Protecting Health, Or Protecting Trade? A Fine Residuum Inwards The Scotch Whisky Association Judgment
November 25, 2018
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Angus MacCulloch, Lancaster University Law School
The Court of Justice has straightaway delivered its judgment inward Case C-333/14 inward relation to the lawfulness of the Scottish mensurate to innovate minimum alcohol pricing, or MUP for short. Both the Scottish Government too the Scotch Whisky Association, which brought the legal challenge, get got “welcomed the ruling,” although I intend that the SWA are likely a footling happier than the Scottish Government equally the instance returns to the Inner House of the Court of Session, which had referred it to the CJEU. I’ve previously written nearly the AG’s Opinion too the Court has adopted a rattling similar approach, but inward many ways the judgment leaves equally many questions equally it answers. It does seem to give quite a strong steer to the Court of Session that the CJEU would prefer the adoption of the “less restrictive” increment inward full general excise duties instead of the MUP, but it leaves the finally conclusion on the proportionality of MUP to the Scottish court.
Is MUP caught yesteryear Art 34 TFEU?
Both parties to the dispute had accepted that MUP pricing was caught yesteryear Art 34 TFEU (the ban on measures amongst an equivalent trial to quantitative restrictions on imports), but in that location was footling clarity equally to how such a mensurate breached the prohibition. That at to the lowest degree has been clarified today. The Court followed the AG’s elegant solution of evading the complications of categorising a MUP equally a “selling arrangement” too dealing amongst the thing nether the Gourmet International trend analysis, but rather preferring to work the Trailers “market access” test. H5N1 minimum pricing mensurate restricts access to the United Kingdom of Great Britain too Northern Ireland marketplace equally it prevents lower cost products from other Member States from exploiting that cost payoff inward lower retail prices [32]. As the removal of the benefits of the cost payoff triggers the marketplace access attempt out in that location is no take to utter over whether in that location is whatsoever discrimination inherent inside the scheme. This is unopen to other instance of the Court preferring the flexibility of the novel attempt out to the to a greater extent than traditional Cassis too Keck job of decisions.
The Tricky Balancing Act inward Proportionality
The bulk of the ruling deals amongst the much to a greater extent than hard interrogation of the potential justification of the mensurate on wellness grounds too whether the restriction is proportionate. At first instance the Outer House of the Court of Session accepted that the mensurate was proportionate equally it targeted ‘harmful too hazardous’ drinkers who tended to eat depression toll high alcohol products which were most effected yesteryear MUP, but inward the CJEU ruling in that location is a different stance taken equally to the locomote of the measure. On the evidence presented to it the CJEU takes the stance that MUP has a “twofold objective” [34], both targeting these “harmful too hazardous” drinkers, patch too reducing full general alcohol consumption inward the wider population “albeit exclusively secondarily”. It is this “ambiguity”, equally the AG set it, which I intend is at the view of the job inward the Ruling. If 1 cannot clearly define what a mensurate is designed to accomplish it is incredibly hard to come upwards to a theater conclusion equally to whether it is proportionate. The Court did accept, at [38], that the mensurate was a existent attempt yesteryear the Scottish Government to address wellness problems inside Scotland, but educate out that it cannot instruct beyond what is necessary inward club to protect health. The selection earlier the CJEU was betwixt the Scottish Government’s preference for MUP, too the declaration that the same wellness create goodness could locomote obtained through an increment inward the full general excise duties applied to all alcohol products, equally preferred yesteryear the SWA too the European Commission. The Court argued that increased taxation could locomote an effective heath protection measure, equally it is inward relation to tobacco, too that an increment inward taxation:
“is liable to locomote less restrictive of merchandise inward those products inside the European Union than a mensurate imposing an MPU. The ground is … that the latter measure, different increased taxation of those products, significantly restricts the liberty of economical operators to determine their retail selling prices and, consequently, constitutes a serious obstruction to access to the United Kingdom of Great Britain too Northern Ireland marketplace of alcoholic drinks lawfully marketed inward Member States other than the United Kingdom of Great Britain too Northern Ireland too to the functioning of fair contest inward that market.”
The disputation that an increment inward taxation would locomote less restrictive of trade, inward comparing to MUP, is 1 of which I get got never been convinced. Taxation affects all products, too MUP would exclusively send upon a limited number; on that unproblematic ground I fighting that MUP is arguably less restrictive inward terms of the book of merchandise impacted yesteryear the measure. Volume of merchandise affected has been seen equally of import inward other Art 34 cases, encounter for instance the Sunday Trading litigation of the 80s, but hither the Court refers to this number much to a greater extent than explicitly than before. It is non concerned amongst reducing the book of merchandise impacted, but is much to a greater extent than concerned that the mensurate does non impact “fair competition” inside the market; fifty-fifty if a greater number of products are affected. The Court refers to an declaration made yesteryear the Lord Advocate questioning the relevance of the Court’s previous cases that dealing amongst minimum pricing inward tobacco markets. The Court rejects that position, at [45], but I am nervous nearly only reading across from those cases. Those cases centred on the Tobacco Harmonisation Directives, which were explicitly designed to heighten the unmarried marketplace integration yesteryear using toll contest equally a driver of integration. The straight protection of retail toll contest is non unremarkably seen too thus explicitly nether Art 34 TFEU. It appears that the Court is straightaway reading the protection of toll contest into the prohibition. There is also, to my mind, unopen to other of import distinction betwixt the wellness problems associated amongst tobacco consumption too the wellness problems associated amongst alcohol - different problems volition require different solutions.
The finally number inward the proportionality give-and-take relates to the vexed interrogation of choosing the to the lowest degree restrictive of the 2 measures, too the intrinsically connected interrogation of the residual betwixt restrictiveness of a mensurate too its effectiveness at achieving its aim. Here nosotros provide to the “ambiguity” of the locomote of MUP. The Courts states, at [47]:
“the fact that increased taxation of alcoholic drinks entails a generalised increment inward the prices of those drinks, affecting both drinkers whose consumption of alcohol is moderate too those whose consumption is hazardous or harmful, does non appear, inward the calorie-free of the twofold objective pursued yesteryear the national legislation at number inward the primary proceedings … to Pb to the conclusion that such increased taxation is less effective than the mensurate chosen”.
The Court appears to advise that equally taxation tin accomplish both the full general too the specific aim it is equally effective. I honor that hard to follow. One of the primary reasons that MUP was adopted was it was targeted, inward that it exclusively impacted on inexpensive too strong products too would non get got a wider impact on moderate drinkers or on-sales, which would mostly locomote inward a higher house the MUP floor. The Court is expressing a preference for the secondary aim of the mensurate too effectively side-lining its primary purpose. It describes this generalised impact equally “additional benefits” [48], but I would fighting this is non additional inward whatsoever valuable feel if it removes the primary benefit, targeting, from the measure. The Court goes on to the green declaration that the finally conclusion is, of course, for the referring court, 1 time it has heard all the evidence too argument, but it is pretty clear where its preference lies. This preference for 1 aim over unopen to other does non sit down good amongst the settled position, repeated at [35], that the Member State tin create upwards one's heed on the grade of protection it requires.
On the Article 36 TFEU Derogation
The previous give-and-take was inward relation to the ‘rule of reason’ inside the Art 34 TFEU prohibition, but equally wellness protection is 1 of the grounds for derogation inward Art 36 TFEU it is too possible to justify MUP on that basis. The Court discusses Art 36 separately too patch the questions are similar the Court appears to adopt a slightly to a greater extent than relaxed tone. It stresses the same proportionality attempt out equally above, too that it is the Member State’s responsibleness to forestall the appropriate evidence, but too that:
“that burden of proof cannot extend to creating the requirement that, where the competent national regime adopt national legislation imposing a mensurate such equally the MPU, they must prove, positively, that no other conceivable mensurate could enable the legitimate objective pursued to locomote attained nether the same conditions”.
This appears to give unopen to succour to the Scottish Government that the ball is straightaway inward their court, too that they must introduce the best evidence they tin to convince the Court of Session. The alcohol policy evidence, including the Nuffield Report published yesterday, tends to advise that in that location is a skillful instance to locomote made for MUP. In that feel in that location is a even too thus a lot for both sides to play for when the Court of Session comes dorsum to this number inward 2016.
Conclusions
It is unfortunate that the Court has followed the reasoning of the AG too the weaknesses that it exhibited. We straightaway get got confirmation that toll contest receives protection nether Article 34 TFEU, too whatsoever attempt yesteryear Member States to interfere amongst the gratis setting of prices is probable to locomote scrutinised equally a thing of European Union law. The most disappointing human face of the ruling is the lack of clarity inward the Court’s give-and-take of proportionality, it has been described equally “Delphic” yesteryear unopen to commentators. I get got explained unopen to of my concerns, but the most troubling human face is the Court’s apparent willingness to advise that the Scottish Parliament picked the “wrong” wellness aim, too work proportionality analysis to “correct” that mistake. The Inner House of the Court of Session even too thus has a lot of piece of work to create inward unpicking the Court’s Ruling.
Barnard & Peers: chapter 12
