Drinks industry set to challenge 40p per unit

10-Apr-2012 - Last updated on 11-Apr-2012 at 09:14 GMT

The drinks sector will challenge the government's introduction of a 40p minimum price per unit of alcohol, according to industry sources

The drinks industry will challenge the government's introduction of a 40p minimum price per unit of alcohol, say sources in the sector.

Whether the challenge will come from a coalition of firms, an industry body or a larger alliance is yet to emerge. But one will come because minimum pricing harms the UK's drinks industry and was previously declared illegal by European courts, said a spokeswoman for the Scotch Whisky Association (SWA).

Any challenge is likely to be based on minimum pricing restricting free trade within the EU, said Omar Shah, partner in EU law at law firm, Latham and Watkins.

The UK government could argue that benefits to public health outweigh the competitive damage, he added. "It's a finely balanced case with no sure-win situation."

To win, the coalition needs to link higher alcohol prices with falling consumption, said John Cassels, partner in EU law and competition at law firm Field Fisher Waterhouse. But both prices and consumption are higher in Scotland, said the SWA.

Minimum pricing

It would also have to prove minimum pricing is the least restrictive method of reducing alcohol-related illness, said Cassels.

Although the EU is likely to be sympathetic with the view that minimum pricing will improve public health, it's difficult to see a unilateral measure surviving in the EU, said Shah.

The European Court of Justice (ECJ) overturned a Dutch attempt at a minimum alcohol price 30 years ago, he added. "I think the government's bitten off more than it can chew this time."

Reluctant to intervene

But Cassels thinks the situation has changed since the Dutch ruling. "I'm not saying a challenge won't succeed, but the evidence of the benefit to public health is there and, generally, the European authorities are now reluctant to intervene in a confrontational way."

Also, a legal challenge would not be unanimously supported. A minimum price would benefit smaller brewers by growing beer sales in pubs, said Julian Grocock, chief executive of the Small Independent Brewers' Association.

Industry needs to engage with government to avoid anti-alcohol campaigners driving prices even higher, he added.