European Commission responds to question on minimum alcohol retail prices

Brussels, 3.7.2009. Mr Verheugen, Vice-President of the European Commission, responsible for enterprise and industry answered a written question by Scottish Socialist MEP Ms. Catherine Stihler on minimum alcohol retails prices.

WRITTEN QUESTION by Catherine Stihler (PSE) to the Commission
Subject: Minimum alcohol retail prices and EC law
The Scottish Government is currently considering minimum prices for alcoholic drinks. In response the Irish drinks industry is preparing to go to court in an attempt to block these plans to tackle Scotland's drink problem.
The Irish Spirits Association (ISA) believes the proposal violates EC law and is considering challenging the legislation before the European Court of Justice.
Can the Commission comment on whether or not minimum alcohol retail prices violate EC law?

Answer given by Mr Verheugen on behalf of the Commission
The Commission recognizes the right of Member States to pursue public health objectives and welcomes, in principle all initiatives which aim at reducing harms to public health, in particular alcohol related harm.

Community secondary legislation, including Council Directive 92/83/EEC ,does not prohibit Member States from setting minimum retail prices for alcoholic beverages. However, any such national measure and its effects still need to be compatible with other provisions of Community law, including the EC Treaty's rules on the free movement of goods (Articles 28-30 EC).

The Court of Justice of the European Communities (“the Court”) has ruled that national rules fixing retail prices for alcoholic beverages could constitute measures having an equivalent effect to quantitative restrictions on imports contrary to Article 28 EC. This would be the case if, for example, prices were set at such a level that imported products were placed at a disadvantage in relation to identical domestic products, either because they could not profitably be marketed in the conditions laid down or because the competitive advantage conferred by lower cost prices was cancelled out. In other words, a minimum price fixed at a specific amount may, according to the circumstances, have an adverse effect specific to the marketing of imported products and thus constitute an obstacle to the free movement of goods within the Internal Market.

On the other hand, this would not be the case if pricing rules applied to all relevant traders operating within the national territory and if they affected in the same manner, in law and in fact, the marketing of domestic and imported products.

Concerning health objectives, which Member States have the right to protect, it would be important to consider the range of alternative measures that might have the same public health impact, but which might be less restrictive to intra-Community trade. For example, a minimum price level could equally be ensured by increasing the excise duties on alcohol. This would allow the tax to act as an objective cost factor. On the other hand, necessity and proportionality of a discriminatory minimum price regime for alcoholic beverages could be questioned since a national rule cannot be justified in terms of Article 30 EC if the underlying interests may be protected just as effectively by measures which are less restrictive to intra-Community trade.