Plans for minimum pricing on alcohol have been dealt a major blow after the EU's highest court said the plan would be in breach of European law.
The European Court of Justice stated that a minimum price for drinks is illegal in cases where a tax could be imposed instead.
The news comes only a week after Health Minister Leo Varadkar published legislation which would impose minimum prices of around €1.95 for a can of beer, €8.60 for a bottle of wine.
The Bill set out a minimum unit price of 10c per gram of alcohol in alcohol products in order to eliminate very cheap alcohol from all stores and shops.
In its ruling this morning, the court said the measure was unfair because it applied to imported drinks as well, and therefore it restricted the ability of foreign drinks companies to trade freely.
Judges at the Luxembourg court concluded that the policy would restrict the market, which could be avoided by the introduction of an alternative tax measure designed to increase the price of alcohol.
They said it was ultimately for the national court of an EU state to determine whether other measures would be as effective in achieving the desired public health benefit.
Scotch Whisky Association (SWA) officials mounted a legal challenge alongside other European wine and spirits producers after legislation to introduce minimum pricing was passed by the Scottish Parliament in 2012.
The SWA's legal challenge to the proposal of a minimum unit price of 50p was initially rejected by judge Lord Doherty at the Court of Session in 2013.
Following an appeal hearing, the case was referred to the ECJ last year for its opinion on six points of European law, with an interim opinion published in September.
In their ruling, judges concluded that a minimum price would constitute an obstacle to the free movement of goods, but that such a measure may be justified on health protection grounds "only if it is proportionate to the objective pursued".
The court said a fiscal measure increasing the taxation of alcoholic drinks "is liable to be less restrictive" than minimum pricing.
UPDATE (1.12pm): The Vintners’ Federation of Ireland (VFI) said it “broadly welcomed” today’s judgement, but insisted that the Government should persist with minimum unit pricing.
“The VFI understands that the ECJ appreciates the objectives of the Scottish Parliament to primarily reduce the hazardous consumption of alcohol, a view and objective we would share as a major industry stakeholder in Ireland,” it said in a statement.
“The ECJ has stated that the introduction of Minimum Unit Pricing (MUP) is only justifiable if it is demonstrated to be proportionate and would achieve what higher taxes on alcohol or other forms of taxation wouldn’t achieve.
“If higher taxation on alcohol had the capability to address the alcohol related issues highlighted by the health professionals we would have few problems in Ireland.
“We have one of the highest levels of taxation on alcohol in Europe and it clearly does not address these issues.
“Taxation as a measure is impotent when some supermarkets sell below the combined VAT and excise levels on alcohol as they currently do as a loss leader.
“The ECJ have referred this back to local courts, and on that basis, it is our opinion, that the Irish Government should continue to introduce a MUP in Ireland, and that this remains the best method to reduce harmful drinking and not other tax measures.”
UPDATE (1.24pm): Conor Cullen of Alcohol Action Ireland says that means taxes aren't working - and Ireland should be able to go ahead with its plans.
“Minimum unit pricing has a number of peer advantages over excise duties,” he said.
“But the main one is that excise duty does not currently, and cannot, address the key issue that minimum unit pricing can, which is the sale of the very strongest, cheapest alcohol on the off-trade, particularly supermarkets.”