News / Scotch Whisky industry challenges minimum pricing

19/07/2012 Scotch Whisky industry challenges minimum pricing

The following article has been taken as a press release from The Scotch Whisky Association Website.

Scotch Whisky industry challenges minimum pricing of alcohol SWA takes action in Europe and through Scottish courts

The Scotch Whisky Association (SWA) is taking action in Europe and the UK against the Scottish Government's minimum unit pricing (MUP) legislation, including a complaint to the European Commission and legal action through the Scottish courts. It is being joined in its opposition by other UK and European Union wine, beer and spirits organisations and companies.

The SWA has consistently argued that MUP:

• Will be ineffective in tackling alcohol misuse
• Will penalise responsible drinkers and put more pressure on household budgets
• Is illegal
• Will damage the Scotch Whisky industry.

The SWA believes the Scottish Government's minimum pricing policy is misguided. The Government's own modelling illustrates that MUP will not reduce the number of hazardous drinkers and will instead force responsible drinkers to pay much more. Scottish Government figures show 73% of alcohol sold in the "off trade" will have to go up in price. Recent statistics reveal that alcohol consumption and alcohol-related harm have been falling, calling into question the need for MUP. But the Scottish Government has decided to press ahead with its plans.

During the Parliamentary process, the Cabinet Secretary for Health Nicola Sturgeon said she expected the policy to be subject to legal challenge. The Scottish Conservatives have called for legal clarity and Scottish Labour has raised doubts over the legality of MUP.

The SWA has been left with no option but to maintain its opposition to the legislation by lodging a complaint to the European Commission (EC) and filing a Petition for Judicial Review with the Scottish Court of Session in Edinburgh.

Now the Scottish Government has notified its plans for an MUP of 50 pence to the EC, other alcohol drinks industry organisations in the UK and across Europe are raising objections to the policy with the Commission.

The SWA's complaint to the EC states that MUP breaches EU trade rules. It says that minimum pricing of alcohol would artificially distort trade in the alcoholic drinks market, contrary to EU law.

The SWA is also concerned that other countries are likely to adopt measures similar to MUP and use a "protection of health" justification to target imported products. Such 'copycat' measures could cost the Scotch Whisky industry £500 million in exports. This would damage the Scottish Government's own ambitions for an export-led economic recovery. Scotch Whisky is vital to the economy, accounting for just under 80% of Scotland's food and drink exports.

The SWA is also taking action through the Scottish Court of Session by applying for Judicial Review of the legislation on the grounds that the law on minimum pricing is in breach of the UK's EU Treaty obligations and contrary to the terms of the Scotland Act 1998. The European Spirits Organisation (CEPS) and Comité Vins (CEEV), the European wine body, have joined the SWA in the legal action in the Court of Session.

Gavin Hewitt, chief executive of the Scotch Whisky Association, said:

"We agree that Scotland must address the harmful use of alcohol, but policy needs to be targeted on the problem. Some 30% of those who drink, consume 80% of the alcohol sold. Despite warnings that minimum pricing of alcohol would be illegal, the Scottish Government has pressed ahead with its ill-targeted policy and misguided legislation. The Scotch Whisky industry is left with no option but to oppose the legislation in Europe and through the Scottish Courts.

"We're far from alone in our objections. Others in the UK and Europe share our views and will also be raising objections with the European Commission.

"Scottish Ministers repeatedly claimed during the Parliamentary process that as a premium product Scotch Whisky would not be affected by minimum pricing. The truth is now out. The Scottish Government's own final impact assessment reveals 85% of Blended Scotch Whisky will be increased in price as a result of an MUP of 50p.

"Moderate drinkers are being forced to pay for an un-targeted, misguided and illegal policy. MUP will not tackle the problem of harmful and hazardous drinkers and will damage one of the country's leading industries. We employ 10,000 people in Scotland, with many jobs in rural communities or economically vulnerable areas, and support a further 35,000 jobs in the supply chain across the UK."

Jose Ramon Fernandez, secretary general of Comité Vins, a co-petitioner to the Scottish Courts on behalf of the European Wine Committee, said:

"We believe the setting of a minimum price contravenes rules governing the wine common market organisation across the EU. It will also act as a discriminatory barrier to trade for imported wines from companies which enjoy a competitive lower cost base, incompatible with EU and international trade law."

Paul Skehan, director general of the European Spirits Organisation (CEPS), another petitioner to the Scottish Courts, said:

"European law is clear - minimum pricing is an illegal barrier to trade. We agree alcohol misuse must be tackled, but other more effective, more proportionate, less trade restrictive measures are available."