KY producers have warned the government that plans to place a minimum price on units of alcohol would be illegal under European trade rules.
The Scotch Whisky Association (SWA), whose members include Diageo, the Edrington Group and Chivas Brothers, has written a letter to Downing Street stating that the policy would amount to a domestic barrier to free trade within Europe.
The group, whose 56 members employ 35,000 people in Britain, also stressed that similar price control efforts from other countries such as the Netherlands have been thwarted by the European Court of Justice in Luxembourg.
Prime Minister David Cameron is keen on a minimum price for a unit of alcohol – likely to be in the 40p-50p range – as he hopes it could save the UK £15bn over 10 years and stem the problem of weekend “war zones” fuelled by drink.
But if the price controls are included in the government’s alcohol strategy – due later this week or early next week – he is likely to face opposition from competition authorities, alcohol producers, and even health secretary Andrew Lansley.
While the drinks industry was said to be comfortable with a ban on supermarkets selling alcohol at a loss, there is widespread concern over minimum pricing as it would have a more dramatic effect.
A 50p minimum unit price would add 27 per cent to the cost of a bottle of Scotch whisky and producers believe higher prices would hurt moderate drinkers and have little effect on problem drinkers.
Gavin Hewitt, chief executive of the SWA, has already fought an earlier bid by Scottish government to set minimum prices. He said it was “the wrong policy option” which would not bring “a more healthy, positive and responsible attitude to alcohol”.
Despite the threat of legal action, health groups say the change is warranted. Government figures show one in four Brits drink at harmful or hazardous levels, and the charity Alcohol Concern expects related hospital admissions to hit 1.5m a year by 2015, at a cost of around £3.7bn a year to the National Health Service.