Minimum pricing: the latest

On 3 September Yves Bot, the Advocate General (AG), issued his opinion in the latest stage of Scotch Whisky Association v Lord Advocate (Case C-333/14): see http://is.gd/nenkNZ. It runs to 153 paragraphs and is inevitably complex. Space constraints mean this can be no more than a brief summary. The case centres on the legality of the Alcohol (Minimum Pricing) (Scotland) Act 2012 proposing what has come to be known as minimum unit pricing (MUP).

Only the beginning

If you read the press you would note that both sides were claiming victory. In fact, there is a long way to go. The pursuers had appealed to the Inner House, which in turn asked the Court of Justice to issue a preliminary ruling. Procedurally the matter next goes to the full ECJ. While the ECJ will often follow the AG’s opinion, it is not obliged to do so. It is likely to take another six months or so for a full decision.

In summary, from para 2 of the AG’s opinion, the request was for a ruling on whether MUP was compatible with EU rules. It appears that most commentators have read no more than the first couple of pages. In fact, a total of six questions were posed, the question of what I may call “inherent incompatibility” being but one of them.

For those, like me, for whom some of the acronyms in the opinion were unfamiliar, a brief explanation. TFEU is the Treaty on the functioning of the EU. There is also much reference to a “single CMO regulation”. A CMO is a common market organisation. Once upon a time, under the Common Agricultural Policy, there were 21 of these. Much needed simplification produced a single regulation establishing a common organisation of the markets for agricultural products, the single CMO regulation. Apologies to those who already know this, but the opinion is tricky to follow if you don’t.

Key provisos

The Scottish Government has taken heart from the AG’s view that rules imposing MUP for alcohol would not “by their very nature be contrary to the system and be harmful to it”. There are, however, important caveats. The AG’s proviso is: “provided that those rules are justified by the objectives of the protection of human health, and in particular the objective of combating alcohol abuse, and do not go beyond what is necessary in order to achieve that objective” (my emphasis).

The next important stipulation relates to one of the main tenets of all EU law, proportionality. Easy to say, more difficult to define. There is an excellent exposition at paras 73-76 of M Bot’s opinion, where he recommends a three stage process. First, is the proposed act suitable for the aim sought? Secondly, the “minimum interference test”, i.e. can the same objective be pursued in a manner imposing fewer restrictions on trade? Thirdly, compare the extent of the interference with the contribution which that measure could secure for the protection of the objective pursued. It is made quite clear that these are matters to be answered by the national court.

Tax alternative?

Another important question considered is whether the proposed objective could not be attained in a less restrictive and equally effective manner by higher taxation. This was an argument put forward by the Scotch Whisky Association, well aware that public opinion would not swallow it. In analogous tobacco cases, however, the ECJ seems to have come to that conclusion, taking the view that such action would be less disruptive of trade between member states.

I find para 141 of particular interest: “It is only where the member state has a choice between different measures suitable for attaining the same aim that it is under an obligation to have recourse to the measure least restrictive of freedom of trade within the European Union.” No one seems to have addressed the unique situation of a member state, the UK, one of whose parts has a separate legal system, but does not have the power to effect the taxation changes which might be an alternative. Were I in the Government camp I would be looking at that with interest.

Nothing, of course, is simple. If the ECJ agrees with the AG, the matter will come back to the Inner House next year. Whatever it decides will go to the Supreme Court. Will this preliminary referral to Europe be enough to prevent a further appeal to the ECJ? Probably not. Don’t bet your house on the matter being resolved this decade.