OFT: minimum pricing could increase alcohol sales

Minimum pricing might increase alcohol sales, according to the Office of Fair Trading (OFT).

The OFT also suggested higher alcohol tax could be more effective at dealing with problems linked to drinking.

It gave its view in evidence for a committee of MSPs looking at Scotland's plan to implement the measure via its new Alcohol Bill.

The OFT's report says a "possible outcome" of minimum pricing is that "higher revenues increase the incentives for retailers to sell more alcohol (due to relatively higher returns)".

"There might inadvertently be an increase in alcohol sales because the effect of increased marketing outweighs the effect of the price increase.

"In markets where, as acknowledged by the Scottish Government, demand is relatively inelastic (that is, has a weak response to price increases), this potential consequence cannot be discounted.

The OFT also said taxation "if well designed, should be less distortive of competition than a minimum price because it would apply to all sales and in equal measure, rather than setting a minimum floor, which would affect only some products and by differing amounts.

"Tax revenues also get passed to the Government, and in principle could be spent on tackling alcohol misuse in other ways.

"This is in contrast to a minimum price which may increase revenues for the industry whereas a tax could avoid any adverse incentives to increase sales of alcohol.

"We recognise of course that the Scottish Government does not have direct control over rates of duty."

The prospect of higher prices from drinks firms was also raised.

The OFT also said a minimum price could lead to a "weakening competition between rivals" and therefore "less incentive for retailers and manufacturers to reduce their costs".

The Health Committee is set to debate the issue today.