Minimum alcohol pricing and EU Law

The legality of minimum alcohol pricing under EU law is being challenged in the courts. Here, at the invitation of IAS, solicitor Jonanthan Goodliffe examines the issue.

Introduction
European law is being invoked to defeat alcohol harm reduction strategies.

This is a paradox, since the wellbeing of the population and the promotion of public health are primary objectives in the European treaties in their modern form. I have demonstrated this proposition in a five page note that collects the relevant material from the treaties with some brief commentary. My note also shows how the treaties provide legal support for alcohol harm reduction strategies.

The democratically elected Scottish Parliament has passed the Alcohol (Minimum Pricing) Act 2012. The intention is to apply a minimum unit price to alcohol. The scientific evidence suggests that this is an effective harm reduction strategy. It is well within the domestic competence of member states under European law. However, the initiative is opposed by industry interests, who are supported by the European Commission.

The European Commission’s views
Issue 3 2012 of Alcohol Alert printed, without comment, extracts from an opinion of the European Commission.
The Commission argued that the Scottish government’s proposals had effect as a quantitative restriction on imports, since they would have more impact on importers than on domestic producers. Such restrictions are banned under article 34 of the Treaty on the Functioning of the European Union (TFEU).

Article 36 provides that article 34 does not preclude restrictions “justified on grounds of … the protection of health and life of humans”. However, before the Treaties had acquired their modern form, the European Court had applied a gloss to this provision. The Court ruled that restrictions should not be applied under article 36 more than is “necessary” to protect the interest in question.

The European Commission argues that “the increase of excise duty appears to be a better option to reach the goals sought” since it will not distort trade in the same way as minimum pricing.

The legal challenge
Industry interests, fortified by the Commission’s support, have brought judicial review proceedings to challenge the Act. The case has been argued before a judge of the Outer House of the Scottish Court of Session, Lord Doherty. I understand that Lord Doherty may deliver his judgment as early as April 2013, or in view of its importance, it may be delayed until the summer or even the autumn.

The possible decisions that may be taken by the judge include (i) ruling in favour of the challenge, (ii) rejecting it, or (iii) referring the legal issues to the European Court. (i) or (ii) are likely to lead to appeals to the Inner House of the Court of Session and thence to the UK Supreme Court.

Whilst a reference to the European Court is an option for the Courts of Session, article 267 TFEU makes the reference mandatory for the Supreme Court, where an issue is raised on the interpretation of the treaty.  A reference to the European Court will not, however, be made when the issue concerns the application, rather than the interpretation, of European law. Nor will the Supreme Court make a reference, despite article 267, if it considers the law to be clear (“acte clair”).

In any event this litigation may be lengthy. The legal uncertainty may have influenced what appears to be the current change of heart of the UK government about the possibility of applying minimum pricing more widely within the UK.

The case for the defence
The main case for the defence is that there are in fact good reasons, despite the views of the Commission, for using minimum pricing rather than taxation to raise the price of alcohol and thus reduce alcohol-related harm. They are supported by scientific evidence. This is not the place for developing those reasons. The case for defence was articulated, for instance, by Dr Evelyn Gillan of Alcohol Focus Scotland in a speech last year which can be viewed online http://vimeo.com/55023283. On the basis of these arguments minimum pricing is indeed “necessary” within the extended meaning of article 36. So, if that is right, the Scottish statute is effective.

The judge may simply accept or reject this evidence, in which case a ruling on European law will not be required, although at least one appeal within the Scottish courts is likely to follow.

Wider issues
The case does, however, raise wider implications about why European rules should be invoked to frustrate rather than advance health initiatives.

At one time the European Court tended consistently to support arguments advanced by the European Commission. However, things have changed since the creation of the European Union and the reformulation of the treaties. The European Court has been more inclined to overrule the Commission when it supports industry interests against member state health or consumer protection initiatives.

So in 2004 the Commission challenged French television advertising rules in the “Loi Evin”. These required foreign programmes (of, for instance, football matches) in France to remove any advertising for alcohol (arising from, for instance, posters adjoining the football pitch). The European court ruled in favour of the French. The opinion of the advocate general Antonio Tizzano and the judgment of the court showed a refreshing change in attitude on health issues. There have been a number of similar cases since then, with some evidence that the Commission is “banging its head against a brick wall”.

In any event, the Commission’s opinion seems to be based on an assumption that the promotion of trade and competition have special status within the treaties, requiring other policies to conform. This may have been a plausible approach in 1957, when the original Treaty of Rome was agreed, but it seems inappropriate and unlawful now.

So article 7 of the TFEU says:

“The Union shall ensure consistency between its policies and activities, taking all of its objectives into account and in accordance with the principle of conferral of powers.”

That does not just require health policies to be consistent with trade and competition policy but vice versa as well. Health and wellbeing are primary aims, whereas trade and competition are means to achieve those aims. The Commission, however, has been blithely pushing trade and competition policy for over 50 years with scant regard for the impact on alcohol consumption. There is a lot of catching up to be done.

Reinterpreting article 36
For the same reason, if the minimum pricing case does ever get to the European Court there seems every reason to invite it to apply a new interpretation to article 36, to achieve a balance with article 7. Unlike the English courts it is not bound by precedent, so it has a freer hand.

Suppose a member state purports to justify a restriction on imports on grounds of the protection of health and life of humans. In that event the court should, I would argue, confine itself to determining following the strict wording of article 36, that the  restriction does not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. In other words the restriction must be applied in good faith.

It is not, however, the function either of the Commission or the Court to second guess policy formulation of measures within member states’ competence, or to purport to audit the scientific basis for those measures.

This is a bold argument. To my mind it is justified, however, when one compares the many differences in, on the one hand, the rules of the original Common Market and, on the other, the more socially aware rules of the current treaties. It is fair to say, however, that the approach tends to follow the policy of member states such as France and Germany, rather than the UK. The UK is more interested in the single market objectives of the European Union rather than its more assertive social agenda.

Upholding effective national alcohol policies will, of course, necessarily cause problems for trade between member states. The objectives of these policies are to a large degree inconsistent. It may be possible to reconcile them to some degree, but never entirely. Where the objectives cannot be reconciled the interests of those affected by alcohol-related harm, particularly children, who are least able to protect themselves, must surely prevail.