Minimum prices for alcoholic drinks

08 April, 2008

Labour MP John Grogan argues that setting minimum prices for alcoholic drinks would not breach EU law.

Minimum pricing regulations could be introduced in the UK off-trade without breaching European law, Labour MP John Grogan has claimed.

Grogan, a fierce critic of cheap alcohol and a campaigner for UK pubs, believes supermarkets could be forced by order of the Competition Act to keep their drinks prices slightly above cost.

Several other European countries already impose minimum prices on a range of food and drink products.

Tesco recently expressed an interest in working with the government to develop legislation limiting deep discounting of alcohol, but warned it would be "commercial suicide" to raise prices independently. Competition law prevents retailers working together to raise prices, but Grogan believes there is a legal mechanism available which would not be contrary to European free trade laws.

"The evidence is that there has been no increase in supermarket prices since the Budget," he said. "The gap between the on and off-trade is going to get wider, with the implications that has - not just for pubs, but increased consumption.

"We've got an alliance of the on-trade, the police and the health lobby and possibly ministers looking to do something and the big question mark is what would the supermarkets say? Tesco are the only ones to have spoken so far and they would be willing for below-cost selling to be outlawed if the government helped them by passing the relevant legislation."

Bargain Booze joint managing director Matthew Hughes said there could be benefits in banning below-cost selling, but warned it would not be a simple task.

"It might, in the long term, promote more competition because it would stop bigger players squeezing smaller players out of existence by funding retail prices that they simply cannot match," he said. "But the definition of 'cost' would be very difficult to create because of the different types of funding in the industry.

"Also competition law is there to protect consumers' interests and as such any action designed to push retail costs up may not wash."

An Asda spokesperson said: "We are not in favour of indiscriminate price rises which would disproportionately hit the vast majority of people who drink sensibly and in moderation especially at a time when household budgets are coming under more and more pressure.

"Rising prices is a blunt instrument and will not be effective at tackling alcohol-related crime and antisocial behaviour. Instead, our targeted measures will go a long way towards tackling these issues."

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