Alcoholic drink manufacturers are being warned they risk breaching competition rules as they scramble to re-position their brands in the wake of Scotland’s new minimum unit pricing policy.
Michael Dean, a partner in the competition and anti-trust team at Dentons, said Holyrood’s intervention in the market and the jump in the price of drinks previously placed at the cheaper end, had the potential to cause problems among many suppliers and retailers.
He said: “With brands at the value end of the market now more expensive, owners of more premium brands will want a higher price still, to maintain the differential, and they will want to communicate that to retailers.
“However, conversations on price can easily stray into territory that is seriously illegal, especially where positions have been destabilised.”
Mr Dean said there were two potential competition law breaches that retailers and brand owners could be in danger of committing as they try to orientate the alcoholic drinks market after the introduction of minimum unit pricing.
The first is discussions which lead to suppliers infringing retailers’ freedom to set their own prices and the second is the temptation to check where competing brands are resetting to – for example checking with competitors that their respective pricing is not out of line.
Mr Dean added: “The law says retailers have to be free to price – except in so far as the government’s intervention has an impact based on unit price, as it just has done.
“Brand owners shouldn’t be dictating the retail price, even though premium brands will undoubtedly want to retain their differential over lower-cost options.
“They need to be very careful about how they communicate that.
“A more general danger arises from the possibility that the new law normalises talking about prices within the industry or exchanging information, but of course that remains strictly illegal between competitors, whether that be among brand owners or among retailers.”