Angus MacCulloch, Law School, Lancaster University
(@AngusMacCulloch)
Lord Mance has handed down the long awaited judgment in SWA v Lord
Advocate in the UK Supreme Court finally dismissing the SWA’s appeal,
and permitting the Scottish Government to implement its Minimum Unit Pricing (MUP)
policy in relation to retail alcohol sales. The scheme to introduce a MUP of
£0.50 per unit, under the Alcohol
(Minimum Pricing)(Scotland) Act 2012, has been delayed for 5 years by this
legal challenge which characterised the scheme as being contrary to EU law; in
that it was contrary to both Article 34 TFEU, as it was a measure having
equivalent effect to a quantitative restriction on trade, and that it was
contrary to the bar on price fixing under the Single
CMO Regulation EU/1308/2013 covering wine.
This is the fourth, and final, substantive judgment in this
litigation. At first instance the Outer House of the Court of Session found MUP
to be lawful, [2013]
CSOH 70, and after receiving a response to a preliminary ruling from the
Court of Justice of the EU, Case
C-333/14 EU:C:2015:845, the Inner House, [2016]
CSIH 77, also upheld the lawfulness of MUP. The SWA’s appeal was perhaps
inevitable, but after a hearing in July 2017, the final judgment has largely
confirmed the findings of both Scottish courts that the policy could be
justified on the basis of the protection of public health.
By the time the case reached the Supreme Court it was
largely settled that MUP could be characterised as a measure having equivalent
effect to a quantitative restriction under Art 34 TFEU, and would be contrary
to the Single CMO Regulation, but any restriction contrary to those provisions
could be justified on the basis of public health protection. The majority of
the discussion in the Supreme Court surrounded the proportionality of MUP; was
there an alternate measure which could achieve MUP’s aim but which be less restrictive
of trade or competition?
The Aim and
Assessment of the Measure
Much of the Supreme Court judgment contains an, at times
detailed, analysis of the public health evidence presented to justify the
introduction of MUP. The CJEU addressed the appropriate time frame for the assessment
of a measure and Lord Mance similarly adopted a permissive attitude to the
question. Flexibility was given to allow the consideration of the most recent
health studies, and the respondent, the Scottish Government, was permitted, at
[28], to:
‘refine the aims advanced and to
demonstrate that, on the material now available, the proposed measure is
justified, even if it only meets an aim which is narrower than, but still falls
within the scope of those originally advanced’.
Both the AG and the CJEU drew attention to the ‘two fold
objective’ (CJEU [34]) of MUP, in relation to problem drinking and the general
consumption of alcohol, but this flexibility allowed the Scottish Government to
refocus their argument on what the new evidence showed to be the most important
benefits of MUP, in relation to problem drinking, and away from the issues of
general consumption. That was to their advantage when as it was seeking to justify
a more targeted measure - MUP - over a more general one - increased excise
duty.
The Test of
Proportionality
Lord Mance opened with a consideration of the guidance set
out by both AG Bot and the CJEU in relation to justification and the
proportionality of restrictions under EU Law. After setting out sections of the
AG’s
Opinion Lord Mance characterised his approach as being a three part test:
is the measure i) appropriate, ii) necessary, and iii) a balancing of the
restrictive effects of the measure as opposed to possible alternatives [14]. In
his assessment of the CJEU’s ruling on the question of proportionality Lord
Mance found the CJEU’s test to be somewhat narrower, only relying on the first
two limbs, although he did recognised that the CJEU considered some aspects of
third limb within ‘necessity’. On this question of the third limb, or
‘proportionality stricto sensu’, Lord Mance posed the following rhetorical
question, at [47]:
‘can it be that, provided an
objective is reasonable and can only be achieved in one way, it is irrelevant
how much damage results to the ordinary operation of the EU market?’
This task was described as being a comparison, ‘between two
essentially incomparable values’ – health and the market [48]. It was also
stressed that, ‘it was not for any court to second-guess the value which a
domestic legislator may decide to put on health’ [48]. This rejection of a
‘balancing’ approach between the competing values of health and the market was
important. It reduced the need for the Scottish Government to produce
compelling economic evidence of the impact of MUP on future markets, but, more
importantly, because it did not compel the court to weigh up, ‘the number of
deaths or hospitalisations … [which were] “proportionate to” the degree of EU
market interference’ [48].
The final decision on proportionality – after consideration
of the new evidence and argument before the Supreme Court – was clear.
‘A critical issue is, as the Lord
Ordinary indicated, whether taxation would achieve the same objectives as
minimum pricing. … [T]he main point stands, that taxation would impose an
unintended and unacceptable burden on sectors of the drinking population, whose
drinking habits and health do not represent a significant problem in societal
terms in the same way as the drinking habits and health of in particular the
deprived, whose use and abuse of cheap alcohol the Scottish Parliament and
Government wish to target. In contrast, minimum alcohol pricing will much
better target the really problematic drinking to which the Government’s
objectives were always directed and the nature of which has become even more
clearly identified by the material more recently available’ [63].
This conclusive finding that MUP is the most effective way of
targeting a particular pattern of problem drinking in Scotland reflects the
same analysis of the evidence by the Lord Ordinary and Lord President in the
Court of Session.
The other key point that Lord Mance went on to make
concerned the respective roles of the Scottish Parliament, in setting health
policy priorities, and the court, in assessing the proportionality of a measure.
As the ‘balancing’ approach, suggested by AG Bot, had ready been rejected it is
perhaps not surprising that Lord Mance restricted the role of the court.
‘the Scottish Parliament and
Government have as a matter of general policy decided to put very great weight
on combatting alcohol-related mortality and hospitalisation and other forms of
alcohol-related harm. That was a judgment which it was for them to make, and
their right to make it militates strongly against intrusive review by a
domestic court’ [63].
But in perhaps the most important passage Lord Mance
continued:
‘That minimum pricing will
involve a market distortion, including of EU trade and competition, is
accepted. However, I find it impossible, even if it is appropriate to undertake
the exercise at all in this context, to conclude that this can or should be regarded
as outweighing the health benefits which are intended by minimum pricing’ [63].
Given the strength of that conclusion it is difficult to see
a circumstance in which a UK court presented with clear evidence of prospective
health benefits from an intended public health intervention, which is predicted
to prevent mortality and hospitalisations, would decide that such a measure is
a disproportionate intervention.
On Evidence
The Supreme Court’s heavily reliance on the evidence base
behind the adoption of MUP is unsurprising. The CJEU stressed the importance of
evidence to justify a measure in both the SWA reference and Case C-148/15 DPV. There is, however, no better
example of the extent to which evidence can become important, but also a
significant burden (as indicated at 411) to a court, than BAT v Dept of Health [2016] EWHC 1169
(Admin).
Although the Supreme Court was heavily reliant on the wealth
of modelling evidence presented to it, it did recognise that much of the
evidence was, as the AG described it, ‘somewhat experimental’, and that it
would difficult ‘predicting the precise reactions of markets and consumers to
minimum pricing’ [62]. In that regard the Lord Mance appears to have taken
comfort that the proportionality of the measure in the longer term would be
assured as the Scottish Government had built a sunset clause into the Act, and
that a formal review of the actual effects of the legislation would be required
or it would cease to be in force after six years.
Conclusions
I have been following this case for a very long time and my
initial reaction is that it is a good conclusion. The Supreme Court has made it
clear, much more so than the CJEU did, that a convincing and well evidenced
public health argument should, and hopefully now will, win out over trade or
competition concerns. The proportionality test still has teeth. A Member State
seeking to justify a measure must be clear about its aim, and it must have a good
evidence base to explain and justify the effectiveness of the intervention it
has chosen. But it now appears that the courts, in the UK at least, will now
give some deference to the policy choices of the legislature if they stand up
to that scrutiny.
It is not the courts role to second-guess policy in these
areas, but I am sure that we will see new challenges if other jurisdictions
attempt to introduce similar policies. Other administrations may see this case
as clearing the way, but they should be careful as the decision in this case
was tied to a detailed analysis of a particular Scottish problem. It is not the
case that the same intervention will be appropriate or necessary everywhere
else.
Barnard
& Peers: chapter 15, chapter 16
Photo credit: Sky News
