Angus MacCulloch, Law School, Lancaster University (@AngusMacCulloch)

The UK Supreme Court, in a long-awaited decision on SWA v Lord Advocate, dismissed the Scotch Whisky Association’s (SWA) appeal, allowing the Scottish Government to proceed with its Minimum Unit Pricing (MUP) policy on alcohol sales. This policy, setting a minimum price of £0.50 per unit of alcohol under the 2012 Alcohol (Minimum Pricing)(Scotland) Act, faced a five-year delay due to legal challenges arguing its conflict with EU law. The SWA asserted that MUP violated Article 34 TFEU as a measure equivalent to restricting trade and breached the Single CMO Regulation EU/1308/2013’s prohibition on price-fixing for wine.

This judgment marks the final decision in a series of legal battles. Initially, the Scottish courts, both the Outer House of the Court of Session and the Inner House, upheld the legality of MUP, even after seeking clarification from the Court of Justice of the EU (CJEU). The SWA’s appeal, while anticipated, was ultimately dismissed by the Supreme Court, affirming the Scottish courts’ position that public health justifications supported the policy’s implementation.

By the time the case reached the Supreme Court, it was largely agreed that MUP could be categorized as a measure potentially restricting trade under Article 34 TFEU and conflicting with the Single CMO Regulation. However, public health protection was recognized as a valid justification for any such restriction. The central debate in the Supreme Court revolved around MUP’s proportionality—whether alternative measures existed that could achieve similar goals with less impact on trade and competition.

The Aim and Assessment of the Measure

A significant portion of the Supreme Court’s judgment meticulously analyzed the public health data supporting MUP’s introduction. Aligning with the CJEU, a flexible approach was taken regarding the timeframe for evaluating the measure. The Scottish Government was allowed to refine its objectives based on current evidence, even if these differed from initial aims, as long as they remained within the original scope.

While both the CJEU Advocate General and the CJEU acknowledged MUP’s dual objective of addressing problem drinking and overall alcohol consumption, this flexibility allowed the Scottish Government to emphasize updated evidence highlighting MUP’s benefits in tackling problem drinking, particularly among vulnerable populations. This shift proved advantageous as it supported a more targeted approach (MUP) over broader measures like increased excise duty.

The Test of Proportionality

Lord Mance initiated his analysis by examining the guidance provided by both Advocate General Bot and the CJEU regarding the justification and proportionality of restrictions under EU law. He characterized his approach as a three-part test, assessing if the measure is: 1) appropriate, 2) necessary, and 3) balanced in terms of its restrictive effects compared to potential alternatives. He observed that while the CJEU’s test seemed narrower, focusing on the first two elements, it indirectly addressed aspects of the third element within the ’necessity’ assessment.

Lord Mance questioned the notion that a measure’s impact on the EU market becomes irrelevant if an objective is reasonable and achievable only through that specific measure. He acknowledged the challenge of comparing health and market values, emphasizing that courts should not second-guess the significance a legislature places on health. This rejection of a ‘balancing’ approach was crucial. It alleviated the need for the Scottish Government to present extensive economic evidence regarding MUP’s impact on future markets. More importantly, it avoided requiring the court to weigh “the number of deaths or hospitalizations… ‘proportionate to’ the degree of EU market interference.”

The ultimate decision on proportionality, reached after considering new evidence and arguments before the Supreme Court, was unambiguous. The court recognized that taxation, while an alternative, would unfairly burden individuals whose drinking habits are not considered problematic. MUP, in contrast, effectively targets harmful drinking patterns, aligning with the Scottish Government’s objectives. This echoed the analysis of the Lord Ordinary and Lord President in the Court of Session, reaffirming MUP as the most effective way to address this specific public health concern in Scotland.

Furthermore, Lord Mance emphasized the distinct roles of the Scottish Parliament in setting health priorities and the court in assessing the proportionality of measures. He stressed the court’s limited role, stating it was not its place to second-guess policy decisions, particularly when clear evidence supports potential health benefits and the prevention of deaths and hospitalizations. He concluded that the anticipated health benefits of MUP outweighed any market distortions, signifying a high threshold for deeming public health interventions disproportionate.

On Evidence

The Supreme Court’s strong reliance on the evidence base for MUP is not unexpected, aligning with the CJEU’s emphasis on evidence for justification. While the court acknowledged that some evidence remained “somewhat experimental” with uncertainties regarding market and consumer reactions, it found reassurance in the Scottish Government’s inclusion of a sunset clause and a mandatory review of the legislation’s effects after six years, ensuring long-term proportionality.

Conclusions

This decision provides a favorable outcome. The Supreme Court unequivocally affirmed that compelling and well-supported public health arguments can, and should, prevail over trade or competition concerns. The proportionality test remains relevant, requiring Member States to clearly articulate their aims and provide robust evidence to justify their chosen interventions. Importantly, this case suggests that UK courts are likely to grant deference to legislative policy choices that meet these standards.

While it is not the court’s function to second-guess policy in such matters, this case will likely lead to further challenges as other jurisdictions consider similar policies. It is essential to recognize that the decision was context-specific, based on a thorough analysis of a particular issue in Scotland. The same intervention may not be appropriate or necessary in different settings.

Barnard & Peers: chapter 15, chapter 16

Photo credit: Sky News