The below-cost sales minefield

To describe it a ‘legal minefield’ is just about right. On the face of it, of course, the call for an end to unfair competition from the supermarkets and the opportunities for pre-loading by young people seems perfectly rational.

Yet any curb on pricing can fall foul of competition law, there is a danger of throwing the baby out with the bathwater, in terms of consumer deals for cash-strapped families, and where to pitch the actual cut-off point is a complete conundrum.

Any proposed legislation has to be framed in a way that is clear and unambiguous — and that is not something recent governments have been very good at. What at first sight seems simple becomes a lot more difficult when the legal people start to cavil about wording and exceptions.

There has been much talk about supermarket lobbying, and I am sure that this goes on — as it does with much of consumer law that applies to any retail sector.

The big supermarkets have high turnovers and attract a huge spend from the general public, most of whom are not binge drinkers but like a good bargain when they see it.

So any sort of hike in alcohol prices is not going to go down too well with the general public, unless it is very carefully managed as a direct attack on the type of consumer that people hate — the yob and the street drinker. In some areas of the country, including Westminster, there is a conditional ban for many off-licences on selling high-strength lager and cider, the traditional tipple of the inebriate classes.

This is a targeted approach, not a global attack on pricing, but it also has its detractors.

The Government appears to have ruled out tax increases, because it would affect all sectors. But the price differential between the on and off-trades is already enormous and there is a danger that low-cost legislation will have only a marginal effect on sales prices, however it is pitched.

If that is what the Government wants, so be it. But the idea that any form of legislation will suddenly end the threat to pubs of supermarket sales is not really in the picture.
Anti-competitive legislation has a chequered history in this country. We all like to talk about the level playing field, but in legislative terms that is extremely difficult to provide for. Look at the problems associated with irresponsible drinks promotions under the mandatory conditions. Although it appears to have settled down somewhat, in the early days some authorities considered any special offer, including happy hours, to fall foul of the regulations. Yet as I have pointed out before, incentives and promotions are part and parcel of all forms of retailing, especially in hard economic times.

I am sure that the problems of properly assessing production costs have already persuaded the Home Office to go for the simpler route of duty plus VAT as a starting point, but this is hardly going to affect anything but the most basic loss-leaders on the shop floor. It may be that there will have to be something else to discourage multiple bargains that attract problem drinkers and perhaps some other restriction will be built into the legislation when it is produced later this year.

Whatever the result, it will not satisfy many people, which is why the parliamentary draughtsmen must be scratching their heads to find a suitable legal definition that will not be full of holes!