Policy paper

Goods market access: approach to restrictions and bans

Updated 17 November 2020

What are we going to do?

The Bill makes clear that pricing-type policies in relation to the sale of goods, for example, minimum alcohol unit pricing or plastic bag charges, and other ‘manner of sale’ requirements, are out of scope of the mutual recognition principle. This means that all parts of the UK will have the freedom to regulate for pricing and other ‘manner of sale’ policies, provided they are not discriminatory and apply equally to all goods from all parts of the UK.

Policies around the use of products, such as the smoking ban, fall outside the scope of the internal market system entirely. The principles of mutual recognition and non-discrimination are only relevant and applicable to matters relating to the sale of a good; sale is defined in Clause 14 of the Bill.

How are we going to do it?

The Bill sets out in Clause 3(3) the type of regulation that will fall under the scope of mutual recognition, called ‘relevant requirements’. The Bill makes clear under Clauses 3(4) – (6) that requirements that govern the manner or circumstances in which goods are sold, including pricing policies, will not be ‘relevant requirements’ for the purposes of mutual recognition, save where they are artificially designed to ban the sale of a good.

We provide a comprehensive list in the Bill of what is considered as relevant requirements. For mutual recognition, this could include:

• the characteristics of a good, such as its quality or performance
• the presentation of a good, such as its packaging or labelling
• anything connected with the production of the good
• any matter relating to the identification or tracing of an animal such as tagging or micro-chipping
• the inspection, assessment, registration, certification, approval or, authorisation of a good
• documentation or information that must be produced or recorded, or provided to an authority

For non-discrimination (Clause 6(3)), relevant requirements could include:

• the circumstances or manner in which a good is sold, such as minimum age restrictions or pricing policies
• the transportation, storage, handling or display of a good
• the inspection, assessment, registration, certification, approval or, authorisation of a good^{[footnote 1]}
• the conduct or regulation of businesses that engage in the sale of certain goods or types of goods

The non-discrimination principle will only affect pricing policies if they are shown to be discriminatory and unjustifiably restrict trade from other parts of the UK. In practice, this means that Minimum Unit Alcohol Pricing, or the plastic bag charge, would have all been possible under the UK Internal Market Bill^{[footnote 2]}.

Conversely, non-pricing policies that place an outright ban on goods being sold, for example a ban on single-use plastics, would be caught by mutual recognition. Devolved administrations could introduce a ban on the sale of a particular good, but the ban would only cover local products produced in that part of the UK (or those imported into that territory from outside the UK). Devolved administrations could not enforce that ban against sellers of goods produced in, or imported into, other parts of the UK.

Background

The internal market system is focused on maintaining the free flow of goods and services, ensuring that new regulations do not impact the functioning of the internal market. Mutual recognition and non-discrimination only apply in relation to the sale of a good, or provision of a service. For goods, mutual recognition will primarily apply to requirements relating to the good itself. By contrast, the non-discrimination principle captures regulation concerned with manner of sale.

The exception to this is where manner of sale requirements results in a de facto ban of a good. In such cases, mutual recognition applies, rather than non-discrimination. For example, if legislation is introduced that says a good can only be sold to persons aged 150 years or older, this is a manner of sale requirement; however, while it does not expressly ban the sale of the good, it would in practice result in a total ban on sale. Noting this is an extreme scenario, it illustrates where mutual recognition would apply in order to capture measures that are artificially designed to make it impossible to sell a good, while being presented as a manner of sale requirement.

Why was a government amendment introduced at Commons Report stage on minimum pricing-type policies?

The government introduced a technical amendment to make our intention crystal clear to the public that this type of regulation would not be covered by mutual recognition.

It has never been the government’s intention for pricing-type policies to be in scope of the mutual recognition principle. They would only be affected if they breached the non-discrimination principle.

How will these policies be kept out of the scope of the mutual recognition principle?

The Internal Market Bill is designed to prevent minimum pricing-type regulation from getting caught by mutual recognition by ensuring that manner of sale requirements will not be caught unless they leave the seller with no practical chance of selling the goods (that is if they are artificially designed to ban the sale of a good).

The Bill clarifies that should an administration want to introduce minimum alcohol pricing rules in future there would be no obstacle to that, as long as the price set does not constitute a discriminatory policy.

1. These specific requirements would fall within scope of non-discrimination, rather than mutual recognition, if they are not a pre-requisite to a good being sold, for example post-sale inspections or market surveillance. ↩

2. Where there are existing differences in regulation prior to the UK Internal Market Bill coming into force, mutual recognition and non-discrimination will not apply retrospectively. This is a forward-looking Bill that will apply to new relevant legislation if it falls within the scope of mutual recognition and non-discrimination. Therefore, the internal market principles will not apply to existing pricing policies. ↩