Answer to written question on The legality of price restrictions on retail alcohol sales

Date published: 20 November 2009

WRITTEN QUESTION E-4680/09 by Charles Tannock (ECR) to the Commission on the legality of price restrictions on retail alcohol sales

The British Government has introduced a policy of continental-style café culture by permitting all-night alcohol sales as well as permitting supermarkets to sell large quantities of very cheap but high-strength alcohol (usually, but not always, beer) which are picked up in crates and then drunk throughout the night on Britain's town and city streets. This has led to widespread concerns about the effect on the long-term health of many young men and women, as well as its effect on public order. Attempts to persuade the supermarkets to voluntarily end this practice have failed, with the President of the U.K. Royal College of Physicians, Professor Gilmore (himself a liver specialist), quoted as saying, 'It is quite clear that voluntary partnerships with the drinks industry aren't sufficient, so we would welcome legislation in this area.'

These concerns have been echoed by health professionals and local politicians (Councillors) across the U.K. as well as the opposition Conservative Party. Significantly, the Scottish Parliament has recently acted to impose a minimum price per unit sale price in supermarkets. Can the Commission confirm that so long as this pricing regime applies equally to all forms of alcohol and not just beer then it is not illegal under Community law, as some in the drinks industry are claiming in order to stop the U.K. Parliament under a new government from legislating in this area?

Answer given by Mr Verheugen on behalf of the Commission
(19.11.2009)

The Commission refers the Honourable Member to its answer to written question E-2294/09 by Ms Stihler[1] on the Scottish Government plan to introduce a minimum price for alcohol.

In the reply to that question, 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.

Community secondary legislation, including Council Directive 92/83/EEC[2], 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 of the EC Treaty) and EC competition rules (Article 81 EC in conjunction with Article 10 EC).

The Court of Justice 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 of the EC Treaty. 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[3].

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[4].

For the Scottish proposal, which is to place a minimum price on alcohol itself, therefore across all products, the principle is that the measure must apply equally to imported and domestic products (without giving preference to one or the other) in order not to raise a prima facie issue under the EC Treaty's rules on the free movement of goods (Articles 28-30 of the EC Treaty)

As regards compliance of the measure or issue with Community competition rules, it should be recalled that according to settled case-law Articles 81 EC and 82 EC are, in themselves, concerned solely with the conduct of undertakings and not with laws or regulations emanating from Member States.

However, those articles, read in conjunction with Article 10 EC, which lays down a duty to cooperate, nonetheless require Member States not to introduce or maintain in force measures, even of a legislative or regulatory nature, which may render ineffective the competition rules applicable to undertakings.

The Court has held, in particular, that Articles 10 EC and 81 EC are infringed where a Member State requires or encourages the adoption of agreements, decisions or concerted practices contrary to Article 81 EC or reinforces their effects, or where it divests its own rules of the character of legislation by delegating to private economic operators responsibility for taking decisions affecting the economic sphere[5].

A State measure introducing minimum retail prices for alcoholic beverages, even if it applies equally to all forms of alcohol, could be scrutinized under Article 10 EC in conjunction with Article 81 EC if such a state measure would meet any of the above mentioned conditions.

[1] http://www.europarl.europa.eu/QP-WEB/home.jsp
[2] Council Directive 92/83/EECof 19 October 1992 on the harmonization of the structures of excise duties on alcohol and alcoholic beverages, OJ L 316, 31.10.1992.
[3] See van Tiggele, Case 82/77, [1978] ECR 25, paragraphs 14 and 18; 'Cullet', Case 231/83,[1985] ECR 305, paragraph 23.
[4] See Keck, joined cases C-267/91 and 268/91, [1993] ECR I-6097, paragraph 16.
[5] See Case C-35/99 Arduino [2002] ECR I-1529, paragraph 34-35, and Case C-198/01 CIF [2003] ECR I-8055, paragraph 45-46, and case-law cited.