Alcohol restrictions are both misguided and contrary to competition law, says Kevin Hawkins

"Freedom and whisky gang tegither" wrote Robert Burns, celebrating this time-honoured Scottish association.

The problem now, however, is that a minority of Scots are drinking too much, which has enabled an even smaller band of fanatics to lobby successfully for minimum pricing at 40p per unit and a ban on all off-trade promotions. The rationale is that alcohol abuse in Scotland is worse than anywhere else in the EU and raising drink prices will reverse the upward trend in total consumption.

The declared target is 'problem drinkers', who tend to choose cheap, higher-strength products. Moderate wine and beer consumers will, allegedly, hardly notice the difference. Abuse is heavily concentrated in deprived urban areas, especially parts of Glasgow and Dundee. So the restrictions will hit the poor, doubtless (as a Victorian temperance reformer would have said) for their social and moral improvement.

Critics point out that urban renewal and economic development would be more relevant. What of competition law? The OFT has warned the Scottish government that minimum pricing will reduce competition, innovation and efficiency in the drinks industry. Presumably John Fingleton will come down as hard on errant Scottish politicians as he has done on price-fixers in the private sector. A European Commission source has been quoted as saying that minimum pricing is not incompatible with EU competition law, but to date there is only the example of cigarettes in Belgium to support this claim, which dates from a less rigorous competition regime. But neither in UK nor EU law is there any support for banning promotions.

Good regulation should be based on robust evidence. The Scottish proposals are driven entirely by a model-based study at Sheffield University, which stands or falls on the assumptions it makes about human reactions to changes in variables such as price. The authors, however, have stepped outside the bounds of standard economic analysis by predicting social outcomes such as 365 fewer deaths from alcohol in year 10 of the policy, 3,200 fewer crimes every year and 1,250 fewer unemployed through alcohol misuse. The alluring precision of these projections has proved irresistible to politicians eager for cerebral legitimacy. One day they will wake up with an almighty hangover.

Kevin Hawkins is an independent retail consultant.

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