Scotland faces competition law risk

03 May, 2018

In the wake of Scotland’s new minimum unit pricing policy, alcoholic drink manufacturers and retailers are being warned that they could risk breaching competition rules.

Minimum unit pricing came into force across Scotland on May 1, making it illegal to sell alcohol for less than 50p a unit, the biggest impact has been on high-strength ciders, with some brands almost doubling in price.

Michael Dean, a partner in the Competition and Antitrust team at Dentons’ Glasgow office, said: “With brands at the value-end of the market now more expensive, owners of more premium brand will want a higher price still, to maintain the differential, and they will want to communicate that to retailers.”

The warnings are over two potential competition law breaches that retailers and brand owners could be in danger of committing:

•Discussions which lead to suppliers infringing retailers’ freedom to set their own prices.

•The temptation to check where competing brands are resetting to – i.e. checking with competitors that their respective pricing is not out of line.

Premium brand owners who want to increase the price of their products can charge more on a wholesale basis and this is high risk according to Dean as retailers may decide not to buy leading suppliers to be tempted to band together on price rises, a “seriously illegal move”.

According to Dentons brand owners can recommend a price but cannot enforce it. Likewise, suppliers should not communicate what other retailers plan to do with their pricing as they are in danger of being a conduit between the competing retailers.

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