UK: Higher taxes better than minimum pricing, argues OFT
The OFT has warned that a minimum price will have "unintended consequences" such as boosting retailers' profits
The UK's Office of Fair Trading (OFT) says it believes raising alcohol duties, instead of minimum pricing, would be a better way to tackle problems.
In its submission to a parliamentary inquiry on the government's alcohol strategy, the watchdog told MPs that a "change in taxation" would create less risk of "unintended consequences".
It argued, in evidence that emerged this week, that the price increase under the policy would "generate windfall gains" for retailers.
"Unlike an increase in tax, additional consumer spending on alcohol would go to private firms rather than to the government," the OFT, which is responsible for enforcing competition and consumer law in the UK, added.
It said it is "concerned that the unintended consequence of this increase in profit may be to give retailers an incentive to sell more, rather than less, low cost alcohol".
"Retailers would gain additional profit for every unit of low cost alcohol that they sold. At worst, such an incentive could dull the effectiveness of the minimum price in reducing alcohol sales," the submission stated.
The watchdog, an independent, non-ministerial government department, said it believed minimum pricing was legal under UK competition law, but it could face "constraints" from "wider European law".
The Health Committee, which conducted the inquiry, backed minimum pricing in its report published last month. However, it called for a "sunset clause" to allow the law to be overturned if it proved ineffective.
The international scope of the Scotch whisky sector and its strong growth in emerging markets has allowed the market to continue growing in spite of the global downturn. However, as a new just-drinks/...
The UK Government is reviving a TV advertising campaign urging people to lower their alcohol intake....
- The End of the Road for International Beer Brands?
- Comment - Another One Bites Bacardi's Dust
- just The Preview - Pernod Ricard's Q4 & FY
- Pernod Ricard's FY Performance by Region, Brand
- Comment - Hybrid Spirits: Innovation or Laziness?
- Mast-Jägermeister targets UK off-trade boost
- Pernod bemoans tough FY as sales, profits drop
- Bacardi announces CFO switch
- SABMiller exec to become CFO at Beam Suntory
- Brown-Forman unveils Jack Daniel's UK push