Westminster to debate OLN campaign

16 January, 2015

Senior MPs have launched an inquiry into Reducing the Strength schemes in response to Off Licence News’ campaign and have called the Competition & Markets Authority to the House of Commons for a hearing next week.

The CMA will present its views on the legality of the controversial initiatives, which have swept across the country as councils force retailers to ban products above a certain strength.

OLN has been campaigning for legal clarity and, until now, the CMA has refused to intervene. However, leading bodies, including the influential All-Party Parliamentary Beer Group, have backed our United to Protect Choice campaign, adding their weight to readers’ concerns that they are being coerced into breaking the law.

The evidence session will take place next Tuesday, led by a number of high-profile politicians including: Andrew Griffiths, chairman of the All-Party Parliamentary Beer Group and MP for Burton upon Trent; John Healey MP, former pubs minister and treasury minister under Labour; Gerry Sutcliffe MP, another former pubs minister; Lord Kennedy of Southwark; and Anne McIntosh MP, chair of the Environment, Food & Rural Affairs Committee.

OLN will represent the trade alongside leading retailers and a team of top barristers.

The Westminster hearing is being held while the European Commission also continues its own investigation into the Reducing the Strength Schemes, following a complaint by OLN and a request for it to intervene.

Guidance issued by the Local Government Association in December has fuelled concerns that retailers who sign up to Reducing the Strength schemes could be breaking competition law.

It warned that retailers could face significant penalties, including fines, if they enter into “restrictive practices” under the schemes, and added that councils might be breaking EU law by encouraging retailers to sign up. The LGA admitted there are “certain competition law risks to retailers arising from some aspects of Reducing the Strength schemes”, but said councils might be able to manage the risk.

It said: “Competition law only applies to ‘undertakings’, broadly defined as firms that are engaged in commercial activity.

“It is highly unlikely that a council, in the context of introducing a Reducing the Strength scheme, will be deemed to be an ‘undertaking’ within the meaning of the law.

“Therefore, the activities of councils and their staff themselves are unlikely to be caught by competition law specifically.

“Local retailers, however, clearly are undertakings within the meaning of competition law. They must, therefore, ensure that they are not engaging in anticompetitive behaviour, otherwise they could face significant penalties, including significant fines.

“Specifically, this means they must not engage in restrictive agreements or concerted practices, within the meaning of competition law.

“Since many of the retailers councils would like to involve in local schemes may be smaller businesses that do not have detailed knowledge of competition law, councils have a duty of care to ensure they are not asking them to breach the law and/or do not put them in a position where they might inadvertently do so.

“Moreover, it is possible that if a local authority encouraged or facilitated breaches of competition law, this could, in certain circumstances, possibly lead to a breach of EU law.”

The LGA warned that the greatest risk occurs when a council is starting a scheme, and urged it to speak to retailers individually rather than as a group, so as to avoid the discussion straying towards “sensitive commercial matters”.

Several times when OLN has asked retailers about how they were encouraged to sign up for a Reducing the Strength scheme, they have told us a council officer told them all neighbouring retailers had signed up and they should get involved.

But the LGA guidance said: “Councils should also avoid encouraging people to sign up by naming (or mentioning in bilateral discussions with retailers) other businesses which are participating or plan to participate. Retailers should be convinced to join by the public policy message only.

“These actions should help to protect retailers from falling foul of competition law.”




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