Price controls on essential foods: partial business and regulatory impact assessment

Section 5: Scottish Government Compliance with UK regulatory alignment and EU Standards

5.1 Alignment of proposals with the Internal Market Act and Intra-UK Trade

The Scottish Government has undertaken an initial assessment of the potential interaction between the proposals and the United Kingdom Internal Market Act 2020 (UKIMA).

Legislation that sets limits on the price at which goods are sold, such as a price cap, is a “manner of sale” requirement in terms of the United Kingdom Internal Market Act 2020. This means that the mutual recognition principle is unlikely to apply to legislative provisions setting price caps, but the non-discrimination principle will be relevant. The final design of any scheme would take into account potential impacts on trade within the UK and information about trade impacts is sought as part of the consultation. The extent to which UKIMA may impact final proposals depends on the final design of any scheme.

The proposals could result in regulatory divergence from other parts of the UK, as no equivalent food price cap scheme currently operates elsewhere.

The implications of UKIMA, intra-UK trade and any relevant Common Frameworks will be considered further as policy development progresses and reflected in future versions of the BRIA.

5.2 Alignment of proposals with EU on standards and access to (trading) markets

The consultation proposals relate to the retail pricing of selected food products and do not propose changes to food safety, food composition, animal welfare or environmental standards. As such, they are not expected to affect Scotland's commitment to maintaining and advancing high standards aligned with those shared by the EU.

Price controls can raise issues under EU law unless impacts on competition can be justified. The compliance of a price cap with EU law depends on its ultimate design, and this will be considered as the policy develops.

The Scottish Government has considered relevant European experience with food price interventions. Recent judgments of the Court of Justice of the European Union concerning measures introduced in Hungary highlight the importance of ensuring that any intervention is proportionate and compatible with wider legal and market frameworks.^[22]

The consultation is therefore seeking views not only on whether intervention is appropriate, but also on how any intervention could be designed to achieve affordability objectives while minimising unintended impacts on businesses, consumers and supply chains. The Scottish Government considers that it may be possible to design a food price intervention in a manner that aligns with EU law.

The Scottish Government has also considered examples from other EU Member States, including Croatia, where food price controls remain in operation. At the time of publication, there is no publicly reported indication that the European Commission has initiated infringement proceedings in relation to those measures. Further information on international examples of food price controls is provided in Annex B of the consultation document.

These issues will be considered further as policy development progresses and reflected in future iterations of the BRIA.