'Less restrictive tax measures' favoured over Scottish minimum alcohol price, says EU court

Audrey Ferrie of Pinsent Masons, the law firm behind Out-Law.com, said that there was "still a long way to go" before the legality of the Scottish Government's planned 50p minimum price per unit under EU law was fully settled. The Court of Justice of the European Union (CJEU) ruled that the policy was incompatible with EU law "if less restrictive tax measures can be introduced", but left this final test to the Scottish courts.

"Although the CJEU has gone slightly further, or at least been more direct, than its advocate general, whether or not the policy will come into force  is still a matter for the Scottish courts," Ferrie said.

"In reaching its decision on proportionality, the Court of Session must objectively examine all the information available to it at the time it makes its decision, and not only that which was available to the Scottish Government when the legislation was made. The final outcome is more important than the finer points of EU law - the matter is still open," she said.

The Alcohol (Minimum Pricing) (Scotland) Act was passed in May 2012 by the Scottish Parliament. It prohibits the sale of alcohol below a minimum price, calculated on the basis of the drink's alcoholic content. The Scottish ministers drafted regulations setting a minimum price per unit (MPU) of 50p in 2013, although this has not yet been introduced due to on-going legal proceedings.

Trade body the Scotch Whisky Association (SWA), along with other European wine and spirits trade bodies, began a legal challenge against the policy in 2012. Although this was rejected by the Outer House of the Court of Session in May 2013, the Inner House, which is Scotland's highest civil court, referred the case to the CJEU on appeal after finding that it "raised questions of European law".

In its judgment, the CJEU said that EU market rules did not contain either "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". However, an MPU was "liable to undermine competition by preventing some producers or importers from taking advantage of lower cost prices so as to offer more attractive retail selling prices", it said.

Although the Scottish Government was entitled to "rely on the objective of the protection of human life and health" in order to justify the policy, it could only do so if the policy was proportionate in line with the tests set out in EU case law, the court said.

"[The] legislation pursues a twofold objective, that of reducing, in a targeted way, both the consumption of alcohol by consumers whose consumption is hazardous or harmful, and also, generally, the population's consumption of alcohol," the court said.

"It does not seem unreasonable to consider that a measure that sets a minimum selling price of alcoholic drinks, the very specific aim of which is to increase the price of cheap alcoholic drinks, is capable of reducing the consumption of alcohol, in general, and the hazardous or harmful consumption of alcohol, in particular, given that drinkers whose consumption can be so described purchase, to a great extent, cheap alcoholic drinks ... [But] a fiscal measure which increases the taxation of alcoholic drinks is liable to be less restrictive of trade in those products within the European Union than a measure imposing an MPU," it said.

"It is however for the referring court, which alone has available to it all the matters of fact and law pertaining to the circumstances of the main proceedings, to determine whether a measure other than that provided for by the national legislation at issue ... such as increased taxation on alcoholic drinks, is capable of protecting human life and health as effectively as that legislation, while being less restrictive of trade in those products within the European Union," it said.

In a statement, health secretary Shona Robison said that the Scottish Government "remains certain that minimum unit pricing is the right measure for Scotland".

"The case will now continue to the Scottish courts, and we look forward to a hearing in the new year to determine the outcome in this case," she said.