The head of the UK's Office of Fair Trading has spoken out against minimum pricing, as just-drinks understands from sources that the regulator has objected to a minimum price on alcohol in Scotland.

Setting a minimum price on a product "has a number of undesirable effects", said John Fingleton, CEO of the Office of Fair Trading, in a speech to the Oxford-based Regulatory Policy Institute this week.

His words come as the Scottish Government prepares for a parliamentary debate this autumn on its plan to introduce a minimum price per unit of alcohol in drinks.

"It would reduce the incentives of firms to compete, innovate and cut costs. So the dynamic benefits of competition are lost," said Fingleton, whose speech also coincided with the launch of the OFT's "why competition matters" report to the Government.

"There is a political risk that in the interest of achieving a specific policy objective, weakening competition can be seen as an attractive short-term option where the alternatives might be to introduce a tax or implement more targeted regulation."

Fingleton added: "It is the job of competition authorities to highlight to government where such a short term fix can have serious and long-lasting negative effects."

An industry source told just-drinks today (11 September) that, following high-level meetings with OFT officials, the regulator's Scotland division has warned the Scottish Government that it is opposed to minimum pricing on alcohol.

Minimum pricing forms a central piece of the ruling Scottish National Party's strategy to tackle alcohol-related harm, although a final proposal has not yet been published.

Several drinks industry leaders have warned that minimum pricing could break both competition law and international trade law.

Ministers may use a "public interest" clause to override competition law, but opposition from regulators may make minimum pricing harder to implement.

Industry leaders expect that any attempt to enforce minimum prices for alcohol will lead to legal challenges.