A ban on selling alcohol below cost price
In its consultation paper, the UK’s Home Office says it wants to overhaul the Licensing Act, which regulates the sale of alcohol in the UK, to give local communities a greater say in these decisions.
“If local communities don’t want nightclubs open until six in the morning then the local authority should be able to respond flexibly to this concern. Similarly, if the local community does want a vibrant late-night economy, with premises open into the early hours, then the local authority should have the flexibility to charge a fee to pay for any additional policing this generates. Local tax payers shouldn’t simply be left to pick up this cost”, James Brokenshire, Parliamentary Under Secretary of State says in his foreword.
Whilst the Government is determined to remove the bureaucracy behind licensing and to put local communities in the lead, it still has a role in setting the framework for responsible trading.
That’s why it is concerned by those businesses that sell alcohol at a loss in order to gain wider trade and intends to ban the sale of alcohol for below cost price.
Alcohol producers and retailers have been invited to respond to the Government’s intended changes until 8 September 2010.
According to media reports, Diageo is considering backing a ban on selling alcohol below the cost of duty and VAT – but denied any link between price and problem drinking.
In its submission to the UK’s Home Office consultation, the maker of Johnnie Walker and Smirnoff said it would oppose any other kind of minimum pricing restriction, the Sunday Telegraph reported on 29 August 2010.
Mark Baird, Corporate Social Responsibility Manager for Diageo UK, told the newspaper: “Our position has always been that we don’t believe there’s a relationship between price and alcohol harm, so we’re fully against minimum pricing.”
Some of Diageo’s competitors have argued that it could have the opposite effect on prices. Brewer Molson Coors, which makes Carling in the UK, said that it could drive prices even lower.
Nick Lakin, head of Corporate Responsibility at Molson Coors, said: “Extremely cheap alcohol prices are not good for society and we believe some form of pricing intervention may be required. Price point is important. We agree there is a connection between price and consumption.”
Molson Coors has met officials from the Home Office and the Treasury, which is holding a separate consultation on alcohol duty.
Supermarket retailer Asda has already pledged not to sell alcohol below the cost of duty and VAT and rival Tesco has backed a discussion on minimum pricing between retailers, the drinks industry and the British government.
As well as pricing, the UK’s Home Office is examining opening hours and how to tackle loutish behaviour at closing time.
Still, the UK Government is aware that whatever ban it will introduce, it must be compatible with EU trade and competition laws and realistic to enforce.
Most EU countries which have tried similar policies have banned selling alcohol below “net invoice price” where the reference price is broadly the unit price on the invoice.
