Scotch Whisky Association & Ors v The Lord Advocate & Anor (Scotland) [2017] UKSC 76

The Scotch Whisky Association challenged Scotland's minimum alcohol pricing legislation as contrary to EU law on free movement of goods. The Supreme Court dismissed the appeal, holding minimum pricing was a proportionate measure to protect public health, particularly targeting harmful drinking among deprived communities.

Facts

The Scottish Parliament enacted the Alcohol (Minimum Pricing) (Scotland) Act 2012, which amended Schedule 3 of the Licensing (Scotland) Act 2005 to insert a licence condition prohibiting the sale of alcohol below a statutorily determined minimum price per unit. The proposed minimum was 50 pence per unit of alcohol. The legislation aimed to address health and social consequences of cheap alcohol consumption. The Act included a five-year review requirement and a six-year sunset clause unless renewed by Scottish Ministers with parliamentary approval.

The Scotch Whisky Association, together with two Belgian organisations representing European spirits producers and wine enterprises, challenged the legislation as contrary to EU law and therefore outside the legislative competence of the Scottish Parliament under sections 29(2)(d) and 57(2) of the Scotland Act 1998. The matter was considered by the Outer House, the Inner House (which referred questions to the Court of Justice of the European Union), and returned to the First Division before reaching the Supreme Court.

Issues

The principal issues were:

• Whether the minimum pricing regime contravened Article 34 TFEU (prohibiting measures equivalent to quantitative restrictions on imports) and, if so, whether it was justified under Article 36 TFEU on grounds of protecting human health.
• Whether the regime conflicted with Regulation (EU) No 1308/2013 (the Single CMO Regulation) establishing a common organisation of markets in agricultural products, particularly in relation to wine.
• Whether the minimum pricing measure was a proportionate means of achieving its stated public health objectives, or whether less restrictive alternatives (notably increased taxation) could attain the same aims.

Arguments

Appellants (Scotch Whisky Association and others)

The appellants accepted that minimum pricing at 50p per unit was an appropriate means of attaining the stated public health objective, but argued that the respondents had failed to discharge the evidential burden of justifying the prima facie infringement of EU free movement provisions. They contended that increased excise duty or taxation would achieve equivalent health outcomes whilst causing less obstruction to free movement of goods and competition. They argued the respondents had not properly analysed the EU market impact and that broader proportionality (stricto sensu) required balancing health benefits against market interference.

Respondents (Lord Advocate and Advocate General)

The respondents argued that the measure was justified under Article 36 TFEU as protecting human health and life, particularly targeting harmful and hazardous drinkers in deprived communities who consume disproportionately large quantities of cheap alcohol. They submitted that taxation alternatives would impose unwanted burdens across all drinkers, including moderate drinkers, and would not target the specific problem of cheap alcohol consumption by those at greatest risk.

Judgment

Lord Mance, delivering the unanimous judgment, dismissed the appeal. The Court examined the guidance from the Court of Justice, which had identified a two-stage proportionality test: whether the measure was appropriate to attain the objective, and whether it went beyond what was necessary to achieve that objective. Notably, the Court of Justice had declined to endorse Advocate General Bot’s suggested third-stage proportionality test (balancing interests stricto sensu).

Targeting and Objectives

The Court accepted that the legislation had a two-fold aim: reducing in a targeted way both consumption by hazardous and harmful drinkers, and general population consumption. Importantly, evidence from the University of Sheffield’s April 2016 study demonstrated that harmful and hazardous drinkers in poverty consumed substantially more alcohol than wealthier counterparts and suffered disproportionately greater alcohol-related deaths and hospitalisations. The Court found it was legitimate for the respondents to rely on this newer evidence to demonstrate that minimum pricing would target the specific health problems arising from extreme drinking in deprived communities.

Comparison with Taxation

The Court considered whether increased excise duty would achieve the same objectives. Whilst the Lord Advocate conceded that taxation could be applied to Scotland alone under Article 1(2) of Directive 2008/118/EC, and Lord Mance accepted for present purposes that more refined banding by alcoholic strength might be possible, the key point remained that taxation would affect prices across the board, imposing burdens on moderate drinkers and on hazardous drinkers not at extreme risk. Minimum pricing, by contrast, specifically targeted cheap alcohol consumed by those most at risk. The April 2016 Sheffield study confirmed that even tax increases achieving similar overall mortality reductions would not target poverty-related extreme drinking as effectively.

EU Market Impact and Proportionality

Lord Mance addressed the absence of detailed EU market impact analysis, noting that comparing the value of health (mortality and hospitalisation reductions) against market interference involved essentially incomparable values, and that it was for member states to determine the degree of health protection desired. The Court accepted the First Division’s finding that the EU market impact would be relatively minor, primarily affecting some wines from Bulgaria, Romania, Portugal, and cheap French brandy. The reports of Professor Yarrow and Dr Decker confirmed that precise market effects were inherently unpredictable.

Experimental Nature

The Court attached significance to the five-year review provision and six-year sunset clause, which acknowledged the experimental and provisional nature of the regime and the scientific uncertainty regarding its precise effects on alcohol consumption.

Implications

The decision confirms that member states retain substantial discretion in choosing measures to protect public health, even where such measures interfere with EU free movement of goods and the Common Market Organisation for agricultural products. The judgment clarifies that, following the Court of Justice’s approach in this case, the proportionality enquiry under Article 36 TFEU focuses principally on whether a measure is appropriate and necessary, rather than involving a separate balancing exercise (proportionality stricto sensu) between the public interest objective and market interference.

The decision is significant for the law on devolution and EU compatibility, demonstrating that legislation passed by the Scottish Parliament addressing genuine public health concerns may withstand challenge even where it interferes with cross-border trade, provided it is targeted, proportionate, and supported by appropriate evidence. The judgment also illustrates the courts’ willingness to give weight to provisional or experimental measures with built-in review mechanisms.

The decision matters particularly to legislators seeking to use price-based regulation for public health purposes, to producers and importers of alcohol within the EU, and to public health policymakers. It supports the proposition that targeted measures addressing specific patterns of harm (here, cheap alcohol consumption among deprived communities) may be preferred over more general fiscal measures that would affect all consumers.

The judgment is limited by its fact-specific assessment of the available evidence and by the experimental nature of the regime, with future review providing scope for reassessment. The Court did not resolve definitively the conceptual question of whether a separate proportionality stricto sensu enquiry exists in EU law, noting only that the Court of Justice appeared deliberately to have suppressed it in this context.

Verdict: The appeal was dismissed. The Supreme Court held that the Alcohol (Minimum Pricing) (Scotland) Act 2012 and the proposed 50 pence per unit minimum pricing regime were compatible with EU law, being justified under Article 36 TFEU as a proportionate measure for the protection of human health, and were therefore within the legislative competence of the Scottish Parliament.

Source: Scotch Whisky Association & Ors v The Lord Advocate & Anor (Scotland) [2017] UKSC 76