Legal Q&A: MUP
MUP has thrown up plenty of questions since it came into force last month. In this special column, Jack Cummins tackles some of them
Do you have a legal question for Jack Cummins?*
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Click on questions below to show answers.
[acc_item title=”Q: I regularly shop at a branch of a national food chain that periodically issues money-off vouchers. Typically, the saving is £5 on a shop of at least £30. Until recently, alcoholic products weren’t excluded. On my last shop I was told by the checkout operator that I couldn’t use the voucher because I was buying some wine. I’m assuming this must have something to do with minimum pricing, but my drinks purchases are usually priced well above the minimum. Can you explain the reason for the restriction? “]
A: According to the guidance issue by the Scottish Government, there’s nothing to stop the continued use of these vouchers. The saving is applied to the total cost of the shopping but it mustn’t take the cost of the alcohol below the minimum price. If, for example, you were buying a bottle of champagne priced at £20, the minimum price would be £4.69 (based on an ABV of 12.5%). So, clearly, the saving would be completely legal – but, in many cases the price would be reduced below the legal minimum.
Perhaps this could be addressed by some sort of IT “fix” so that the till system checks the value of the voucher against the minimum price of alcohol purchases and allows or blocks its use. But I suspect this retailer – along with others – has taken a risk-averse view. You could of course use the voucher by splitting the alcohol and food into two separate transactions, provided that the food spend still matched the threshold amount. That would certainly please those who are constantly arguing for alcohol to be checked out separately – but I suspect most shoppers would just view this as a total nuisance.[/acc_item]
[acc_item title=”Q: How does MUP affect tastings as part of a distillery tour?”]
A: These tastings are addressed in the Scottish Government guidance. In my view, it’s wrong. The relevant paragraph starts with the proposition that “Minimum pricing applies to the sale of alcohol”. That’s perfectly correct, of course. But Section 3 of the Licensing (Scotland) Act 2005 provides that alcohol is treated as “sold” where it’s supplied as part of a contract. So, if there’s a charge for the tour, and alcohol is provided, it’s wrong to say – as the guidance does – that minimum pricing doesn’t apply to free samples “as there’s no sale of alcohol”. In fact, the cost of the tour must be at least equal to the minimum price of the samples. There’s another important dimension to this. Anyone operating these tours and providing tastings must have a licence for the premises if the tour carries a charge, even if the samples are ‘free’.[/acc_item]
Free soft drinks
[acc_item title=”Q: I’ve read that some small shops might be offering free bottles of soft drinks with alcohol purchases to offset the impact of minimum pricing on their customers. Can they do this?”]
A: The 2005 Licensing Act provides that a promotion is ‘irresponsible’ if it involves the supply of an alcoholic drink free of charge, or at a reduced price, on the purchase of one or more drinks (which need not be alcoholic). But there’s nothing to prevent the supply of a free non-alcoholic drink on the purchase of an alcoholic product, provided the minimum price is met.
[acc_item title=”Q: What’s the position where a retailer takes an alcohol order online from its headquarters in England but sends the purchases from a warehouse in Scotland?”]
A: Minimum pricing applies to that sort of transaction. Where an online order is fulfilled by the dispatch of the goods from premises in Scotland, those premises must be licensed and the licence will have the minimum pricing condition attached. On the other hand, if the goods are sent from England, there’s no price restriction and nothing to prevent a ‘click and collect’ arrangement so that the alcohol can be picked up from premises in Scotland. Since there’s no sale at the point of collection, those premises needn’t be licensed. However, if they are licensed the alcohol must be taken away during licensed hours. There’s also nothing to prevent Scottish retailers heading over the border and filling a van with supermarket purchases for re-sale in Scotland – provided, of course, that the retailer holds a licence.
[acc_item title=”Q: I’ve been trying to work out how to apply the minimum pricing formula to products but it’s leading to bizarre results. Can you please clarify the methodology?”]
A: The condition attached to premises licences sets out how the minimum price is to be calculated. The formula is: MUP x S x V x 100, where MUP is the minimum unit price; S is the strength of the alcohol; and V is the volume in litres. You need to put decimal points in the right places. So, taking the example of a bottle of wine with a strength of 12.5% and containing 75cl, the correct calculation is as follows: 0.5 x .125 x .75 x 100 = £4.687. That figure needs to be rounded up to £4.69. You should not rely on the number of units where that’s given on labelling. As far as multi-packs are concerned, it’s important to bear in mind that so-called ‘linear pricing’ still applies if any of the pack components are sold individually.
[acc_item title=”Q: Does minimum pricing impact on ‘meal deal’ offers? “]
A: Where a meal and alcohol are sold for a combined price, that price must not be less than the minimum price of the alcohol if it was sold on its own. So, if a pub offers a meal and a bottle of house wine (75cl, 12.5% ABV) the cost of the package cannot be less than £4.79.
Brand match and reward points
[acc_item title=”Q: I work for a multiple retailer with outlets on both sides of the border. While there’s no minimum pricing in England and Wales, there is a ban on selling ‘below cost plus duty and VAT’. That’s called the ‘permitted price’. I’m aware that the ‘below cost’ guidance issued by the Home Office specifically approves of the use of ‘brand match’ coupons where the coupon would take the price of alcohol below the ‘permitted price’. Does the same approach apply to minimum pricing? What about reward points? “]
A: While the Scottish Government guidance follows the Home Office guidance in large measure, it takes an opposite approach to ‘brand match’ schemes. The Home Office treats the coupons as “a form of refund for overpaying” and they can result in alcohol being sold below the ‘permitted price’. That’s an odd analysis. If I make a purchase that would have been cheaper elsewhere, I wouldn’t consider myself to have been “overcharged”. So, correctly in my opinion, the Scottish approach is to allow the use of ‘brand match’ coupons for an alcohol purchase but only provided it doesn’t result in the price being reduced below the minimum price. On both sides of the border, the same approach is taken in relation to points accumulated on a reward card. The cash value of the points can be used for an alcohol purchase provided that the value of the points redeemed (plus any cash top-up) is not below the minimum price of the product. But the reward points must have been earned in a previous transaction. Those awarded during a particular transaction only have a cash value in relation to future purchases: they are not instantly redeemable.
*Jack Cummins is unable to enter into personal correspondence on readers’ questions. The advice offered in SLTN is published for information only. No responsibility for loss occasioned by persons acting or refraining from action as a result of material contained on this page or elsewhere in SLTN can be accepted by the author or publisher.