In Scotch Whisky Association v The Lord Advocate (Scotland) [2017] UKSC 76, the Supreme Court has held that a “suppressed” form of proportionality review, focused on suitability and necessity, applies for review of measures designed to address serious public health issues.
Key points
- The Supreme Court held that a two stage proportionality assessment focused on suitability and necessity should be applied to review of the Scottish Parliament’s minimum alcohol pricing regime for consistency with EU law. In light of an earlier ruling by the European Court of Justice, it was not appropriate to conduct a separate third stage of balancing of interests between the minimum pricing regime’s health benefits and
economic impacts. - While the Supreme Court emphasised that it is not a reviewing court’s role to second-guess policy judgments balancing the stated health objective against economic and other effects, Member States will still need to establish through cogent, objective evidence that the measure adopted is a suitable and necessary means of achieving that aim.
Background
The Scottish Parliament passed the Alcohol (Minimum Pricing) (Scotland) Act 2012 (“the Act“) with the objective of curbing excessive consumption of cheap alcohol and its health and social effects. The Act imposed a licence condition on retailers of alcohol which prohibited them from selling alcohol for less than a minimum price per unit, to be determined by regulations, with an initial proposed price of 50 pence per unit. The Act contained a sunset clause, pursuant to which the Act would cease to operate after six years unless the Scottish Parliament decided that it should continue.
The Scotch Whisky Association and two Belgian organisations representing spirits and wine exporters challenged the validity of the Act on the basis that it was incompatible with EU law. In particular, they alleged that the minimum pricing regime amounted to a disproportionate infringement of the EU’s prohibitions on quantitative restrictions on trade (Article 34 of the Treaty on the Functioning of the EU) and price fixing (under the Single CMO Regulation EU/1308/2013 in relation to wine).
The challenge was rejected at first instance by the Scottish Outer House. On appeal, the Inner House referred six questions to the European Court of Justice (“ECJ“, case C‑333/14). Following the ECJ’s ruling, the Inner House dismissed the appeal and then granted permission to appeal to the Supreme Court.
The Judgment
The two-stage proportionality test
The Supreme Court unanimously dismissed the appeal, finding that the Scottish minimum pricing regime is a proportionate means of achieving a legitimate aim.
Central to that conclusion was the Supreme Court’s application of the ECJ’s judgment on the proper approach to proportionality in cases involving health. There, the Advocate General had conducted a three-stage proportionality analysis considering (i) appropriateness, (ii) necessity and (iii) a balancing of interests. The ECJ did not endorse this three-stage test but instead the ECJ held that: “[I]t is for the national authorities to demonstrate that that legislation is consistent with the principle of proportionality, that is to say, that it is necessary in order to achieve the declared objective, and that that objective could not be achieved by prohibitions or restrictions that are less extensive, or that are less disruptive of trade within the European Union.”
The Supreme Court interpreted the ECJ’s judgment as, in its words, “suppressing” the third stage of proportionality as articulated in the Advocate General’s opinion, or subsuming it within the second stage, in order to “signal the appropriateness of an even greater level of restraint and respect for national authorities’ choice of measure to protect health” and in recognition of “the uncertainties and experimental nature of the proposed minimum pricing system“.
The Supreme Court noted, however, that the suppression of the third stage by the ECJ gave rise to “some difficulty” as to whether and how market and other impacts should be balanced against the health objectives of the measure but that, nevertheless, “an appreciation of the likely EU market impact seems on the face of it a sensible precondition to action interfering with EU cross-border trade and competition.”
Application to the minimum alcohol price
Before the ECJ and the Supreme Court, the appellants contended that less restrictive measures, such as a tax or excise on alcohol, would have been equally effective. The ECJ was sceptical of the Scottish authorities’ reasons for rejecting these general taxation measures, which included the impact on other sectors of the drinking population. In the ECJ’s view, “contributing to the achievement of the general objective of combating alcohol misuse, not only cannot constitute a reason to reject such a measure, but is in fact a factor to support that measure being preferred to [the minimum price per unit]“. However, the ECJ held that ultimately this was a question for the national courts, which alone have available all the relevant facts to undertake this assessment.
The Supreme Court held that the appellants’ alternative measures, including a general tax on alcohol, would impose an unintended and unacceptable burden on sectors of the drinking population whose drinking habits and health did not represent the target of the Scottish Parliament. In contrast, minimum alcohol pricing would directly target the problematic drinking, arising from the use and abuse of cheap alcohol, to which the Government’s objectives were directed. A minimum price was easy to understand and simpler to enforce.
The Supreme Court, in making that assessment, noted that:
- It is not for any court to second-guess the value which a domestic legislator may decide to put on health. The Scottish Parliament and Government had decided to put very great weight on combatting alcohol-related health and social issues, and that was a judgment for them to make.
- Even if it were appropriate, it was impossible to conclude that the economic impact on producers, wholesalers and retailers of alcohol across the EU can or should be regarded as outweighing the health benefits which are intended by minimum pricing. The analysis involved comparing two incomparable values. For this reason, there was “very limited scope” for the appellants to complain about the absence of EU market evidence of the effect of the minimum price.
- In any event, any attempt to assess the EU market impact in the present area would itself have involved incalculables, which could not be further or more precisely assessed in any relevant way, and requiring evidence as to the market impact in Romania, Spain, Portugal and Italy as a precondition to legislating was “an unrealistic counsel of perfection.” While the Court acknowledged that the system would be experimental, that was addressed by the provision for review and the sunset clause.
Comment
The Scotch Whisky case is an important demonstration of the proportionality principle which applies in the same way in English cases involving EU law issues. In the context of measures implemented to address a well-evidenced public health problem, a reviewing court will not undertake a separate “third stage” of balancing interests in addition to the first two stages of suitability and necessity, although an appreciation of the impact of the measure will be considered in a suppressed form at the second stage.
The case demonstrates that, in the context of public health measures, deference will be afforded to the national parliament’s prioritisation of health risk, even where the measure adopted is “experimental“. Nevertheless, Member states will still need to establish through evidence that the measure adopted is an effective means of achieving that aim.
