Alcohol Focus Responds

Alcohol Focus Scotland quickly issued a scathing rebuttal of the Commission’s legal opinion, accusing it of being selective, partial, misleading and in places factually inaccurate. For example, a key argument of the Commission’s opinion is that MUP would, in effect, discriminate against imported products. However, AFS point out that the figures show that in regard to the spirits market, MUP would have more impact on domestically produced spirits than imported products.

More generally, AFS complains that a number of legitimate questions that have been raised with the Commission about the ability of taxation to curb the affordability of alcohol have not been acknowledged or properly addressed. For example, “the Commission opinion omits to acknowledge that despite having some of the highest alcohol excise duty rates in the EU, affordability of alcohol in the UK has increased by a greater amount than most other EU countries. The opinion fails to acknowledge the differential impact of alcohol taxation on the on- and off-trade and that a shift to off-trade can act as a driver of increased affordability. The opinion fails to acknowledge the differential impact of different pricing controls on different categories of drinker and related harms, and the importance from a public health perspective of targeting the cheapest alcohol products. The opinion asserts that taxation can be used as an alternative to minimum pricing, but does not specify the level of taxation increase required to achieve a 50ppu minimum price. In not specifying the level of tax increase required, no determination can be made on which measure is less trade restrictive.

In disregarding much of the evidence, the opinion fails to address the complexity of the issues. It is our view that the Commission should consider all the available evidence, and present a balanced assessment.”

In regard to the percentage of the alcohol market affected by taxation compared to minimum pricing, AFS criticises the Commission’s opinion for claiming that there is equivalence between taxation and minimum pricing as regards the extent of the market affected by the two measures, and therefore taxation should be preferred as it is less trade-restrictive.

AFS refutes this statement as misleading. “Alcohol excise duties are fixed as a specific amount and apply to cheap and expensive, on-trade and off-trade products equally. This is not the case with minimum pricing. At the proposed level of 50ppu, minimum pricing in Scotland will affect mainly off-trade sales, and it will affect off-sales retailing below 50ppu by varying amounts depending on the difference between the current retail price and the proposed minimum price.”

With respect to the issue of whether increases in alcohol taxes are passed on to the consumer, AFS attacks the Commission’s opinion for ignoring evidence from the UK on the practice of below-cost selling of alcohol by large supermarket retailers that account for 84% of off-trade sales of pure alcohol in Great Britain. “This evidence, referred to in both the Scottish Government’s BRIA and the first 2009 RAND report , relates to a 2007 UK Competition Commission inquiry into the groceries market that found supermarkets routinely engaged in below-cost selling of alcohol as part of their competitive sales strategy. If it has been established that retailers sell alcohol at a loss in the UK, then there is no certainty that the ability of manufacturers and importers to absorb alcohol tax increases is limited by the extent of their profit margin, as suggested by the opinion’s reference to the Commission v Hellenic Republic (C-216/98) court ruling.”

Other additional measures

AFS is particularly dismissive of the Commission’s insistence that, aside from taxation, there are other additional measures that the Scottish Government could adopt to reduce alcohol harm. “It asserts that there are targeted measures that could be implemented that are likely to be more effective than measures aimed at the total population, but omits to mention what these targeted measures are.

As the availability of alternative measures is central to the question of legality, we find the Commission's unsubstantiated claims on this point inappropriate. If the Commission has evidence of more effective interventions, then its opinion should make clear what those measures are. Comparing effectiveness requires two or more known quantities. To assert that some unspecified, unknown measure is more effective is, in our view, not verifiable.

International evidence is clear that whole population interventions and particularly pricing interventions are highly effective in reducing harmful alcohol consumption. Minimum pricing is a measure aimed at tackling a rise in harmful consumption in Scotland that is specifically associated with the increased affordability and availability of cheap alcohol. To be considered an alternative to minimum pricing, a measure must tackle affordability and must be as effective in reducing alcohol-related harm. A targeted measure that does not tackle affordability is not an alternative to minimum pricing.”