If 10 local authorities succeed in exploiting a competition law loophole, it could signal the end of national pricing strategies on alcohol, warns Michelle Perrett
Minimum pricing would be hard enough to implement on a national level. It would cause absolute chaos if local authorities were allowed to set their own prices, warn retailers.
Yet that is exactly the scenario they are facing in the wake of news last week that 10 councils in Greater Manchester are trying to introduce a 50p per unit lower price limit.
Competition lawyers admit there is a loophole in competition law that could allow the Association of Greater Manchester Authorities (AGMA) to push through minimum pricing.
This week, David Cameron said that he broadly supported the proposal. "I think the idea of the councils coming together on this is a good one and we will certainly look at it very sympathetically," he told local residents in Manchester on Tuesday, adding that he would "look at the details".
If AGMA succeeds, it will pave the way for other local authorities to set their own prices and signal the end of a national alcohol pricing strategy.
"National businesses will have a whole load of practical and financial impositions put on them," adds BRC spokesman Richard Dodd. The big question is whether minimum pricing complies with competition laws.
At the moment, the jury is out, which is why other local authorities are viewing the AGMA attempt very much as a test case. Mike Jones, alcohol programme manager for the public health network in Manchester, says he is speaking to a number of local authorities, including Middlesbrough, that plan to push through their own minimum pricing bylaws if Manchester succeeds.
Middlesbrough, Sunderland, Bournemouth and Dundee are among a raft of local authorities that have tried, but failed, to introduce minimum pricing in the past. None of them, however, have attempted to take the bylaw route.
And although health secretary Andrew Lansley has ruled out minimum pricing as a government policy, the AGMA will feel its arm has been strengthened by David Cameron's talk of a Big Society and the localism agenda.
Now, it just has to convince the relevant minister of state (a bylaw only needs one to be passed by one minister) that there are no competition issues. If a minimum price is set there is obviously the prospect that a cartel will be established which is illegal under competition law.
But the AGMA is proposing the introduction of minimum pricing under section 235 of the Local Government Act, which allows bylaws to be introduced for the 'protection of nuisances' and on paper exempts 'cartels' from competition law. On paper that is.
The whole area is a legal minefield, warn lawyers, and whether they are exempt or not, it won't necessarily stop the European Commission looking into such a scheme if it considers it anti-competitive. Even Cameron admitted the strategy could fall foul of competition law.
Mark Hastings, a spokesman for the British Beer & Pub Association, certainly doesn't believe local authorities have the legal right to set prices. "They just don't have those powers," he says. "I think the Manchester authorities are struggling to find a way to do this."
The BRC is convinced any move towards minimum pricing would be open to legal challenge. "Even if they did manage to push this through, any customer would be able to challenge this under competition law," says Dodd. "And if a drinks company or retailer thought the council was abusing its power they could issue a legal challenge."
The AGMA partnership agrees the legal situation is confusing and has highlighted that there has been no test of competition law and alcohol. "This is a hugely conflicting issue with some competition lawyers saying it is fine and some saying it is not," says Jones. "We are in a situation where nobody really knows what is going to happen. We have found something that has completely rattled everyone's cage."
The details of how the strategy would be implemented have yet to be thrashed out, but as with any bylaw, retailers would face penalties if they refused to comply. "If you pee on the street you get a fine. As with any bylaw retailers will have to agree and if they don't do it they will be put into a system where they will be fined."
There is a larger question of how local bylaws would fit in with the government's national alcohol strategy. It is in the middle of two reviews at the moment: a consultation on the Licensing Act and a review of alcohol tax.
The Association of Convenience Stores believes the government is in danger of giving too much power to local authorities. "The government has already concluded that minimum pricing would not be an effective tool in tackling problem drinking, so it is difficult to understand why David Cameron would support the policy at a local level," said chief executive James Lowman, in the wake of Cameron's comments this week.
Prior to Cameron's comments, Lowman described AGMA's move as a publicity stunt and a "gimmick" to put minimum pricing back on the national government agenda. Judging by this week's events, it has worked.
A worrying precedent has been set, says Lowman. "The whole basis of the localism agenda is if you get a decision made at local level it will be a better decision," he says. "Having this on a localised level is very dangerous."
The prospect of localised minimum pricing is already sending shivers down the industry's spine. Tesco still maintains that a minimum pricing policy can only work at a national level and must not be on a localised basis.
However, Hastings says it would be wise not to read too much into what were essentially off-the-cuff remarks. "Let's see how this goes. Cameron is indicating that the government wants to crackdown on irresponsible promotions and loss-leading alcohol. I think this is about support for local people to take action against deep discounting of alcohol and some people have read into this his support for local minimum pricing."
Whether it actually becomes a reality is another matter.
And in scotland...
Scottish local authorities such as Perth & Kinross and Dundee attempted to impose minimum booze pricing in the early 2000s. The SNP is now considering a minimum price policy as part of an Alcohol Bill but the government has said it is willing to consider alternatives following objections by opposition MPs this week.
The Bill plans to give ministers powers to impose a minimum price, introduce a new tax for retailers and ban off-trade promotions. In a cross-party meeting this week, health secretary Nicola Sturgeon said it would consider a "sunset clause" that would allow the policy to be reviewed after a set period.
Minimum pricing would be hard enough to implement on a national level. It would cause absolute chaos if local authorities were allowed to set their own prices, warn retailers.
Yet that is exactly the scenario they are facing in the wake of news last week that 10 councils in Greater Manchester are trying to introduce a 50p per unit lower price limit.
Competition lawyers admit there is a loophole in competition law that could allow the Association of Greater Manchester Authorities (AGMA) to push through minimum pricing.
This week, David Cameron said that he broadly supported the proposal. "I think the idea of the councils coming together on this is a good one and we will certainly look at it very sympathetically," he told local residents in Manchester on Tuesday, adding that he would "look at the details".
If AGMA succeeds, it will pave the way for other local authorities to set their own prices and signal the end of a national alcohol pricing strategy.
"National businesses will have a whole load of practical and financial impositions put on them," adds BRC spokesman Richard Dodd. The big question is whether minimum pricing complies with competition laws.
At the moment, the jury is out, which is why other local authorities are viewing the AGMA attempt very much as a test case. Mike Jones, alcohol programme manager for the public health network in Manchester, says he is speaking to a number of local authorities, including Middlesbrough, that plan to push through their own minimum pricing bylaws if Manchester succeeds.
Middlesbrough, Sunderland, Bournemouth and Dundee are among a raft of local authorities that have tried, but failed, to introduce minimum pricing in the past. None of them, however, have attempted to take the bylaw route.
And although health secretary Andrew Lansley has ruled out minimum pricing as a government policy, the AGMA will feel its arm has been strengthened by David Cameron's talk of a Big Society and the localism agenda.
Now, it just has to convince the relevant minister of state (a bylaw only needs one to be passed by one minister) that there are no competition issues. If a minimum price is set there is obviously the prospect that a cartel will be established which is illegal under competition law.
But the AGMA is proposing the introduction of minimum pricing under section 235 of the Local Government Act, which allows bylaws to be introduced for the 'protection of nuisances' and on paper exempts 'cartels' from competition law. On paper that is.
The whole area is a legal minefield, warn lawyers, and whether they are exempt or not, it won't necessarily stop the European Commission looking into such a scheme if it considers it anti-competitive. Even Cameron admitted the strategy could fall foul of competition law.
Mark Hastings, a spokesman for the British Beer & Pub Association, certainly doesn't believe local authorities have the legal right to set prices. "They just don't have those powers," he says. "I think the Manchester authorities are struggling to find a way to do this."
The BRC is convinced any move towards minimum pricing would be open to legal challenge. "Even if they did manage to push this through, any customer would be able to challenge this under competition law," says Dodd. "And if a drinks company or retailer thought the council was abusing its power they could issue a legal challenge."
The AGMA partnership agrees the legal situation is confusing and has highlighted that there has been no test of competition law and alcohol. "This is a hugely conflicting issue with some competition lawyers saying it is fine and some saying it is not," says Jones. "We are in a situation where nobody really knows what is going to happen. We have found something that has completely rattled everyone's cage."
The details of how the strategy would be implemented have yet to be thrashed out, but as with any bylaw, retailers would face penalties if they refused to comply. "If you pee on the street you get a fine. As with any bylaw retailers will have to agree and if they don't do it they will be put into a system where they will be fined."
There is a larger question of how local bylaws would fit in with the government's national alcohol strategy. It is in the middle of two reviews at the moment: a consultation on the Licensing Act and a review of alcohol tax.
The Association of Convenience Stores believes the government is in danger of giving too much power to local authorities. "The government has already concluded that minimum pricing would not be an effective tool in tackling problem drinking, so it is difficult to understand why David Cameron would support the policy at a local level," said chief executive James Lowman, in the wake of Cameron's comments this week.
Prior to Cameron's comments, Lowman described AGMA's move as a publicity stunt and a "gimmick" to put minimum pricing back on the national government agenda. Judging by this week's events, it has worked.
A worrying precedent has been set, says Lowman. "The whole basis of the localism agenda is if you get a decision made at local level it will be a better decision," he says. "Having this on a localised level is very dangerous."
The prospect of localised minimum pricing is already sending shivers down the industry's spine. Tesco still maintains that a minimum pricing policy can only work at a national level and must not be on a localised basis.
However, Hastings says it would be wise not to read too much into what were essentially off-the-cuff remarks. "Let's see how this goes. Cameron is indicating that the government wants to crackdown on irresponsible promotions and loss-leading alcohol. I think this is about support for local people to take action against deep discounting of alcohol and some people have read into this his support for local minimum pricing."
Whether it actually becomes a reality is another matter.
And in scotland...
Scottish local authorities such as Perth & Kinross and Dundee attempted to impose minimum booze pricing in the early 2000s. The SNP is now considering a minimum price policy as part of an Alcohol Bill but the government has said it is willing to consider alternatives following objections by opposition MPs this week.
The Bill plans to give ministers powers to impose a minimum price, introduce a new tax for retailers and ban off-trade promotions. In a cross-party meeting this week, health secretary Nicola Sturgeon said it would consider a "sunset clause" that would allow the policy to be reviewed after a set period.
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