OUTER HOUSE, COURT OF SESSION [2013] CSOH 70

P762/12

OPINION OF LORD DOHERTY in the Petition of (1) THE SCOTCH WHISKY ASSOCIATION; (2) CONFEDERATION EUROPEENE DES PRODUCTEURS SPIRITEUX (also known as CEPS -' THE EUROPEAN SPIRITS ORGANISATION); (3) COMITE DE LA COMMUNAUTE ECONOMIQUE EUROPEENNE DES INDUSTRIES ET DU COMMERCE DES VINS, VINS AROMATISES, VINS MQUSSEUX, VINS DE LIQUEUR ET AUTRES PRODUITS DE LA VIGNE (also known as CEEV - COMITE EUROPEEN DES ENTERPRISES, VINS) Petitioners; For Judicial Review of the Alcohol (Minimum Pricing) (Scotland) Act 2012 and of related decisions ________________

Petitioners: O'Neill QC, M. Ross, Brodies LLP

First Respondent: Moynihan QC, Duncan QC, Scottish Government Legal Directorate

Second Respondent: Carmichael QC, J.N.M. MacGregor, Office of the Advocate General

3 May 2013

Introduction

Petition

[1] In this petition for judicial review the petitioners challenge the legality of an enactment of the Scottish Parliament - the Alcohol (Minimum Pricing) (Scotland) Act 2012 (asp 4) ("the Act"). They also challenge the legality of the Scottish Ministers' decision that they will make an Order ("the proposed Order") setting the minimum price at 50 pence per unit of alcohol.

[2] The Act amends the Licensing Scotland Act 2005 (asp 16). The amendments make provision for a minimum price per unit of alcohol being specified by Order of the Scottish Ministers, and for such an Order to be laid before the Scottish Parliament for approval by resolution. If the Act is brought into force the amended provisions inserted into the 2005 Act will prohibit the sale of alcohol on licensed premises at a price below its minimum price. In each case the minimum price for the drink offered for sale would be arrived at using the formula MPU x S x V x 100 (minimum price per unit x strength of the alcohol x volume in litres x 100). Thus, for example, with a minimum price of 50 pence per unit, a standard sized (75cl) bottle of wine with an alcohol strength of 12 % would have a the minimum price of £4.50 (£0.50 x 12% x 0.75 x 100). If the alcohol strength of the wine was 15% the minimum price would be £5.62 (£0.50 x 15% x 0.75 x 100).

[3] On 14 May 2012 the Cabinet Secretary for Health, Wellbeing and Cities Strategy announced that 50 pence per unit was the preferred minimum price for alcohol: a draft Order - The Alcohol (Minimum Price per Unit) (Scotland) Order 2013 - was prepared shortly thereafter. It specifies a minimum price of 50 pence per unit. As a consequence of the present challenge the Act has not yet been brought into force and the Order has not yet been made.

[4] The petitioners challenge the Act and the decision to set the minimum price at 50 pence per unit. They do so on several grounds.

[5] Until shortly prior to the first hearing one of those grounds was that the Act was outside the legislative competence of the Scottish Parliament, because, it was maintained, it related to reserved matters. In light of the decision and reasoning of the Supreme Court in Imperial Tobacco Ltd v Lord Advocate 2013 SLT 2 that ground was not insisted upon.

[6] The grounds which were advanced were (1) that the Act and the decision to set the minimum price at 50 pence per unit are in breach of the Acts of Union; (2) that the Act is outside the legislative competence of the Scottish Parliament and is not law because it purports to modify, or confer power to modify, Articles 4 and 6 so far as they relate to freedom of trade (s. 29(1),(2)(c) and Sched. 4, paragraphs 1(1), 1(2)(a); (3) that the Act is outside the legislative competence of the Parliament and is not law because it is incompatible with EU law (Scotland Act 1998, s. 29 (1),(2)(d)); (4) that, for the same reasons, the proposed Order would, if made, be outside devolved competence and be beyond the powers of the Scottish Ministers (Scotland Act 1998, ss.54(2),(3) and 57(2)). The incompatibility with EU law was said to arise in three respects. First, minimum pricing was said to contravene Article 34 TFEU and it was maintained that it could not be, or was not, justified under Article 36. Second, it was said to be incompatible with the common organisation of the market relating to wine and certain other alcohol products. Third, it is said to be in breach of Article 6(2) of Regulation (EC) 110/2008 relating to spirits.

Petitioners

[7] The first petitioners are a trade association representing distillers and others involved in the Scotch whisky industry. They have 52 members who account for more than 90% of production of Scotch whisky. A number of those members also import other alcoholic drinks, particularly spirits and wines, from other countries including other member states of the EU. The second petitioners are a representative body in the European Union for producers of spirit drinks. The third petitioners are a representative body for the European Union wine industry and trade.

Respondents

[8] The first respondent is the Lord Advocate and the second respondent is the Advocate General for Scotland. Alcohol Focus Scotland made a written intervention in terms of Rule of Court 58.8A but did not seek to make oral submissions.

First hearing

[9] The matter came before me for a first hearing. Prior to the first hearing the petitioners and both respondents prepared detailed written submissions in lieu of oral submissions being made by junior counsel. At the hearing - which occupied seven days - I heard extensive oral submissions from senior counsel for the petitioners and senior counsel for the first respondent. Senior counsel for the second respondent adopted the first respondent's submissions except in so far as relating to the Acts of Union challenge: on that matter the second respondent wished to make no submissions.

[10] I do not set out in detail all of the submissions made, or all of the authorities referred to. Had I done so it would have added considerably to the length of this Opinion. The written submissions are available for reference if required.

[11] I am grateful to counsel for their thorough and well-presented arguments. Thanks are also due to those who arranged that copies of the pleadings, productions, written submissions, and authorities were available on CD ROMS. That facilitated the hearing in court, my deliberations, and the preparation of this Opinion.

Legislative history

[12] The Alcohol (Minimum Pricing) (Scotland) Bill was introduced to the Scottish Parliament by the Scottish Ministers on 31 October 2011. The Health and Sport Committee, as lead committee, began taking stage 1 oral evidence on the general principles of the Bill on 10 January 2012. The committee received written evidence from a large number of interested parties and it met on five occasions to hear oral evidence (see the Stage 1 Report, Annexes B, C and D). The stage 1 debate took place in the Parliament on 14 March 2012. The Bill was passed following the stage 3 parliamentary debate on 24 May 2012. The result of the division was: for 86, against 1, abstentions 32. The Bill received Royal Assent on 29 June 2012.

Scotland Act 1998

[13] The Scotland Act 1998 provides:

"S. 29 Legislative competence

(1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament.

(2) A provision is outside that competence so far as any of the following paragraphs apply-

..........

(b) it relates to reserved matters,

(c) it is in breach of the restrictions in Schedule 4,

(d) it is incompatible with any of the Convention rights or with EU law ....

S. 30.- Legislative competence: supplementary

(1) Schedule 5 (which defines reserved matters) shall have effect....

S. 37. Acts of Union

The Union with Scotland Act 1706 and the Union with England Act 1707

have effect subject to this Act....

S. 54.- Devolved competence

(1) References in this Act to the exercise of a function being within or outside devolved competence are to be read in accordance with this section.

(2) It is outside devolved competence-

(a) to make any provision by subordinate legislation which would be outside the legislative competence of the Parliament if it were included in an Act of the Scottish Parliament, or

(b) to confirm or approve any subordinate legislation containing such provision.

(3) In the case of any function other than a function of making, confirming or approving subordinate legislation, it is outside devolved competence to exercise the function (or exercise it in any way) so far as a provision of an Act of the Scottish Parliament conferring the function (or, as the case may be, conferring it so as to be exercisable in that way) would be outside the legislative competence of the Parliament.

S. 57.- EU law and Convention rights

.....

(2) A member of the Scottish Government has no power to make any subordinate legislation, or to do any other act, so far as the legislation or act is incompatible with any of the Convention rights or with EU law.

.....

Schedule 4 ENACTMENTS ETC. PROTECTED FROM MODIFICATION

Part I THE PROTECTED PROVISIONS

Particular enactments

1.-

(1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, any of the following provisions.

(2) The provisions are-

(a) Articles 4 and 6 of the Union with Scotland Act 1706 and of the Union with England Act 1707 so far as they relate to freedom of trade ...."

Schedule 5 lists reserved matters. Part I contains General Reservations. Part II contains Specific Reservations. Part III contains General Provisions.

Acts of Union challenge

The petitioners' arguments

[14] The petitioners submitted that the Acts of Union are constitutional statutes. They "committed successor Parliaments to legislate within the underpinning constitutional framework".

[15] The Articles which the petitioners founded upon were:

"ARTICLE 4

[1] That all the Subjects of the United Kingdom of Great Britain shall from and after the Union have full freedom and Intercourse of Trade and Navigation to and from any port or place within the said United Kingdom and the Dominions and Plantations thereunto belonging And

[2] that there be a Communication of all other Rights Privileges and Advantages which do or may belong to the Subjects of either Kingdom except where it is otherwise expressly agreed in these Articles.

ARTICLE 6

[1] That all parts of the United Kingdom for ever from and after the Union

[i] shall have the same Allowances Encouragements and Drawbacks and

[ii] be under the same prohibitions restrictions and regulations of Trade and

[iii] liable to the same Customs and Duties on Import and Export

[2] And that the Allowances Encouragements and Drawbacks prohibitions

restrictions and regulations of Trade and the Customs and Duties on Import and Export settled in England when the Union commences shall from and after the Union take place throughout the whole United Kingdom"

ARTICLE 7

That all parts of the United Kingdom be for ever from and after the Union liable to the same Excise upon all exciseable Liquors

ARTICLE 18

[1] That the Laws concerning regulation of Trade Customs and such Excises to which Scotland is by virtue of this Treaty to be liable be the same in Scotland from and after the Union as in England and

[2] That all other Laws in use within the Kingdom of Scotland do after the Union and notwithstanding thereof remain in the same force as before (except such as are contrary to or inconsistent with this Treaty) but alterable by the Parliament of Great Britain with this difference betwixt the Laws concerning public right Policy and Civil Government and those which concern private right

[i] that the Laws which concern public right Policy and Civil Government may be made the same throughout the whole United Kingdom

[ii] But that no alteration be made in Laws which concern private right

Except for evident Utility of the Subjects within Scotland."

[16] Under reference to Articles 4, 6, and 18 of the Acts of Union, and to the observations of Lord Hope in Imperial Tobacco at paragraph 29, it was submitted that there is a common internal market between Scotland and England. In the passage in Imperial Tobacco which was relied upon, Lord Hope described the contents of Part II of Schedule 5 to the Scotland Act 1998 (Specific Reservations):

"There is no common characteristic, but there is a common theme. It is that matters in which the United Kingdom as a whole has an interest should continue to be the responsibility of the United Kingdom Parliament at Westminster. They include matters which are affected by its treaty obligations and matters that are designed to ensure that there is a single market within the United Kingdom for the free movement of goods and services."

[17] The petitioners contended that if there was to be minimum pricing in Scotland, but not in England, the result would be disparity in the United Kingdom common market in alcoholic drinks. That, it was said, would be contrary to the terms, purpose and intent of Article 4. Minimum pricing would also have a detrimental effect on imports to Scotland as compared with England, contrary to Article 6. Consumers might indeed perceive a minimum price to be in the nature of an excise duty "contrary to the tenor of Article 7". It would result in "the Laws concerning regulation of Trade Customs" being different in Scotland and England contrary to Article 18. It was clear from AXA General Insurance Ltd v HM Advocate 2012 1 A.C. 868 that s. 29 of the Scotland Act 1998 was not exhaustive as to the circumstances in which the legality of an Act of the Scottish Parliament may be challenged. The matters complained of were amenable to challenge at common law. Finally, it was submitted that the 2012 Act, together with the proposed Order, impliedly modified Articles 4 and 6 in so far as they related to freedom of trade. It was outside the legislative competence of the Scottish Parliament and the Ministers to make such a modification (Scotland Act 1998, s. 29(2)(c), s.54(2) and (3), and Sched. 4, Part I, paragraph 1).

The first respondent's arguments

[18] The first respondent submitted that the Scotland Act 1998 was perfectly clear as to the relationship between it and the Acts of Union. There was no ambiguity on that matter. The legislative competence of the Scottish Parliament, and the vires of the Ministers, were affected by the Acts of Union only to the extent expressly provided for in the 1998 Act. The relevant provisions were s. 29 (2)(c), s. 37, s. 54(2) and (3), and Sched. 4, paragraph 1. The only constraint on the legislative competence of the Parliament, and on the powers of the Ministers, arising from the provisions of the Acts of Union was that set out in Sched. 4, para. 1(2)(a). In those circumstances there was no room for any other exceptional challenge of the sort envisaged by Lord Hope and Lord Reed in AXA. The matters raised did not go to the rule of law nor did they affect fundamental rights. In any event it was clear there was no breach of any of the Articles referred to. The contention that Articles 4 and 6 require trading conditions to be identical in Scotland and England was plainly wrong: Citizens Insurance Co of Canada v Parsons (1881-82) L.R. 7 App. Cas. 96 at p. 112-3; Imperial Tobacco, Petitioner 2012 SLT 749 per Lord President Hamilton at paragraphs 40-41, per Lord Reed at paragraph 157, and per Lord Brodie at paragraph 217. The preservation of Articles 4 and 6 in so far as they relate to trade served to guarantee equal free access to the market in each country, not uniformity in the conditions applicable to each of those markets. There was no breach of Articles 7 or 18. The 2012 Act and the proposed Order did not, and would not, modify Articles 4 and 6 of the Acts of Union so far as they related to trade.

Discussion

[19] I do not find any of the petitioners' submissions on this chapter of the case to be persuasive.

[20] I agree with the first respondent that on a proper interpretation of the relevant provisions of the Scotland Act 1998 the relationship between the Acts of Union and the 1998 Act is clear. The former have effect subject to the latter (s.37). The Scottish Parliament has no power to modify Articles 4 and 6 so far as they relate to freedom of trade (Schedule 4, paragraph 1(2)(a)): but that is the only respect in which the Acts of Union limit the Parliament's powers to legislate. The Parliament has plenary powers within the limits upon its legislative competence which were created by s. 29(2) (AXA, per Lord Reed at paragraph [147]).

[21] In any event I do not accept that there is any conflict between, on the one hand, the provisions of the 2012 Act and the proposed Order, and, on the other, the Articles founded upon by the petitioners. Nor do I accept that the Act and the proposed Order would modify Articles 4 and 6. The context of the passage at paragraph [29] of Lord Hope's judgment in Imperial Tobacco was discussion of the reserved matters set out in Part II of Schedule 5 to the Scotland Act 1998. In my opinion the petitioners pluck it out of context. They seek to rely on it as authority for the proposition that Articles 4 and 6 lay down that there be a single internal market between Scotland and England with common laws and conditions relating to trade applying in each country. In my opinion the passage is not authority for any such proposition.

[22] Articles 4 and 6 do not require trading conditions in Scotland and England to be identical. The observations of First Division in Imperial Tobacco v Lord Advocate 2012 SC 297 are instructive. In relation to Articles 4 and 6 Lord President Hamilton opined:

"[40] ...Wide terms in a constitutional statute have to be read in their historical context - in this case against the political objective, of particular importance to Scotland, to allow merchants from each of the parts of what was then to become Great Britain access on equal terms to the markets of the other (see the historical works referred to by the Lord Ordinary). But, as was pointed out in Citizen's Insurance Company of Canada and Anr v Parsons (pp. 112, 113), Art 6 has never been understood as preventing Parliament from passing separate and different laws bearing on trade in the constituent parts of Great Britain. Acts regulating the sale of intoxicating liquors and bankruptcy statutes were given as illustrations. Cautionary obligations, other than possibly in relation to consumer contracts, are another field impinging on trade in which the law, statutory and otherwise, may diverge as between the two jurisdictions. Until 1893 the Scots law of sale of goods was very different from that of England and Wales; some important differences, at least as regards non-consumer contracts, remain. The preservation of Scots law as a distinct and living corpus of jurisprudence depends on the continuation of separate treatment. What appears to be ruled out by Art 6 is any preference being given in trading conditions merely because the trader comes from one or other of the constituent parts of Great Britain - that is, free access to markets."

Lord Reed reasoned in relation to Article 6:

"[156] It is generally accepted that free access to the English domestic and colonial markets formed, from the Scottish perspective, an important reason for entering into the Union. The background to the Union included the failure of the attempt by the Darien Company to establish a Scottish colony in the Americas, resentment of the Navigation Acts, increases in duties upon Scottish exports to England, and the threat in the Alien Act 1705 to prohibit such exports entirely. Accordingly, several Articles in the Acts of Union were devoted to matters concerning trade, such as customs duties, rights of navigation, and rights to trade with the colonies. The focus of Art 6 , in particular, is upon equality of trading conditions. It begins by requiring 'the same Allowances, Encouragements and Drawbacks ... the same Prohibitions, Restrictions and Regulations ... and the same Customs and Duties' (emphasis added). As to what those allowances and so forth should be, it then requires that 'the Allowances [etc] ... settled in England ... shall ... take place throughout the whole United Kingdom'. As originally enacted, Art 6 then gave some specific examples: Scottish cattle exported to England were not to be liable to any duties to which English cattle were not subject within England; English subsidies on exports of grain were to be extended to oats (a Scottish product); and bere (a Scottish variety of barley) was to be given the same export subsidy as barley. Article 6 is not therefore a general guarantee of freedom of trade in the widest sense, and it does not prohibit restrictions on trade. It is concerned with a more specific matter, namely that trade should not be advantaged or disadvantaged, in the respects mentioned, according to whether it is carried on in Scotland or in England and Wales. It is to be noted that the scope of Art 6 has not been understood as extending to all distinctions between Scotland and England which may affect trade (Citizen's Insurance Company of Canada and anr v Parsons , pp 112, 113); nor could it have been intended that Art 6 should proscribe all such distinctions, given the intention, reflected in Art 18 , to retain a separate Scottish legal system."

Lord Brodie added:

"[216] Counsel's argument was that the 2010 provisions offend against the requirement that there be 'the same prohibitions restrictions and regulations of Trade' in all parts of the United Kingdom. Like your Lordship in the chair I would see what is guaranteed here is free access to markets not that there be uniformity in the conditions applicable to the particular markets associated with the different parts of the United Kingdom. Were it otherwise Scotland could not have a separate legal system from England, something which it is thought to have been guaranteed to Scotland by Art 18 (and see Citizen's Insurance Company of Canada and anr v Parsons , pp. 112, 113)."

I respectfully agree with these observations. The provisions of the Act and the proposed Order do not restrict or seek to restrict the freedom to trade of, nor do they give any preference in trading conditions to, traders in either Scotland or England. They do not modify Articles 4 and 6 in so far as they relate to trade.

[23] In relation to Articles 7 and 18 minimum pricing is neither an "Excise" nor is it a "Trade Usage". That is plain having regard to the ordinary meaning of those words; and it is even plainer once the words are construed in their historical context.

[24] While the language of s. 29 does not imply that the matters listed there are necessarily exhaustive of the grounds on which Acts of the Scottish Parliament may be challenged (AXA, per Lord Hope at paragraph [45], per Lord Reed at paragraph [136]), none of the matters raised relating to the Acts of Union provides a relevant basis for a common law challenge to the Act or the proposed Order.

[25] It follows that this aspect of the petitioners' challenge is ill-founded.

Articles 34 and 36 TFEU

The provisions

[26] Article 34 and 36 TFEU provide:

"Article 34

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States....

Article 36

The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants ... Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Members States."

[27] The same provisions formerly appeared in earlier treaties. The numbering of the Articles has not always coincided with the present numbering (eg at the time some of the authorities were decided the relevant Articles were Articles 28 and 30). To avoid confusion I shall use the current numbering even though in some of the cases I mention the numbering at the material time differed.

[28] It was common ground that the minimum pricing provisions contained in the Act and the proposed Order would be struck at by Article 34 unless they could be justified under the "mandatory requirements" or Article 36. The respondents accepted that the provisions must be considered in principle to be measures having equivalent effect to quantitative restrictions on imports: they were capable of hindering, directly or indirectly, actually or potentially, intra-Community trade (Case 8/74 Dassonville [1974] ECR 837, paragraph 5; Case C-420/01 Commission v Italy [2003] ECR I-6445, paragraph 25; Case C-434/04 Ahokainen and Leppik [2006] ECR I-9171, paragraph 18). Parties approached the case on the basis that it was not necessary to consider the mandatory requirements separately from Article 36. The respondents' position was that the measures proposed were justifiable on the grounds of the protection of public health and the prevention of public disorder.

Notification to the European Commission and the Commission's Detailed Opinion

[29] On 25 June 2012 the Scottish Ministers notified the draft Order to the Commission in terms of Article 8 of the Technical Standards Directive 98/34/EC. Comments and opinions on the draft Order were submitted by several Member States. On 25 September 2012 the Commission delivered to the UK Government and a limited number of other interested parties its detailed opinion prepared in terms of Article 9(2) of the Directive. In that opinion the Commission noted that national legislation imposing minimum pricing falls within the ambit of Article 34 TFEU; that the draft Order was capable of having an adverse effect on the marketing of imported goods, and was a measure having an effect equivalent to a quantitative restriction in so far as it prevented their lower cost price from being reflected in the retail selling price. The Commission accepted the existence of an alcohol caused public health problem in Scotland, and that a policy of increasing prices was likely to reduce consumption (generally and by hazardous and harmful drinkers). However, it suggested that those ends could also be achieved by using excise duty to increase prices for all products; that that would better serve the aim of achieving a reduction in consumption; and that it would avoid hindering free movement. It did not see the potential problem of increases in excise duty being absorbed by producers or retailers (rather than being passed on to consumers in the form of increased prices) as a sticking point. It observed that it was "not definite" that that would be likely to occur. Nor did it accept that the constraints imposed by the excise duty directives would prevent excise duty being used effectively to achieve the aims of reducing consumption - both generally and by hazardous and harmful drinkers. As increasing excise duty was an available measure which was less restrictive of trade than minimum pricing the draft Order appeared to be disproportionate. The Commission opined that the draft Order would be in breach of Article 34 TFEU were it to be adopted without giving due consideration to its remarks.

[30] The views of the Commission and of the Member States who submitted comments or opinions are, of course, of interest; but no more than that. The Commission's detailed opinion is but one of the steps in the procedure for dialogue provided for by the Technical Standards Directive. The contents do not bind either the Commission or the UK. This court is not bound by any view expressed by the Commission in its opinion.

The petitioners' arguments

[31] The petitioners contended that minimum pricing could not be justified.

[32] The primary argument was that there was clear and constant jurisprudence of the Court of Justice showing that minimum pricing was always unlawful and could never be justified by virtue of Article 36 (Case 82/77 Openbaar Ministerie v Van Tiggele [1978] ECR 25; Case C-287/89 Commission v Belgium Ex p. Bene BV [1991] ECR I-2233; Case C-302/00 Commission v France [2002] ECR I-2025; Case C-197/08 Commission v France [2010] ECR I-1599; Case C-198/08 Commission v Austria [2010] ECR I-1645; Case C-221/08 Commission v Ireland [2010] ECR I-1669).

[33] The secondary argument was that if justification for minimum pricing was not always legally precluded, it was not justified in the circumstances of the present case. It was not proportionate. The legislative aims were, at best, confused. It was not easy to reconcile the aim of reduction in consumption across the board with the aim of targeting hazardous and harmful drinkers. On the material available currently - in particular having regard to additional reports prepared since the Act was passed - the court should not be satisfied that the proposed measures are appropriate and capable of achieving the professed aims. It ought not to be satisfied on the evidence that hazardous and harmful drinkers in higher income categories bought cheap alcohol; or that raising the price of alcohol which is cheap relative to its strength would be likely to be effective in targeting hazardous and harmful drinkers. In any event, there were less restrictive measures which could be used to achieve the legislative aims. Those included a combination of increases in excise duty and bans on below duty plus vat sales, or below cost plus duty plus vat sales. Excise duty could be adjusted so that no alcohol retailed at less than the equivalent of at least 50p per unit of alcohol. That would avoid cheaper alcohol being singled out. The EU legislation on excise duty imposed minimum rates of duty. It did not prevent member states imposing higher rates. Wine between 8.5% and 15% strength had to have a single rate of duty applied, as did cider between 1.2% and 8.5%: but the UK could fix that rate as high as it wished. The onus was on the respondents to show that such alternative measures would not be equally effective in achieving the desired aims. Such measures would be less distorting or restrictive of intra-Community trade than minimum pricing because under them lower cost imports would retain their inherent cost advantages relative to similar goods which were costlier to produce. In this context reliance was placed upon the content of the Commission's opinion. The Commission had not been satisfied that there were not less restrictive measures which could be used. Its views were of course not binding on the court, but they were persuasive and ought to be treated with respect.

[34] The petitioners suggested that in judicial review of legislation it would be wrong to allow the Scottish Parliament or the Scottish Ministers any margin of appreciation or discretion. The intensity of review of national measures varied depending upon the subject matter and the particular circumstances. Here, the subject matter was price-fixing: the intensity of review should be high.

The respondents' arguments

[35] There had been ample evidence before the Parliament and the Ministers, and there was ample evidence before the court, of serious public health and related public order problems in Scotland caused by problematic alcohol consumption. The Commission had recognised and accepted the existence of the problems, and the need for them to be addressed.

[36] The aims of the measures were legitimate. An important aim - probably the more important one - was to target harmful and hazardous drinkers and reduce their consumption. The other aim was an overall reduction in consumption. The means of attaining both aims was by increasing the price of alcohol which was cheap relative to its strength. There was evidence which supported the view that harmful and hazardous drinkers tended to purchase disproportionate amounts of such alcohol, and that that applied no matter the income level of the drinker. There was also evidence that increasing the price of such alcohol using minimum unit pricing would be likely to lead to reductions in the consumption levels of such drinkers. There would also be likely to be a reduction in consumption levels across the population as a whole.

[37] There was no rule of EU law that precluded justification of minimum pricing by virtue of Article 36 or the mandatory requirements. The cases relied upon by the petitioners were not authority for any such proposition, and the reasoning of the Court of Justice in Case C-231/83 Cullet v Centre Leclerc [1985] ECR 305 (paragraphs 23-33) was at odds with it.

[38] It was accepted that the onus was on the respondents to show that the measures were justified: but if it was to be suggested that there was a specific alternative measure which would be just as effective, but would be less restrictive of trade, then there was an evidential onus on the party founding on it to raise the issue. Here the petitioners had not put forward such a specific case: they had relied upon general assertions that a combination of excise duty and a below cost or below duty plus VAT ban would be less restrictive. The difficulty with such a general approach was that it was not possible to carry out a proper comparison of the respective likely obstacles to free trade arising under each. Across the board rises in duty might well have significant effects on trade. In any event, there was no obligation to demonstrate that there were no conceivable alternative measures which would be as effective, but which would create less of an obstacle to free movement. The Parliament and the Ministers had focused on possible alternatives that had been raised. They had concluded that none of the alternatives suggested would be suitable and appropriate, or as effective, in achieving the aims. That had been a conclusion which they were entitled to reach. Increasing excise duty across the board would not be as effective in targeting harmful and hazardous drinkers. It would penalise the on-trade and the off-trade indiscriminately, whereas it was clear that the problem with cheap alcohol arose in the off-trade. It was not necessary to make higher price alcohol more expensive than it was. The excise duty directives required the same rate to be applied to wines of different strengths and the same rate to be applied to ciders of different strengths. Wine of 8.5% strength had to be taxed at the same rate as wine of 15% strength. Cider of 1.2% strength had to be taxed at the same rate as cider of 8.5% strength. That was not conducive to targeting alcohol which was cheap relative to its strength.

[39] The additional items proffered by the petitioners since the Act was passed did not give rise to any material change of circumstances. To a very large extent they simply revisited issues already considered and sought to supplement other evidence which had already been given.

[40] In judicial review the court's role was not that of primary fact finder. It was to examine "whether, as a matter of objective fact, there existed material which justified the measure in terms of the protection of health" (Sinclair Collis Ltd v Lord Advocate 2013 SLT 100, paragraph [58]). In carrying out that task the court ought, at each stage, to afford to the Parliament and to the Ministers a margin of appreciation: in identifying the problem; in deciding on the aims, and on the degree of protection of health that was desired; in selecting suitable measures to seek to achieve the aims; in determining the prospects of success of the measures; and in deciding whether any suggested alternative measures were likely to be as effective as the measures proposed (see eg Case C-110/05 Commission v Italy [2009] ECR I-519, paragraph 65; Ahokainem and Leppik, paragraph 32; Sinclair Collis Ltd v Lord Advocate, paragraphs [54], [59]).

[41] The respondents accepted that, standing the decision of the Inner House in Sinclair Collis, the test was not whether the national measures were manifestly inappropriate: cf. R (Sinclair Collis Ltd) v Secretary of State for Health [2012] 2 WLR 304. (The second respondent expressly indicated that the concession was made only for this case and for the purposes of the first hearing). The context here was measures directed primarily to the protection of health and life. It was inappropriate to approach matters as if this was a price-fixing case where the issue was one of competition law. Where the protection of health was at issue national authorities were entitled to a significant margin of discretion.

[42] There had been material before the Parliament, and there was material before the court, which provided objective justification for the Act and for the minimum price provided for in the proposed Order.

Discussion: Articles 34 and 36

(i) Can minimum pricing ever be justified?

[43] I am not persuaded that the authorities upon which the petitioners rely vouch the proposition that, as a matter of law, justification of measures having equivalent effect to quantitative restrictions on imports is precluded where the measures provide for minimum pricing.

[44] No Article 36 or mandatory requirements justification was advanced in Openbaar Ministerie v Van Tiggele - the issue was whether there was a breach of Article 34. The same observation applies to Commission v Belgium Ex p. Bene BV. Case C-302/00 Commission v France was a case where the issues were whether the French government had failed to fulfil its obligations under Articles 9(1), 8(2) and 16(5) of Council Directive 95/59/EC of 27 November 1995, Article 2 of Council Directive 92/79/EEC of 19 October 1992, and the first paragraph of Article 95 of the EC Treaty. The court held that Article 36 could only provide a justification for a breach of Article 34 or Article 35 - it could not be relied upon to justify breaches of other provisions (see paragraphs 33-35 of the Judgment).

[45] The recent tobacco cases (Commission v France, Commission v Austria, and Commission v Ireland) are not authority for the petitioners' primary proposition.

The issue in each case was whether the national provisions were contrary to Article 9(1) of Council Directive 95/59/EC. The court held that Article 36 TFEU provided no defence to the breach of Article 9(1) of the Directive. Article 36 could be relied upon only to justify a contravention of Articles 34 or 35. It could not be relied upon to justify breaches of other provisions. There was no scope for it to justify breach of a provision such as Article 9(1) (which dealt with a matter in relation to which there had been harmonization).

[46] In Cullet v Centre Leclerc one of the issues was whether the national measures setting minimum prices for petrol were an obstacle to freedom of movement in terms of Articles 34 and 36. If minimum pricing is always precluded whatever the circumstances, the court would not have required to consider (as it did) whether the measures in question were justified under Article 36.

[47] It follows that the petitioners' primary contention is unsound.

(ii) The correct approach to assessing justification

[48] When the Court of Justice reviews national measures for compatibility with EU law its role is not that of primary fact finder. Its role is a supervisory one. The crucial question is whether there is objective justification for the measures which are under attack. The fact that there may be controversy, and that the evidence may not be all one way, does not preclude the conclusion that the necessary justification is present. The Court affords a measure of respect - a margin of appreciation - to the decisions of national authorities (see eg Case C-110/05 Commission v Italy [2009] ECR I-519, paragraph 65; Ahokainem and Leppik, paragraphs 32, 39).

[49] Where a national court is reviewing national measures said to be incompatible with EU law the national court requires to approach matters in the same way as the Court of Justice would had it been adjudicating on the question in issue.

[50] In Sinclair Collis v Lord Advocate the Article 36 justification relied upon by the Scottish Government was the protection of health and life of humans. In its Opinion the Extra Division observed:

"[54] In determining whether section 9 is justified in terms of Article 36, the court again takes as a starting point, and does not consider that it should add any gloss upon, the judgment of the ECJ in Commission v Italy .... It stated:

"59 ... a prohibition may be justified on one of the public interest grounds set out in Article [36] or in order to meet imperative requirements (see, in particular Case C-420/01 Commission v Italy [2003] ECR I-6445, paragraph 29, and Case C-270/02 Commission v Italy [2004] ECR I-1559, paragraph 21). In either case, the national provision must be appropriate for securing the attainment of the objective pursued and not go beyond what is necessary in order to attain it (Case C-54/05 Commission v Finland [2007] ECR I-2473,

Paragraph 38 ([2007] 2 CMLR 33, paragraph 38), and Case C-297/05

Commission v Netherlands [2007] ECR I-7467, paragraph 75 ([2008] 1 CMLR 1, paragraph 75)).

...

61 In the absence of fully harmonising provisions at Community level, it is for the Member States to decide upon the level at which they wish to ensure ...safety in their territory, whilst taking account of the requirements of the free movement of goods within the European Community (see, to that effect, Case 50/83 Commission v Italy [1984] ECR 1633, paragraph 12, and, by analogy, Case C-131/93 Commission v Germany [1994] ECR I-3303, paragraph 16).

62 ... it is for the competent national authorities to show that their rules fulfil the criteria set out in paragraph 59 of the present judgment (see, to that effect, Commission v Netherlands, paragraph 76, Commission v Portugal, paragraph 39, and judgment of 24 April 2008 in Case C-286/07 Commission v Luxembourg, paragraph 37).

...

65 ... a Member State may determine the degree of protection which it wishes to apply in regard to ... safety and the way in which that degree of protection is to be achieved. Since that degree of protection may vary from one Member State to the other, Member States must be allowed a margin of appreciation and, consequently, the fact that one Member State imposes less strict rules than another Member State does not mean that the latter's rules are disproportionate (see, by analogy, Case C-262/02 Commission v France [2004] ECR I-6569, paragraph 37, and Case C-141/07 Commission v Germany [2008]

ECR I-6935, paragraph 51 ([2008] 3 CMLR 48, paragraph 51)).

66 ... Whilst it is true that it is for a Member State which invokes an

imperative requirement as justification for the hindrance to free movement of goods to demonstrate that its rules are appropriate and necessary to attain the legitimate objective being pursued, that burden of proof cannot be so extensive as to require the Member State to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions (see, by analogy, Case C-157/94 Commission v Netherlands [1997] ECR I-5699, paragraph 58).

67 ... that Member States cannot be denied the possibility of attaining an objective such as ... safety by the introduction of general and simple rules which will be easily understood and applied by [the person to whom they apply] and easily managed and supervised by the competent authorities".

[51] While the justification in Commission v Italy had been one of the mandatory requirements - road safety - rather than one of the justifications in Article 36, the general principles discussed there are equally applicable to Article 36. The Opinion of the Extra Division continued:

"[56] Proportionality requires that the measure is both "appropriate" ("suitable") to secure the objective and "necessary" as a means of doing so. A measure is suitable only if it genuinely reflects a concern to attain the objective in a consistent and systematic manner (Commission v Austria, no. C-28/09, 21 December 2011, paras 125-126). The court accepts that a measure cannot be necessary if there is an alternative which has a less restrictive effect on intra-European Union trade. In both respects, the court does not agree that the test for a successful challenge to a measure which infringes Article 34 is that it requires to be "manifestly inappropriate" to attain the objective. The court does not therefore accept that the level of judicial scrutiny can be

described as "low". The ECJ is clear in its requirement that the member state demonstrate that the measure is proportionate; that is to say appropriate and

necessary in the manner already described. The court accepts the petitioners'

submission that "manifestly inappropriate" is language used by the ECJ in relation to testing European Union institution measures (or national measures implementing EU law) (see e.g. R v Secretary of State for Health ex parte British American Tobacco (Investments) [2002] ECR I-11453, para 123). There the balance is between private and public interests. It is not applicable when testing the legitimacy of state measures against fundamental principles contained in the EU Treaties where the balance is between EU and state interests (see generally Tridimas: General Principles of EU Law (2nd ed) pp. 137-138)....

[58] In demonstrating proportionality, the onus is upon the member state to justify the measure objectively. This is likely to involve demonstrating, by reference to extraneous materials, that the measure is capable of attaining the stated purpose. Since the justification requires to be objective, this exercise is not one which involves an examination of the subjective reasoning of the decision making body (in this case a legislature), but one concerned with determining whether, as a matter of objective fact, there existed material which justified the measure in terms of the protection of health.

[59] The state does not require to prove that there are no conceivable alternatives to the measure. The practicalities of public understanding and ease of enforcement are relevant considerations (Commission v Italy (supra) at para 67). In this latter respect, there is a margin of appreciation afforded to the state not only in determining the general health objective of reducing smoking but also in selecting the manner in which the reduction in health risk is to be achieved...."

[52] The petitioners accepted that the court's task is one of review, but they were reluctant to accept that national measures be accorded any margin of appreciation. In my opinion that reluctance was misplaced. Commission v Italy, Ahokainem and Leppik, and Sinclair Collis give clear guidance as to the approach to be taken by the court when faced with the issue whether a prima facie breach of Article 34 is justified. They confirm that in such circumstances the national authority is indeed entitled to a margin of appreciation or discretion when the proportionality of the measures is considered by the court.

(iii) Proportionality - the aims of the measures

[53] As the harm which any alcoholic beverage is capable of causing has a direct relationship to its alcoholic content, the minimum price is per unit of alcohol. The aims of the measures are the reduction of alcohol consumption, but in particular the reduction of such consumption by hazardous and harmful drinkers. Another way of expressing that is the reduction in the number of units of alcohol consumed, but in particular the reduction in the number of units consumed by hazardous and harmful drinkers. Both aims are directed principally towards the protection of health and life, though other consequential (largely public order and economic) benefits are also anticipated.

[54] In my opinion it is clear that it is not an aim of the measures that alcohol consumption be eradicated. Nor is it an aim to make its cost prohibitive for all drinkers. The measures are intended to strike at alcohol misuse and overconsumption (see, eg, the Policy Memorandum to the Bill, paragraph 3) and to get people to build a healthy and sensible relationship with alcohol (see, eg, paragraph 15 of the Policy Memorandum and paragraph 2.1 of the Scottish Government's Final Business and Regulatory Impact Assessment ("the Final BRIA")). The Parliament and the Ministers were aware that greater harm to health and life could be avoided if the minimum price was set higher than 50 pence per unit (see eg the tables in the Explanatory Notes to the Bill and in section 5 of the Final BRIA showing the anticipated impacts of setting the minimum price at various levels between 25 pence per unit and 70 pence per unit) but the Ministers chose 50 pence per unit as the appropriate level. They were seeking to strike a reasonable balance between, on the one hand, public health and social benefits, and, on the other, intervention in the market (see eg the Final BRIA, paragraph 20). The Parliament and the Ministers recognised that many people have "a balanced, positive and enjoyable relationship with alcohol" (see eg the Final BRIA paragraph 4.3): such drinkers are not the target of the measures. The major problem is excessive consumption of cheap alcohol. The measures seek to address this by increasing the price of such alcohol.

(iv) Proportionality - legitimate aims?

[55] There is overwhelming evidence of grave health, social, economic and public order consequences caused in Scotland as a result of excessive alcohol consumption. Such consumption by harmful and hazardous drinkers is particularly concerning, and is harmful to those drinkers and to others. On the basis of the material placed before me I am in no doubt that reduction of alcohol consumption generally, and reduction of consumption by hazardous and harmful drinkers in particular, are both legitimate aims in terms of Article 36.

[56] The petitioners do not suggest that the measures attacked are a disguised restriction on trade. It is very plain that both the Parliament and the Ministers have proceeded in good faith with the very best of intentions in an effort to address the harm caused by current levels and patterns of alcohol consumption in Scotland. It is also clear that the initiative has been conceived and developed as a health initiative and that it enjoys prodigious support from health professionals and health agencies. There is not the slightest suggestion that it is a disguised restriction on trade.

(v) Proportionality - appropriate to achieve the aims?

[57] Ultimately the petitioners did not seriously challenge the suitability of the measures to achieve some general reduction in alcohol consumption. They did challenge their suitability to achieve a reduction in alcohol consumption by hazardous and harmful drinkers. They pointed to evidence that there are greater numbers of such drinkers in higher income brackets than in lower income brackets. They contended that more affluent hazardous and harmful drinkers are unlikely to be purchasers of the cheapest alcohol, and that therefore the measures would not target them; and that even if they do purchase cheap alcohol, minimum pricing would just result in them spending more to consume the same amount as before.

[58] These arguments were all the subject of evidence and debate before the Parliament. There was evidence that hazardous and harmful drinkers - across the income spectrum - tend to buy cheap alcohol. There was evidence showing that there is a linear relationship between price and consumption; that as price increases consumption tends to decrease; and that such features applied across all income groups.

[59] Whilst it is correct that there are a greater number of hazardous and harmful drinkers in higher income than in lower income groups, the harmful drinkers in the lowest income quintile consume far more alcohol per head, and are the source of much greater health related and other harm, than harmful drinkers in the higher income quintiles. There is also clear evidence that the greatest alcohol-related harm is experienced by those who live in the most deprived areas (see the evidence summarised in paragraph 2.29 of the Final BRIA).

[60] I conclude that there is objective evidence that the measures are appropriate to achieve their aims.

(vi) Proportionality - necessary?

[61] If the legitimate aims of the measures are capable of being achieved equally effectively by other measures which create less of an obstacle to intra-Community free movement of goods the measures would not be proportionate.

[62] The Parliament and the Ministers do not have legislative competence to increase excise duties - they are a reserved matter. Parties were at one that that lack of competence could not be prayed in aid by the respondents. If such less restrictive measures were available to the Parliament or Government of the United Kingdom, or to the Scottish Parliament or Scottish Government, minimum pricing would be incompatible with EU law.

[63] I agree with the respondents that there is an evidential onus on the petitioners to raise the issue of suggested alternative measures. In my view the petitioners have done enough to discharge that onus.

[64] If the suggested alternative measures would be just as effective as minimum pricing in achieving the legitimate aims being pursued, the contention that they would be less of an obstacle to freedom of movement of goods would appear, at least prima facie, to be logical and have force. On that hypothesis the alternative measures would enable products with low production costs to retain their cost advantage over products with higher production costs. Removal of that advantage would hinder freedom of movement for lower cost products (whether presently imported to Scotland or attempting to gain a foothold in the market here).

[65] It is for the respondents to show that the alternative measures would not be less of an obstacle to free movement. Rather than seeking to demonstrate that, the respondents (a) relied on their submission that the evidential onus had not been discharged, and (b) cautioned that the consequences for intra-Community trade of the suggested alternative measures might be more complicated and less predictable than the petitioners suggest. I have already rejected the first of those submissions. I do not consider the second submission to be an adequate response. The respondents had the opportunity to show that the consequences for free movement would be different from those the petitioners maintain would result. They have not availed themselves of that opportunity. Accordingly, I proceed on the basis that if the suggested alternative measures would truly be just as effective as minimum pricing, they would also be less of an obstacle to freedom of movement.

[66] That leaves what is, in my opinion, a critical issue relating to justification in this case - the comparative effectiveness of minimum pricing and the alternative measures. If the alternative measures would not be just as effective as minimum pricing in achieving the legitimate aims, minimum pricing would be necessary and proportionate.

[67] Both methods would use price increases to discourage consumption. Minimum pricing would involve increasing the prices of those alcohol products currently retailing at prices below 50 pence per unit. The legislation would not require any increase in price for other alcohol products. The alternative measures would seek to achieve price increases through the imposition of higher excise duties (and consequential increases in VAT): if passed on to the consumer there would be likely to be price increases for all (or almost all) alcohol products.

[68] A number of arguments were advanced that the proposed alternative measures would be less effective than minimum pricing in achieving the legitimate aims pursued. Their gist had been set out in paragraph 4.3 of the Final BRIA. Minimum pricing would be easier to understand and simpler to enforce than the alternative measures. It is not open to absorption. The constraints in the excise duty directives mean that excise duty can't be used to achieve the same outcomes as minimum pricing. The measures wouldn't be as effective because they don't apply exclusively to lower priced alcohol; and they would have disproportionate effects on the on-trade and on moderate drinkers, whereas minimum pricing would not.

[69] As was stated in paragraph 4.3:

"A minimum price per unit has the advantage of certainty. It is not open to

absorption. It does not encourage cross-subsidisation between different

products and product groups. Due to its simplicity, it is easier to understand,

measure and enforce."

Each of these points has some force. There was literature and oral evidence that excise duty rises might not be passed on (or not passed on in full) to consumers (see eg Professor Ludbrook supra p. 739, and Dr Gillan at p. 747 during the same session). That potential problem does not arise under minimum pricing. The proposition that there would be greater certainty and simplicity in the operation and enforcement of minimum pricing is tenable (cf. Commission v Italy, paragraph 67).

[70] The Court of Justice has observed on several occasions (see eg Ahokainem and Leppik, paragraphs 32, 39) that national authorities are to be accorded a margin of discretion in determining the measures which are likely to achieve concrete results.

[71] The terms of Directives 92/83/EEC and 93/83/EEC do place some constraints on using excise duty to achieve the legitimate aims discussed earlier. There is a minimum rate of excise duty for each alcohol product. Rates of duty for spirits and beer are to be aligned with alcoholic content. However, wines, other fermented beverages (including cider), and intermediate products require to have duty applied by volume of finished product, with uniform single rates being applied to products of different strengths (such as still wines with an alcohol content between 8.5% and 15%, sparkling wines with an alcohol content between 8.5% and15%, other still fermented beverages with an alcohol content between 8.5% and 15%, other sparkling fermented beverages with an alcohol content of between 8.5% and 15%, and intermediate products with an alcoholic content of between 1.2% and 22% (with certain exceptions). It is not possible in those cases for excise duty to increase as alcoholic strength increases. It might, eg, be possible to select a rate of excise duty which resulted in all products in a particular category being priced no lower than the highest strength product in a range would be under minimum pricing: but that would be likely to involve many of the lesser strength products in the range being priced higher than they would be under minimum pricing. Another possibility is that the relevant single rate could be selected on the basis of the average strength of products in any particular category. The rate for wine might be calculated so that it was likely to result in the product's retail price approximating to the price under minimum pricing for wine of, say 12-13%. However, neither possibility would be as satisfactory as minimum pricing. In neither case would the excise duty (and the ultimate price if indeed it was passed on rather than absorbed) relate directly to the actual alcoholic strength of the product. Minimum pricing would permit lesser prices to be charged for lower strength alcohol within each of these categories than for higher strength products. A system which results in higher prices for higher strength alcohol appears to be more consistent with the legitimate aims than one which will tend to result in similar prices for alcohol of significantly different strengths (see eg the evidence given to the Health and Sport Committee on the morning of Tuesday 10 January 2012 by Professor Ludbrook, p.739; the evidence of Professor Stockwell to the Committee on the afternoon of the same day at pp. 779-780, 792, 795; see also the evidence given to the Committee on the morning of 24 January 2012, p. 907, by Andrew Leicester on behalf of the Institute of Fiscal Studies as to the difficulties in using excise duty because of the existing constraints). Under minimum pricing alcohol which is cheap relative to strength can be targeted. The directives preclude excise duty being used in that way.

[72] In paragraph 4.3 the argument that using excise duty would not be as effective as minimum pricing because it would not have a "targeted effect" on hazardous and harmful drinkers was explained in the following way.

"There is evidence that across the board taxation increases do not have a targeted effect on the consumption of alcohol of those most at risk of alcohol-related harm¹¹¹. This is because harmful and hazardous drinkers consume a disproportionate amount of cheaper products¹¹². A minimum price is a measure that is targeted at products priced cheaply relative to their high strength.

111 E.g. Gruenwald et al. (2006) developed a model which shows that price increases targeted at the lowest cost brand would produce a greater reduction in sales than across the board price increases; Gruenwald, P.J., Ponicki, W.R., Holder, H.D., and Romelsjo, A. (2006) Alcohol Prices, Beverage Quality, and the Demand for Alcohol: Quality Substitutions and Price Elasticities, Alcoholism Clinical and Experimental Research 30 1: 96-105

112 Booth, A. et al. (2008) Independent Review of the Effects of Alcohol Pricing and Promotion Part A:Systematic Reviews, Sheffield: University of Sheffield."

The evidence cited in footnote 111 indicates that where prices increase across the board consumers of higher priced drinks can choose to drink less or switch to lower cost alternatives: whereas those who were already drinking the lowest price drinks had no option to switch to cheaper substitutes. It explains that measures which achieve the same rise in the average price of alcohol may have different effects on total sales. Total sales are reduced more where the price rises are concentrated on the lowest cost beverages, as opposed to being applied to all beverages. The reasons are that consumers of the cheapest products do not have the option of switching down; and that heavier drinkers tend to buy disproportionate quantities of cheap alcohol. This evidence was relied upon by several witnesses who gave evidence before the Parliament (see eg the evidence given by Professor Ludbrook supra at pp. 739-40, 770; and Dr Rice at p. 740: and the evidence given to the Committee on the morning of 24 January 2012 by Professor Chick at pp. 895-6, 915 and by Dr Holmes at pp. 912-3). The Articles which were relied upon, and the evidence of these witnesses, were coherent and intelligible. They clearly vouched - and explained - the proposition that, for any given average price increase, concentrating price increases on the cheapest products is the most effective way of reducing total sales.

[73] The petitioners counter that excise duty on alcohol can be increased as much as is necessary to raise the prices of cheaper products to desired levels. Such an approach would not affect, or target, drinkers of cheaper products only: but it could subject them to price increases of at least the same order as under minimum pricing. In each scenario the price of the cheapest alcohol would be increased by the same amount. In each case those who drink the cheapest products would have no option to switch down. In those circumstances the alternative measures would be no less effective in reducing the consumption of cheap alcohol or the consumption of alcohol by hazardous and harmful drinkers.

[74] I leave aside for the moment the difficulties in using excise duty already discussed. The point can also be made that, as the directives require there to be uniform rates of duty (linked in the case of beer and spirits to alcohol content and in other cases to volume of finished product), there is no scope for the application of a duty cap. If rates of duty are increased to raise the price of alcohol that is too cheap the same rates will require to be applied to more expensive alcohol. Targeting - in the sense of focusing duty increases on cheaper alcohol - is not possible.

[75] Further, it appears to me that there are important differences between, on the one hand, the petitioners' and the Commission's approach to the aims of the measures and, on the other hand, the Parliament's and the Ministers' approach.

[76] The excise duty route favoured by the petitioners and the Commission would (if increases were passed on to consumers rather than being absorbed etc.) necessarily involve greater price rises, and would affect more products, than would minimum pricing. With higher prices would come decreased consumption. That, say the petitioners and the Commission, would mean that the legislative aims would be better served than under minimum pricing.

[77] That argument would have been more persuasive if the legitimate aims of the measures had been to reduce consumption, including consumption by hazardous and harmful drinkers, to the maximum extent possible regardless of possible economic or social consequences. However, those are not the aims of the measures. Rather, the relevant aims are those described in paragraphs 53-54 supra.

[78] It is the legitimate aims described in Article 36 that are capable of justifying the creation of an obstacle to free movement. The principal Article 36 consideration in this case is the protection of health and life.

"Health and the life of humans rank first among the property or interests protected by Article 36 and it is for the Member States, within the limits imposed by the Treaty, to decide what degree of protection they intend to assure and in particular how strict the checks to be carried out are to be."

(Case C-104/75 Officer Van Justitier v De Peijper [1976] ECR 613 at paragraph 15: see to the same effect Commission v Italy, paras. 61, 65; Sinclair Collis Limited v Lord Advocate, para. 54).

[79] The protection of health and life of humans is the most important of the interests protected by Article 36, and it was for the Parliament and the Ministers to decide, within the limits imposed by the Treaty, how far they wished to go in protecting health and life from harmful aspects of alcohol consumption. In my opinion there is inherent in the Act and the proposed Order a judgment as to the level of protection of health and life the measures are designed to achieve. There is also a judgment that the best way of maximising reductions in sales, consumption and harm is to focus price increases on cheaper alcohol. Socio-economic considerations, such as concerns for the on-trade or for moderate drinkers, could not be used to justify measures which were more restrictive of free movement than alternative measures which were equally effective in providing the desired degree of protection of health and life. However, they are matters which may legitimately be taken into account in deciding the level of protection of health and life the Parliament and the Ministers wish to secure. The decision as to how far to go in protecting health and life inevitably involved striking a balance between health benefits and other interests. It was open to the Parliament and the Ministers to take into account likely impacts on moderate drinkers and the on-trade when deciding on an appropriate and proportionate level of protection of health and life.

[80] If, notwithstanding the contra-indications already discussed, excise duty could be used to achieve price increases at least equal to those which would arise under minimum pricing, the outcome under each regime would be materially different. To achieve equivalent prices for the very cheapest products using excise duty there would also have to be duty rises on many other products. Those products would thus be more expensive than they would have been under minimum pricing. All of the products which would have been unaffected by minimum pricing would be liable to face price increases - some very substantial - because of excise duty rises. The average increase in the price of alcohol would have to be significantly greater than under minimum pricing (in order to achieve increases in price for the cheapest products of the same order as under minimum pricing). Moderate drinkers and the on-trade would be affected more. The level of protection of health and life imposed would be greater than that thought by the Parliament and the Ministers to be appropriate and proportionate.

[81] For all these reasons I am satisfied on the material before me that there is objective justification for the conclusion that the alternative measures would be likely to be less effective in achieving the legitimate aims which the minimum pricing measures pursue.

The additional material

[82] None of the parties contended that I was restricted to consideration of the material which had been before the Parliament and the Ministers. The petitioners suggested that the additional reports obtained by them cast doubt on parts of the evidence which had been relied upon by the Parliament and the Ministers. On the other hand the respondents maintained that the reports did not give rise to any material change of circumstances: to a very considerable extent they simply revisited issues already considered and sought to support other evidence which had already been given.

[83] I agree with the respondents that the additional reports have not given rise to material changes in the range of views which were already represented in the evidence available to the Parliament and the Ministers. Nor do I think that any of them contains material which is of such significance or weight that the Parliament and the Ministers would have been bound, or have been likely, to have concluded (a) that minimum pricing was unsuitable to achieve the health and social benefits it was directed to; or (b) that the suggested alternative measures would be just as effective as minimum pricing.

Conclusion on Articles 34 and 36

[84] It follows that in my opinion the Article 36 justification has been made out. There is objective justification supporting the proportionality of the Act and the proposed minimum price.

Common Agricultural Policy: common organization of the market in relation to wine, other fermented beverages, and agriculturally produced ethyl alcohol

Introduction

[85] Regulation (EC) 1234/2007 (as amended by Regulation (EC) 491/2009) provides for the common organisation of the market in many agricultural sectors including wine and other fermented beverages (such as cider, mead and perry) and agriculturally produced ethyl alcohol.

The petitioners' arguments

[86] The petitioners submitted that the regulation of the market in respect of wine, other fermented beverages, and agriculturally produced ethyl alcohol falls under the exclusive competence of the EU. In these sectors Regulation (EC) 1234/2007 left no room for national measures unless those measures were specifically authorised by the EU. Once there had been any exercise of EU competence in a particular sector competence in relation to that sector was no longer shared. It did not matter that the Regulation was not an exhaustive harmonising measure. In this respect harmonising legislation providing for the common organisation of the market in agricultural products was an exception to the general rule. Where the EU had exercised competence there required to be specific authorisation or conferral of competence for national measures to be valid. There had been no such authorisation or conferral in relation to the matters covered by the Act and the Order. Reliance was placed on Case C-137/00 R v Competition Commission, ex parte Milk Marque Ltd [2004] QB 442; Case 88/75 Tasca [1976] ECR 291; Case 111/76 Officier van Justitie v Van den Hazel [1977] ECR 901; Case 154/77 Procureur du Roi v Dechmann [1978] ECR 1473; Case 83/78 Pigs Marketing Board(Northern Ireland) v Redmond [1978] ECR 2347; Cases 95 & 96/79 Procureur du Roi v Kefer [[1980] 2 CMLR 77.

[87] Reliance was also placed on Case C-355/00 Freskot AE v Elliniko Dimosio [2003] ECR I-5263 where it was stated (at paragraph 19):

"Where there is a regulation of the common organization of the market in a given sector, the Member States are, according to settled case-law, under an obligation to refrain from taking any measures which might undermine or create exceptions to it (see, as regards the common organisation of the market for poultry meat, Case 111/76 Van den Hazel [1977] ECR 901, paragraph 13, and as regards other sectors, inter alia, Case C-456/00 France v Commission [2002] ECR I-11949, paragraph 31, and Case C-462/01 Hammarsten [2003] ECR I-781, paragraph 30)."

It was submitted that the minimum pricing measures undermined the common organization of the market brought about by Regulation (EC) 1234/2007.

[88] Further, it was maintained that the Act and the draft Order were incompatible with Regulation (EC) 1234/2007, in particular with Articles 113c.1(b) (in relation to wine) and 128 (b) (in relation to each of the alcoholic products the Regulation dealt with). Articles 113c and 128 provide:

"Article 113c

Marketing rules to improve and stabilise the operation of the

common market in wines

1. In order to improve and stabilise the operation of the common market in wines, including the grapes, musts and wines from which they derive, producer Member States may lay down marketing rules to regulate supply, particularly by way of implementing decisions taken by the inter-branch organisations referred to in Articles 123(3) and 125o. Such rules shall be proportionate to the objective pursued and shall not:

(a) relate to any transaction after the first marketing of the produce

concerned;

(b) allow for price fixing, including where prices are set for guidance or recommendation;

(c) render unavailable an excessive proportion of the vintage that would otherwise be available;

(d) provide scope for refusing to issue the national and Community

certificates required for the circulation and marketing of wines

where such marketing is in accordance with those rules....

Article 128

General principles

Unless otherwise provided for in this Regulation or in provisions adopted pursuant thereto, the following shall be prohibited in trade with third countries:

(a) the levying of any charge having equivalent effect to a customs

duty;

(b) the application of any quantitative restriction or measure having

equivalent effect."

In terms of Article 113c.1(c) Member States' marketing rules regulating the supply of wines shall not allow for price fixing. It was contended that minimum pricing was a form of price fixing (Case 128/83 Bureau National Interprofessionel du Cognac v Guy Claion [1985] ECR 402) and that Article 113c.1(c) prohibited it. Minimum pricing was a quantitative restriction on imports or a measure having equivalent effect, and in relation to trade with third countries it was specifically prohibited by Article 128 (b). These were specific prohibitions. There was no exception or derogation from the provisions on the grounds of the protection of health (or on any of the other grounds contained in Article 36 TFEU). Even if the minimum pricing measures did not breach Articles 113c or 128(b), they undermined the aims and objectives of the common organisation of the market in relation to wine and the other alcoholic products dealt with by the Regulation. They were accordingly unlawful.

The respondents' arguments

[89] It was submitted that agriculture is an area of shared competence between the EU and the Member States (TFEU, Articles 2 and 4), and that Member States lost competence only to the extent that the EU had exercised its competence. Otherwise, Member States retained competence (TFEU, Protocol 25 and Declaration 18). Harmonisation measures relating to agriculture were governed by the general rule concerning harmonisation provisions. They did not fall to be treated differently. The petitioners' primary proposition was not vouched by the cases relied upon. In each of them there had been intensive regulation of the sector in question including the establishment of a price mechanism and a trading system. They were simply examples of cases where there had been comprehensive harmonisation. They were to be contrasted with the limited intervention in relation to wine, other fermented products, and agriculturally produced ethyl alcohol which had taken place under Regulation 1234/2007. Cases such as Case 5-77 Tedeschi v Denkavit Commerciale Srl [1977] ECR 1555, Case 16/83 Karl Prantl [1984] ECR 1299, and Case C-350/97 Unabhängiger Verwaltungssenat für Kärnten [2001]1 CM.L.R. 2 demonstrated that harmonisation in the agriculture sector was not an exception to the general rule. The general rule was that where a particular area of commercial activity engaging the principle of the free movement of goods was regulated by harmonising legislation of the EU, that legislation superseded the general provisions of Articles 34 to 36 TFEU. The legislation had to be examined to determine the matters which it dealt with, and the matters which had been fully harmonised. Here it was clear that in relation to the relevant products neither pricing nor the protection of health and life had been the subject of harmonisation. Regulation 1234/2007 had dealt with a number of specific matters (eg, in relation to wine, certain aspects of the production process and oenological practice (Article 120 a-g), labelling and presentation (Articles 113d, 118w-zb), protection of designations of origin and of connections with geographic locations (Article 118a et seq.): but it had not purported to deal with price and the protection of health and life. The current common organisation of the market in relation to wine was very different from the regime at the time Prantl was decided. The previous regime had involved much greater intervention and had included price intervention. The minimum pricing measures did not breach any of the Regulation's provisions. Article 113c was a very specific measure which enabled wine producer Member States to lay down marketing rules to regulate the supply of wine produced in the Member State up to the time of first marketing. Its scope was narrow (Article 113c.1(b)). It did not deal with sales to consumers or the protection of their health. Provisions as to pricing at the production stage did not preclude Member States' price measures in relation to the retail and consumption stages provided the measures did not jeopardise the aims and functions of the common organisation of the market: eg see Procureur du Roi v Dechmann. The introductory words of Article 128 were significant. Provisions had been adopted pursuant to the Regulation and those provisions contained equivalents to Article 36 TFEU: (see eg Mögele and Erlbacher, Single Common Market Organisation, (2011), page 617, paragraph 12; Council Regulation (EC) No 260/2009 of 26 February 2009 on the common rules for imports, Articles 24.2(a) and 25.1; Council Regulation (EC) No 625/2009 of 7 July 2009 on common rules for imports from certain third countries (Codified version), Articles 19.2(a) and 20.1; and Council Regulation (EC) No 1061/2009 of 19 October 2009 establishing common rules for exports, Article 10).

Discussion

[90] It is well settled that where a matter has been the subject of exhaustive EU harmonisation any national measure relating to that matter must be assessed in relation to the provisions of the harmonising measure and not those of the Treaty (see eg Case C-463/01 Commission v Germany [2004] ECR I-11705, paragraph 36 and the case law cited; Case C-470/03 AGM-COS.MET Srl v Finland [2007] ECR I-2749, paragraph 50; Case C-216/11 Commission v France, Judgment of the Court (Fourth Chamber)14 March 2013, paragraph 27).

[91] Agriculture is an area of shared competence. In my opinion the authorities relied upon by the petitioners do not vouch the principal proposition advanced by them. I agree with the respondents that cases such as Denkavit, Prantl and Monsees demonstrate that the correct approach is to examine carefully the subject matter and scope of the harmonisation measures: and that it is clear that the rule which applies generally in connection with harmonising legislation applies equally to legislation dealing with common organisation of the market in the field of agriculture. Member States remain able to act on matters which are not the subject of specific harmonisation measures provided that national provisions do not undermine or create exceptions to the common organisation of the market.

[92] In so far as Regulation 1234/2007 deals with common organisation of the market in relation to wine, other fermented beverages, and agriculturally produced ethyl alcohol it provides for intervention and regulation in a limited number of areas. Significantly, it does not regulate price. Nor does it purport to deal with the protection of health. It is not a fully harmonised measure dealing comprehensively and exhaustively with common organisation of the market for those products. National measures remain competent where they deal with matters not dealt with by the Regulation. In relation to such matters the Regulation does not supersede Articles 34 and 36 TFEU.

[93] In my opinion there is no conflict between the provisions of the Regulation and the minimum pricing measures. The latter do not undermine or create exceptions to the former.

[94] Article 113c relates to the period up to first marketing by (or on behalf of) the producer. In terms of Article 113c.1 (b) marketing rules relating to that period are not to allow price fixing, ie agreements between producers to fix prices: cf. Bureau National Interprofessionel du Cognac v Guy Claion. The provision strikes at marketing rules at the production stage which permit anti-competitive price fixing agreements between competitors. It does not prohibit or restrict Member States' competence to make provision for minimum retail prices for sales from licensed premises to consumers (cf. Dechmann, paragraphs 13 and 17) on grounds of the protection of public health.

[95] While it is correct that Article 128(b) makes provision similar to Article 34 TFEU in respect of trade with third countries, and that Regulation 1234/2007 itself contains no justification or derogation provision similar to Article 36 TFEU, that absence does not support the conclusion that the Regulation made exhaustive provision for the common organisation of the market in each of the sectors dealt with. (In fact in several instances subsequent provision has been made pursuant to the Regulation and those provisions contain equivalents to Article 36 TFEU: see eg Regulation 260/2009, Articles 24.2(a) and 25.1; Regulation 625/2009, Articles 19.2(a) and 20.1; Regulation 1061/2009, Article 10; Mögele and Erlbacher, op. cit., page 617, paragraph 12).

[97] It follows in my opinion that this chapter of the petitioners' challenge is ill-founded.

Spirit drinks: Regulation (EC) 110/2008, Article 6(2)

Introduction

[98] The title of the provision founded on by the petitioners is Regulation (EC) No. 110/2008 of the European Parliament and of the Council of 15 January 2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks. The preamble sets out the following among its aims:

"(4) To ensure a more systematic approach in the legislation governing spirit drinks, this Regulation should set out clearly defined criteria for the production, description, presentation and labelling of spirit drinks as well as on the protection of geographical indications....

(6) In general, this Regulation should continue to focus on definitions of spirit drinks which should be classified into categories. Those definitions should continue to respect the traditional quality practices but should be completed or updated where previous definitions were lacking or insufficient or where such definitions may be improved in the light of technological development...

(14) Given that Council Regulation (EC) No 510/2006 of 20 March 2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs does not apply to spirit drinks, the rules for protection of geographical indications on spirit drinks should be laid down in this Regulation. Geographical indications should be registered, identifying spirit drinks as originating in the territory of a country, or a region or locality in that territory, where a given quality, reputation or other characteristic of the spirit drink is essentially attributable to its geographical origin..."

Article 1.1 provides:

"This Regulation lays down rules on the definition, presentation and labelling of spirit drinks as well as on the protection of geographical indication of spirit drinks."

Article 6.2 provides:

"Member States shall not prohibit or restrict the import, sale or consumption of spirit drinks which comply with this Regulation."

The petitioners' arguments

[99] It was submitted that Article 6.2 prevented Member States from doing anything to prohibit or restrict the import, sale or consumption of spirit drinks which complied with the Regulation; that a minimum price for alcohol would have the effect of restricting imports of spirit drinks; that it would also be, in effect, a prohibition on sales below the minimum price; and that it would restrict the consumption of spirit drinks.

The respondents' arguments

[100] The respondents maintained that, on a proper construction of the Regulation, Article 6.2 did not have the broad and literal meaning suggested by the petitioners. Having regard to the terms of the Regulation as a whole, and to its purpose as disclosed in Article 1.1 and the preamble, it was clear that it did not deal with pricing, and that Article 6.2 did not prohibit minimum pricing. The Regulation was not designed to achieve harmonisation on pricing or on the protection of health.

Discussion

[101] The proposition advanced is a startling one. If correct, it would mean that in any case where the requirements of the Regulation are satisfied national authorities have no competence to prohibit or restrict, directly or indirectly, the import, sale or consumption of spirit drinks on any grounds whatsoever. Thus, for example, any measure directed towards restricting excessive drinking of spirits and other alcohol on public health or public policy grounds would be unlawful.

[102] In my opinion the construction put forward by the petitioners is plainly wrong. The ambit of the Regulation is much more limited than the petitioners suggest. It is a harmonising measure relating to the definition, description, presentation, labelling and the protection of geographic indications of spirit drinks. That is the context in which Article 6.2 falls to be construed. So construed, in my opinion it is simply not capable of bearing the very broad interpretation which the petitioners contend for.

[103] The Regulation is not a measure which purports to deal with either pricing or the protection of health and life. It remains within the competence of Member States to make provision in relation to those matters. Such provision will be lawful provided it complies with the Member State's Treaty obligations (including Articles 34 and 36).

[104] It follows that I do not accept the petitioners' contention that the minimum pricing measures contravene Article 6.2.

Reference

[105] The petitioners suggested that I might consider making a reference to the Court of Justice under Article 267 TFEU for a preliminary ruling if I considered that the answer to any question of interpretation of EU law was not clear.

[106] The approach which I must adopt in deciding whether to make a preliminary reference is set out in R v International Stock Exchange of the United Kingdom and the Republic of Ireland Ltd, ex p Else (1982) Ltd [1993] QB 534 per Bingham MR at page 545D-G. Applying that approach, I am satisfied with sufficient certainty that the petitioners' argument that minimum pricing can never be justified is ill-founded; that their arguments based upon Regulations 1234/2007 and 110/2008 fall to be rejected; and that it is unnecessary and inappropriate to refer any question to the Court of Justice for a preliminary ruling.

[107] On the issue of Article 36 justification the critical question is the proportionality of the minimum pricing measures. There is no issue of legal interpretation of the Article which requires elucidation. It is well established that the national court is in a better position than the Court of Justice to examine and determine all the circumstances bearing upon proportionality (including the identification of the aims of the legislation, and whether the aims might be achieved as effectively by less restrictive measures) (Case C-405/98 Konsumentombudsmannen (KO) v Gourmet International Products AB (GIP) [2001] ECR I-1795, paragraph 33; Case 434/04 Ahokainen and Leppik, paragraphs 37-39; Joined Cases C-186/11and C-209/11 Stanleybet International and Others v Ypourgos Oikonomias kai Oikonomikon, Judgment of the Court of Justice (Fourth Chamber) 24 January 2013, paragraph 26). Indeed, the Court of Justice has no jurisdiction to determine facts on a reference under Article 267 TFEU (see eg joined Cases C-316/07, C-358/07 to C360/07, C-409/07 and C-410/07 StoB and Others [2010] ECR I-8069, paragraph 46; Case-176/11 HIT hoteli, igralnice, turizem dd Nova Gorica and Another v Bundesminister für Finanzen, Judgment of the Court (Fourth Chamber) 12 July 2012, paragraph 33). It follows that, in relation to Article 36 too, I do not consider it necessary or appropriate to refer any question to the Court of Justice for a preliminary ruling.

Decision

[108] In my opinion none of the challenges to the minimum pricing measures is well founded. There is no proper basis for the petitioners being granted any of the remedies which they seek. The petition is refused.