the implications for countries across Europe and other areas of public health policy.
Legal considerations in minimum unit pricing of alcohol
The Alcohol (Minimum Pricing) (Scotland) Act, along with subordinate legislation, will require holders of liquor licences to charge a minimum price per unit of alcohol (calculated as the minimum price charged = minimum price per unit × strength of the alcohol × volume in litres). However, the introduction of MUP has implications for the obligations of the UK as a member state of the European Union (EU). The Treaty on the Functioning of the European Union (like its predecessor treaties) includes the currently named Article 34. This article states that: ‘quantitative restrictions on imports between member states and all measures having equivalent effect shall be prohibited’. But Article 36 sets out situations where that prohibition does not apply:
The provisions of Article 34 … shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans … Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
Depriving businesses of the opportunity to use their efficiency (as manufacturer or dealer) to charge lower prices than competitors is an interference with market forces that might impede cross-border trade in Europe. That makes it a ‘measure having equivalent effect’ to a quantitative restriction on imports and means it will be caught by the Article 34 prohibition, unless an Article 36 justification (in this case protection of health), renders the prohibition inapplicable.
The declared purposes of MUP are to ‘reduce alcohol consumption in Scotland, in particular reducing the consumption of alcohol by harmful drinkers, and reduce the impact that alcohol misuse has on public health, crime, public services, productivity and the economy as a whole’.2 But crucially, Article 36 cannot save a measure that falls under Article 34 from prohibition just because its proponents claim that it has a health purpose. Minimum alcohol price measures have been condemned by the European Court of Justice in the past. So, too, has minimum tobacco pricing. The reason given was that Article 36 was not available unless no alternative measure, less restrictive of trade, could attain the health objective just as well. An increase in duty or a ban on below-cost sales (loss-leading), neither of which would fall under Article 34, would fulfil the apparent objective of increasing the price to consumers. Therefore, it was considered, the market interference resulting from minimum pricing would be disproportionate to the benefit sought. In the case of tobacco only, there was the further point that the excise duty regime applicable under EU law is incompatible with a minimum pricing regime.
To bring MUP within Article 36 and so rescue it from the Article 34 prohibition, the Scottish Government must demonstrate two things: first, that MUP can indeed ‘reduce the consumption of alcohol by harmful drinkers, and reduce the impact that alcohol misuse has on public health’ and second: that an alternative less trade-restrictive measure (such as increase in duty or a ban on below-cost selling) could not do so just as well. It is irrelevant that the Scottish Parliament has no powers over competition law (ruling out a ban on loss leading) nor over excise duty (likewise reserved to the UK Westminster Parliament). The question is whether such alternative measures would be sufficient to meet the declared purpose of the measure, not which organ of the EU member state has power to take them.
The proposed legislation has been accompanied by much research and debate.3 The Scottish Government has notified plans to introduce MUP to the European Commission under the standards Directive (98/34/EC). The practical effect of notification is that it puts the matter in the hands of the Commission and eliminates the prospect of litigation before the national courts on the European law issues. The Commission will be responsible for deciding on the legality of the intervention on the basis of the evidence and arguments put forward. Only the Court of Justice of the European Union has jurisdiction to review anything done by the Commission. It will review the legality of the Commission’s process but it will not interfere with a conclusion properly arrived at.
From a legal perspective, an important difficulty for advocates of MUP is the lack of experimental evidence demonstrating its effectiveness and the consequent reliance on econometric modelling. What if all currently available evidence supports the case for minimum pricing but, after it has been in operation for a time, it fails to deliver the expected benefits? There are extensive plans to monitor and evaluate the introduction of MUP in Scotland and produce an evidential basis for review of the actual outcomes delivered by the legislation.4 It was announced that the measure itself was to contain a review or ‘sunset’ clause.5 This means that whatever intervention the Scottish Government implements now can be reviewed in the future to ascertain what results MUP has delivered and to consider whether it has been materially more effective than other less trade-restrictive approaches. The purpose of this ‘safety valve’ is to enable a provisional conclusion on proportionality to be drawn now on existing econometric modelling evidence, as the best evidence currently available, and then to allow a further outcome-based review in the future. This feature might encourage the European Commission to allow the MUP legislation to proceed, on the basis that it would be revoked if its proportionality should turn out not to have been demonstrated.
Implications for European public health legislation
While the case study we have considered is based within Scotland, the principles apply more generally across the European Union and European Economic Area. They are also likely to influence the interpretation by the World Trade Organization of the similar provisions of Article 20 of the General Agreement on Trade and Tariffs (GATT) and therefore be of relevance to public health internationally.
Many areas of public health may benefit from legislative measures and political will is usually a necessity for their introduction. However, in addition to political factors, legal barriers may need to be considered.
Many interventions apart from pricing mechanisms may be interpreted as interfering with imports and exports within the European Economic Area (and further afield) and could raise similar legal issues. These include selective taxation or tax rates (such as on sugary drinks or fatty foods) or product specification (such as plain labelling of cigarette packets). Epidemiological methods have been traditionally strong at demonstrating the extent and causes of a problem, thus highlighting areas of public health need and potential focuses for action. There is also a growing acknowledgment of the central role for the evaluation of these public health actions. However, for novel legislative interventions, modelling studies that directly compare alternative measures (some of which may be less trade-restrictive) may be of increasing use for policy. Consideration of these alternative measures, with the ability to demonstrate that this process has been carried out robustly, may therefore aid the demonstration of the legality of important future public health interventions.
S.V.K. is funded by the Chief Scientist Office at the Scottish Health Directorates as part of the Evaluating Social Interventions programme at the MRC Social and Public Health Sciences Unit (MC_US_A540_0013).
Conflicts of interest: S.V.K. is currently involved in planning evaluation of the introduction of minimum unit pricing for alcohol in Scotland. J.M. is a member of the Law Reform Committee of the Law Society of Scotland and has provided evidence to the Health and Sport Committee of the Scottish Parliament on the topic of minimum unit pricing.
S.V.K. conceived the idea for the article, contributed to writing and revision of the manuscript. J.M. provided expertise on legal content, contributed to writing and revision of the manuscript.