Angus MacCulloch, Lancaster University Law School

Background to the Opinion

Advocate General (AG) Bot provided his opinion on September 3rd, 2015, regarding Case C-333/14, which involved the Scottish Government’s plan to establish a minimum price per unit (£0.50) on alcohol sales. This Minimum Unit Pricing (MUP) faced legal challenges from the Scotch Whisky Association, leading to the case reaching the Court of Justice of the European Union (CJEU). The CJEU was asked to determine whether the MUP aligned with the single Common Market Organisation (CMO) and the free movement principles of the Treaty on the Functioning of the European Union (TFEU). AG Bot’s opinion highlighted the significance of price competition within EU law.

The Compatibility of MUP with the single CMO

Article 167(1)(b) of Regulation 1308/2013, which governs the single CMO, prohibits Member States from dictating prices for wine. However, AG Bot emphasized that this regulation specifically pertains to “marketing rules” for supply regulation, often established by stakeholder organizations. Consequently, he concluded that there was no explicit ban on retail price-fixing within the CMO, leaving this responsibility shared between Member States.

However, AG Bot then explored the possibility of an indirect conflict through Member States’ obligation, under Article 4(3) TFEU, to uphold the CMO’s objectives. The European Commission argued that regulating retail prices would clash with the principle of free pricing, disadvantaging low-cost producers who benefit from the CMO. AG Bot asserted that freely determined prices are fundamental to the free movement of goods under fair competition. Minimum retail pricing within a Member State could erode the competitive edge of low-cost producers, distorting competition, and thereby contradicting the single CMO. Despite this, the CMO doesn’t preclude Member States from enacting measures serving “legitimate objectives” like public health protection. However, the principle of proportionality mandates that such measures must demonstrably achieve their objective without exceeding what is necessary. This proportionality evaluation should mirror the one applied under Article 36 TFEU, addressing potential Treaty-based constraints on the free movement of goods.

The Compatibility of MUP with Art 34 TFEU

Regarding Article 34 TFEU (which prohibits quantitative restrictions and measures of equivalent effect on the free movement of goods), AG Bot’s opinion first analyzes whether MUP qualifies as a measure of equivalent effect (MEEQR), despite both parties agreeing that it was. Reconciling the CJEU’s past rulings in cases like van Tieggle, Keck, and Trailers is complex. Could MUP, post-Keck, be classified as a “selling arrangement” and thus fall outside the scope of Article 34 TFEU, rendering the van Tieggle ruling irrelevant? AG Bot navigates this by adopting a blended approach, drawing from all these judgments, including the “market access” test from Trailers. He posits that a national measure can obstruct trade if, as a selling arrangement, it’s discriminatory (de jure or de facto), or if it inherently hinders market access to the Member State. If a measure impedes access, its discriminatory nature becomes irrelevant as it falls under Article 34. He clarifies that hindering the ability to leverage low-cost competitive advantage constitutes a barrier to market access, thus bringing MUP within the scope of Article 34 TFEU. Effectively, this modernizes the van Tieggle rationale through the “market access” lens of Trailers. This is arguably among the most compelling propositions in his opinion, affording special status to price competition as a driver of free movement in the internal market. For thoroughness, AG Bot also explores whether MUP could be a “dynamic selling arrangement,” akin to advertising restrictions, but his arguments on this, particularly concerning domestic wine production, lack conviction.

When examining the potential justification for an MEEQR under Article 36 TFEU, AG Bot first addresses the discretion given to Member States when determining the level of protection for legitimate objectives. He contends that Member States must have leeway in complex policy areas, but they need to substantiate their choices as suitable and proportionate. However, his explanation of the proportionality analysis lacks clarity. Particularly, the suggestion that national courts should weigh the “degree of impediment” to trade against the “importance of the objectives pursued and the expected gains” is concerning. Should a national court be tasked with balancing trade benefits against public health benefits?

Turning to a more direct assessment of MUP, AG Bot tackles a critical question from the initial judgment: the measure’s precise aim. He identifies an “ambiguity” regarding whether MUP targets “harmful” and/or “hazardous” drinking or aims to protect all drinkers’ health, ultimately acknowledging that the national court must make the final determination. Regarding harmful and hazardous drinking, he concedes that, despite the complexities, it seems reasonable for a Member State to consider MUP an “appropriate means” of achieving this objective. Evidence presented by the Lord Advocate regarding MUP’s specific impact, especially on young harmful and hazardous drinkers, persuaded him. While this might seem like a win for the Lord Advocate, the opinion takes a turn.

AG Bot expresses doubts about the necessity of the measure, particularly when comparing MUP to a general alcohol duty increase. The Court of Session initially rejected a duty increase because it lacked targeted effectiveness against harmful and hazardous drinking, potentially impacting moderate drinkers and less problematic on-sales consumption. AG Bot is unconvinced by the argument that MUP is more targeted. He posits that if the objective is genuinely limited to combating hazardous and harmful drinking, it’s incumbent upon the rule-makers to demonstrate that a duty increase cannot achieve this. While this burden of proof is established, AG Bot adds that the Lord Advocate would need to provide evidence showing a general increase’s “disproportionate impact” on moderate drinkers and its potential benefits in addressing harmful or hazardous consumption among higher-income groups (less affected by MUP). He also argues that a duty increase could further contribute to broader health objectives, potentially making it preferable to MUP.

This final part of the opinion appears flawed. While duty increases have been favored in many tobacco-related cases cited in the opinion, alcohol and tobacco consumption present different problems requiring different solutions. All tobacco consumption is harmful, but the same cannot be said for all alcohol consumption, even in Scotland. Consumption in bars and restaurants differs significantly from consumption at home or on the streets. The consumption patterns of various alcohol types also vary greatly. The targeting aspect of MUP seems far more justifiable. It remains unclear why a general duty increase, impacting all consumers and alcohol trade, is deemed less restrictive than the limited impact of MUP. A duty increase inherently affects a larger trade volume. This push for duty increases appears less about trade and more about safeguarding market price competition. While the Tobacco Directives explicitly state their competition goals, AG Bot seems to be using Articles 34 and 36 TFEU to achieve a similar outcome in the free movement context.

Barnard & Peers: chapter 12