On 5th February 2014 the Home Office published its guidance on banning the sale of 'below cost' alcohol in England and Wales (the "Guidelines"). The Guidelines accompany the proposed Licensing Act 2003 (Mandatory Licensing Conditions) Order 2014 (the "Order"), which was issued in draft on 7th February 2014 and is expected to come into force on 6 April 2014.
The Order provides that the licence holder "shall ensure that no alcohol is sold or supplied for consumption on or off the premises for a price which is less than the permitted price". The permitted price is defined by reference to a formula contained within the draft Order which translates to the cost of the duty on the alcohol plus the VAT payable on that duty. The effect of the Order will be the imposition of a mandatory condition on all current and future premises licence and is an attempt at curbing the 'binge drinking culture' currently seen across the UK.
The Guidelines touch on a number of peripheral issues that may complicate the introduction of a minimum pricing obligation such as multibuy promotions, multipack products, complementary drinks and discount coupons. For example, in relation to multibuy promotions, favoured most prominently by supermarket chains, licence holders "will need to ensure that the total purchase price for the package of products is not below the aggregate of the duty plus VAT permitted price for each product comprised in the package". This would be achieved by calculating the combined permitted price of each alcoholic product in the promotion. Additionally, the Guidelines provide licence holders with workable examples, where necessary, to enable them to ensure that they are pricing products correctly.
In reality, should the Order come into force in substantially the same form as the draft, the impact is likely to be negligible on businesses that refrain from selling significantly discounted alcohol. However, the legislation may cause more of a problem for businesses that offer customers multibuy discounts, vouchers and meal deals. In these circumstances, the task of ensuring compliance with the legislation may become complicated and onerous.
A report produced by the world's leading medical journal 'The Lancet', has concluded that the introduction of a minimum pricing regime for alcohol in the UK would procure large health gains among heavy drinkers (i.e. the 5% of people who drink at rates classified as 'harmful'). The research leading to the compilation of the report found that 74% of the total reduction in alcohol consumption would be among harmful drinkers – with a predicted drop in alcohol-related deaths of 860 a year and hospital admissions of 29, 900 a year.
The idea of a minimum pricing regime for alcohol sale is not unique to England and Wales. The Alcohol (Minimum Pricing) (Scotland) Act 2012 (the "Act") was passed in June 2012 but has encountered a number of challenges as to its legality which has meant the Act has still not been enacted. Most notably, the Scotch Whisky Association (SWA) has challenged the Act. The SWA lost the first round of the legal battle when the Court of Session in Edinburgh ruled that the minimum pricing law was legal. The SWA is appealing against that decision as we speak with the matter expected to conclude this week. The SWA have indicated that if they lose this appeal they are prepared to take the case to the Supreme Court and even the European Court of Justice if necessary. Should the Act finally be enacted, the price per unit of alcohol in Scotland will be set at 50p, meaning a bottle of wine with an alcoholic strength of 12.5% would cost at least £4.69.
It is uncertain whether or not the Order will create the same furore and contention as the Act but is likely to be met with a certain level of disdain from a small number of affected businesses.
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