Experts cast doubt on minimum prices for alcohol

11 April, 2008

Overriding competition laws to set minimum prices for alcoholic drinks may set a dangerous precedent, experts believe.

Ministers could bypass UK competition law and force the Office of Fair Trading to set minimum prices for drinks, a senior legal advisor to the OFT confirmed to Off Licence News.

A special clause allows ministers to overturn the rules in cases of “exceptional public policy”, but this would be an extreme measure if used for alcoholic drinks. “This [clause] would be more a case of North Korea is about to invade,” the source said.

Speculation has grown that supermarkets and off-licences could be forced to keep drinks prices above the cost of production, in order to curb binge drinking.

It is understood that senior government ministers have discussed pricing with alcohol industry representatives.

Any action would have to be government-led. Price fixing is illegal under EU and UK law, and retailers are even prohibited from discussing prices with each other.

OFT officials may make exceptions on economic grounds, but have no power to override the rules in the name of public interest.

Commenting on minimum drinks prices, professor Stephen Davies, an economics expert at the University of East Anglia and who has advised the OFT in the past, said: “Considering the general approach taken on retail pricing, I’m sure there would be opposition.”

Several politicians believe alcohol’s link to health problems and antisocial behaviour justifies an exception, however. Alcohol abuse costs the UK health service more than £1.7bn annually, according to government figures.

Labour MP John Grogan, a fierce critic of cheap alcohol, told OLN last week: “"We've got an alliance of the on-trade, the police and the health lobby and possibly ministers looking to do something.”

Several other European countries ban retailers from selling food and drink products “below cost”.

A European Commission spokesperson suggested it was possible to apply this to alcohol in the UK. “For tobacco there are EU taxation rules, whereby minimum pricing is not allowed, but no similar legislation exists for alcohol.”

Alcohol and retail industry leaders argue the UK already has some of the highest alcohol prices in Europe.

“If pricing was an issue then why aren’t there more problems in other countries with lower taxes on alcohol?” said Gavin Partington, of the Wine & Spirit Trade Association.

“We’ve never denied there’s a problem with alcohol abuse, but it’s a minority of people. The vast majority, who drink sensibly in the comfort of their own homes, should not be punished.”

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