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Cite as: [2023] ScotCS CSIH_27, 2023 GWD 26-225, 2023 SC 311, 2023 SLT 771, [2023] CSIH 27

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FIRST DIVISION, INNER HOUSE, COURT OF SESSION

[2023] CSIH 27

P558/21

Lord President

Lord Pentland

Lord Matthews

OPINION OF THE COURT

delivered by LORD CARLOWAY, THE LORD PRESIDENT

in the Reclaiming Motion in the petition by

(FIRST) GREENE KING LIMITED; (SECOND) HAWTHORN LEISURE LIMITED; and

(THIRD) PUNCH TAVERNS LIMITED

Petitioners

against

THE LORD ADVOCATE

Respondent

for judicial review of the Tied Pubs (Scotland) Act 2021

First and Third Petitioners: O'Neill KC, Welsh; TLT LLP

Respondent: Crawford KC, Scullion; Scottish Government Legal Directorate

_______________

7 July 2023

Introduction

[1]

This is a judicial review of the Tied Pubs (Scotland) Act 2021. The petitioners

maintain that the Act is outside the legislative competence of the Scottish Parliament

because: (a) tied pub contracts are a reserved matter as they involve the regulation of anti-

competitive practices or agreements; and (b) the Act infringes the petitioners' property

rights under Article 1 of the First Protocol to the European Convention on Human Rights.

The Lord Ordinary held that the Act was within the legislative competence of the Scottish

Parliament. The petitioners challenge that determination.

Legislation and the Convention

The Scotland Act 1998

[2]

Section 1(1) of the 1998 Act established the Scottish Parliament. Section 28(1)

empowered the Parliament to make laws; to be known as Acts of the Scottish Parliament.

That power is subject to section 29, by which an Act of the Scottish Parliament, which is

outside its legislative competence, is "not law". That occurs, inter alia, if the Act "relates to

reserved matters" or if it is incompatible with any of the Convention rights. Whether a

provision of an Act relates to a reserved matter is to be determined "by reference to the

purpose of the provision, having regard (among other things) to its effect in all the

circumstances".

[3]

Although there were amendments to section 29 during the Parliamentary debates,

the general devolution scheme followed that set out in the relative White Paper (Scotland's

Parliament (Cmnd 3658)). The scheme consisted of a list of matters which were reserved to

the UK Parliament rather than a definition of what was devolved. Section 30 provides that

Schedule 5, which sets out the list, is to have effect. That schedule contains, first, a number

of general reservations; notably the constitution, foreign affairs and defence of the realm

(Part I). Secondly, it lists under twelve headings a large number of specific reservations

ranging from financial and economic to miscellaneous, including outer space (Part II). It is

"Head C Trade and Industry" which is of direct relevance.

[4]

Head C commences with Business associations and Insolvency before moving onto

paragraph "C3. Competition" and then Intellectual property, Import and export control, Sea

fishing, Consumer protection and nine other areas of greater or lesser generality. C3 itself

reads:

"Regulation of anti-competitive practices and agreements, abuse of dominant

position; monopolies and mergers".

It is the interpretation of those words which is at the core of the dispute. For reasons to be

explained, their context and purpose require deeper exploration as does their effect. What,

in short, did the UK Parliament intend these words to cover?

[5]

The White Paper provides some background in narrating that, in the then UK

Government's view, there were "many matters which can be more effectively and

beneficially handled on a United Kingdom basis" (para 3.2). These would secure

"participation in an economic unit which benefits business and provides access to wider

markets and investment and increases prosperity for all" (ibid, quoted in Imperial Tobacco v

Lord Advocate 2012 SC 297, Lord Reed at para [81]; see also 2013 SC (UKSC) 153, Lord Hope

at para [29], cited in Christian Institute v Lord Advocate 2017 SC (UKSC) 29, Lady Hale at

para [28]). The reservation about competition is explained as follows (para 3.3):

"Common markets for UK goods and services at home and abroad including the

law on companies and business associations, insurance, corporate insolvency and

intellectual property, regulation of financial institutions and financial services,

competition policy ... consumer protection, regulation of the energy supply

industries and international trade policy and Export Credit Guarantee Department

matters."

The translation of competition policy into the wording of C3. will require greater analysis,

but there is similar wording in C7., "Consumer protection", which becomes "Regulation of

(a) the sale and supply of goods and services to consumers".

[6]

The Notes on Clauses to Schedule 5 (Scottish Office, February 1998)

in relation to C3.

read:

"This Section reserves the regulation of anti-competitive practices and agreements;

abuse of dominant position, and monopolies and mergers".

The reservation is:

"designed to ensure the continuation of a common United Kingdom system for the

regulation of competition matters. Responsibility for competition policy rests with

the President of the Board of Trade".

Reference was made to the existing, and prospective, legislation which governed the

investigation of anti-competitive practices and the referral of restrictive practices to the

court. The Notes explain, somewhat unhelpfully, that what is reserved is "the regulation of

anti-competitive practices and agreements; abuse of dominant position; monopolies and

mergers". This includes powers of investigation to enforce competition law and the

administration of that law through the existing executive institutions.

The Small Business, Enterprise and Employment Act 2015

[7]

Part 4 of the 2015 Act does not apply to Scotland (s 163(3)). The reason for that,

according to the UK Government's Pub Companies and Tenants Consultation: A Government

Response (June 2014) (p 14), was that "This matter is devolved in Scotland ...".

[8]

Part 4 introduced a Pubs Code and an adjudicator for England and Wales. The

rationale for doing that was given in the Explanatory Notes, relative to Part 4, as being:

"longstanding concerns about imbalance, unfairness and lack of transparency in the

relationship between tied pub tenants and pub-owing businesses. These concerns

have been explored by several Business Select Committees over a period of ten years,

with further evidence supplied by responses to a Government Call for Evidence in

2012 and correspondence to Ministers. This led to a public consultation in 2013 and

the Government Response to that consultation in June 2014."

not the, albeit very similar, Explanatory Notes from which the Lord Ordinary quotes.

[9]

The Code, which places obligations on certain pub-owing businesses, with an

adjudicator to enforce it, provides tenants with an option to replace a tied arrangement with

a market rent only (MRO) alternative. The objective of Part 4 was stated in the Explanatory

Notes as being to ensure that: tied tenants are no worse off than other tenants; there is a fair

share of risk and reward; and the relationship is based on the principle of "fair and lawful

dealing". This is reflected in sections 42 and 43 of the 2015 Act. An important feature of

Part 4 is that it applies only to businesses which own at least 500 pubs in England and Wales

(s 69(1)).

The Tied Pubs (Scotland) Act 2021

[10]

In August 2014 the Campaign for Real Ale commissioned a survey of tied pubs in

Scotland. CAMRA considered that tied pubs involved unfair business practices. These had

led to higher prices, lower investment and pub closures (see Policy Memorandum to the

relative 2020 Bill, para 47). In May 2015 the Scottish Government commissioned its own

research. This did not suggest that there was any disadvantage in the tied pub sector

(Memo, para 54). Meantime, in June 2016, the Scottish Beer & Pub Association published a

voluntary code of practice.

[11]

Neil Bibby, a Labour MSP, was unhappy with the research results and the

effectiveness of the voluntary code, which did not include an MRO option. He carried out

his own consultation on reform along the lines of the 2015 Act. The object of his proposed

reform was to ensure a fairer balance of power by improving tenants' rights. The majority of

responders were in favour of reform. Support came not only from individual tenants but

also from breweries and "drinks companies", trades unions, the Federation of Small

Businesses, the Scottish Licensed Trade Association and CAMRA. The SBPA and a minority

of responders opposed reform (Memo para 89). This was on the basis, inter alia, that tied

pubs were mutually beneficial.

[12]

Mr Bibby introduced his Bill in February 2020. This ultimately gained Scottish

Government support and became the 2021 Act. The policy objectives of the Bill were stated

in the Policy Memorandum as the improvement of the position of tied pub tenants by

introducing a Scottish Pubs Code to govern the landlord and tenant relationship (Memo

para 3). They were said to be "broadly similar to those of Part 4" of the 2015 Act and

designed to ensure that Scottish tenants had at least the same protections and opportunities

as were enjoyed by the equivalent tenants in England and Wales (Memo para 4). The aim

was to have a code which was consistent with three principles, two of which were in the

2015 Act, viz: fair and lawful dealing by the landlords in relation to the tenants; that the

tenant should not be worse off than if they were not subject to the tie; and that the tie offered

a fair share of risk and reward. As with the 2015 Act, the code would provide tenants with

an MRO option.

[13]

The Policy Memorandum outlined the economic background of the pub industry

both in Scotland and the wider UK. It explained the advantage of tied pubs in so far as their

rents would include a dry (standard) and a wet (relative to the tie) element. The actual rent

paid should, at least in theory, be less than the open market figure. The Memorandum

detailed the shifting sands of the pub industry in recent years with the imposition and

revocation of the Supply of Beer Orders in, respectively, 1989 and 2003. These had restricted

the number of tied pubs which a brewer could own. Thereafter, the UK Parliament had

carried out several inquiries into tied pubs and had identified "significant concerns and

problems with the tied pub model and the relationship between large pub businesses and

their tenants" (Memo para 24). These included delays in rent review negotiations, lack of

transparency in these, failures to carry out repairs, ignoring oral agreements, harassment,

costs of tied products, increased levels of rent and a lack of compliance with other

agreements and obligations (Memo para 25). The problems stemmed from an inequality of

bargaining power. The amount of the dry rent paid was becoming insufficiently reduced to

negate the impacts of the wet rent. Many tied tenants were struggling to make a living. The

Memorandum detailed the case for legislative reform in England and Wales and how the

2015 Act had been applied in practice (para 29 et seq). It set out the case for an equivalent

statutory code in Scotland, noting the CAMRA survey conclusion on unfair business

practices and the low take up and effect of the voluntary code (supra). The Memorandum

did acknowledge the Scottish Government's own research (supra).

[14]

The Act applies to all leased pubs which are subject to a contractual obligation which

requires that at least some of the alcohol (in practical terms, beer and cider) which is to be

sold is supplied by the landlord or a person nominated by the landlord (s 20(1)). Section 1

obliges the Scottish Ministers to introduce a code which places requirements and restrictions

on businesses which involve tied pubs. There is to be an adjudicator who has responsibility

for enforcing the Code (s 2).

[15]

The Code has yet to be introduced to Parliament for approval. On 27 February, the

court suspended the provisions of section 4 of the 2021 Act which contains the duty of the

Scottish Ministers to introduce the code and an adjudicator. Any Code will have to enshrine

the principles: of fair and lawful dealing between landlord and tenant; that the tenants

should be no worse off than if they were not subject to a tie; and that any agreement should

fairly share the risks and rewards. Schedule 1 provides that the Code should prohibit a term

which limits rent assessments which can only be initiated by the landlord and can only

increase the rent (para 3). It must require a landlord to offer to enter into a guest beer

agreement, which allows the sale of at least one beer chosen by the tenant (para 4). It must

require a landlord to offer an alternative MRO lease (para 5); that is one which fixes the rent

at a market value and does not involve a tie.

Article 1 of the First Protocol to the European Convention on Human Rights

[16]

The Article states that:

"Every natural or legal person is entitled to the peaceful enjoyment of his

possessions. No one shall be deprived of his possessions except in the public interest

and subject to the conditions provided for by law ...

The preceding provisions shall not, however, in any way impair the right of a State

to enforce such laws as it deems necessary to control the use of property in

accordance with the general interest ...".

It is not disputed that any interference must be proportionate; a matter which is assessed by

asking: (1) is the objective sufficiently important to justify the limitation; (2) is the limitation

rationally connected to the objective; (3) could a less intrusive measure have been used; and

(4) balancing these matters with the severity of the consequences, has a fair balance been

reached between the rights of the individual and those of the community (Bank Mellat v HM

Treasury (No. 2) [2014] AC 700, Lord Sumption at para 20). The intensity of the review by the

court will vary according to the nature of the right and the context in which the interference

occurs.

Expert Opinion

[17]

Accompanying the petition was a report from Dr Pau Salsas. Dr Salsas is a

managing consultant at Europe Economics, a private economic consultancy based in

London. He is essentially an economist with an academic background in statistics and

econometrics. The petition avers that Dr Salsas' principal findings have been "extrapolated"

into the petition (STAT 24), but the whole report is nevertheless incorporated into the

petition by reference. The Lord Ordinary records that the respondent had objected to the

use of the report in so far as it purported to express a view on the economic effects of the

2021 Act on the pub sector and on the proportionality of the measures relative to the

petitioners' A1P1 rights. The petitioners had stated that their reliance on the report was "as

evidence of fact". On that basis the Lord Ordinary was content to have regard to the report,

whilst "acknowledging that the proportionality assessment was ultimately a matter for the

court" (Opinion para [20]).

[18]

The report addresses the question of proportionate interference under specific

reference to the four questions in Bank Mellat v HM Treasury (No 2), albeit quoting the

summary in In re Medical Costs for Asbestos Diseases (Wales) Bill [2015] AC 1016, (Lord Mance

at para 45) (report Executive Summary p 3). It emphasises, in relation to question 1, the

benefits for both parties in a tied pub arrangement and the differences in contractual

arrangements in other sections. Dr Salsas criticises the evidential basis for the various

complaints by tied pub tenants; there being none to establish any market failure. He

expresses a view that there are "no proper reasons for State intervention" (p 4). He goes on,

on question 2, to say that the reasons proposed will damage the sector by challenging its

traditional dynamics. Ultimately, according to Dr Salsas, landlords will discontinue the

arrangement. Questions 3 and 4 did not arise in any significant way, given his previous

conclusions.

The Lord Ordinary

[19]

The petitioners' contention, that any regulation of tied pub agreements was a

reserved matter, was rejected by the Lord Ordinary for seven reasons. First, Article 101(1) of

the Treaty on the Functioning of the European Union concerned itself with agreements

which restricted or distorted competition. It provided redress which was distinct from that

under the 2021 Act. Secondly, the areas which were covered by C3. were all directed at

market failure and not contractual fairness, with which the 2021 Act was concerned.

Thirdly, the exemption under Article 101(3), which was based on consumer-oriented

fairness, did not preclude regulation in relation to other concerns such as contractual

fairness. Fourthly, the petitioners had conflated the relevant market as that between tied

pubs and free houses, rather than aspiring entrants into the market for distribution of beer to

on-trade premises and incumbents who were already established in that market. Fifthly, the

primary focus of the 2021 Act was on the protection of tied pub tenants. It did not address

the effect on consumers; nor did it prohibit tied pub leases. Sixthly, the Act's express

purpose was to govern the fairness of the relationship between landlords and tenants. It did

not follow, from the fact that the Act interfered with parties' freedom of contract, that the

Scottish Parliament was regulating competition. Seventhly, while there may be some impact

on competition, those effects were incidental to the Act's purpose. The Act did not relate to

the reserved matter of competition and was not outside Parliament's legislative competence.

[20]

The petitioners' argument on the effect of Article 1 was also rejected. It would be

premature to carry out a proportionality assessment. The remedies sought were in respect

of the legislation as a whole. That challenge had to fail given that it had not been shown that

the Act was incapable of being operated in a manner which was compatible with

Convention rights (Christian Institute v Lord Advocate, at para [28]). The circumstances under

which MRO and guest beer offers had to be made were not prescribed by the Act. The

petitioners had mischaracterised these rights as automatic. Many of their complaints were

based on misconceptions of what the Act requires. Any alleged dangers to the tied pub

sector and the consequences of a broad application of the Act to landlords and tenants could

not be assessed until the code had been introduced.

[21]

It was clear from the Policy Memorandum that the objectives of the 2021 Act were to

improve the position of tied pub tenants and to redress the imbalance of power between

them and their landlords. Those objectives were sufficiently important to justify the extent

to which there had been any interference with the petitioners' A1P1 rights so far. It did not

follow from the evidence of Dr Salsas that, where there was no evidence of market failure,

the legislation had no legitimate objective.

Submissions

Petitioners

[22]

This was an easy case involving two questions. First, were tied pub agreements anti-

competitive? The answer to that was in the affirmative because they restricted competition.

Secondly, did the Act seek to regulate these agreements? The answer to that was also in the

affirmative. Section 1 could not be clearer. The Scottish Ministers were "by regulations", to

"impose requirements and restrictions on pub-owning businesses in connection with tied

pubs".

[23]

The substance of competition law had remained largely unchanged after the United

Kingdom had left the European Union. The EU legislation had been adopted into domestic

law. Beer supply agreements were anti-competitive (Case T-231/99 Joynson v Commission

[2002] 5 CMLR 4 at para 57; Case C-453/99 Courage v Crehan [2002] QB 507). The whole point

was that, pre "Brexit", tied pubs had been subject to a block exemption as they were a form

of vertical agreement; ie between persons not in competition with each other but the one

retailing the other's goods (Commission Regulation (EU) No 330/2010 ... on the application

of Article 101(3) [TFEU] ...; Competition Act 1998 (Vertical Agreements Block Exemption)

Order 2022, Art 10(5)). That exemption would not apply were there to be an MRO. The

reservation in C3. was not the regulation of competition law or policy but of anti-

competitive agreements. The 2021 Act purported to modify the block exemption of tied

pubs. Adjusting bargaining strengths just meant changing the contractual conditions.

[24]

The Lord Ordinary erroneously focused on whether the changes introduced by the

2021 Act were compliant with EU competition law. That was of no consequence on whether

its provisions related to a reserved matter (UK Withdrawal from The European Union (Legal

Continuity) (Scotland) Bill 2019 SC (UKSC) 13, at para 25). The focus on consumer protection

confused the reservation under C3. with that in C7. The sole question was whether the Act's

provisions related to the regulation of anti-competitive practices. The test was a broad one

which encompassed both direct and indirect effects (Reference by the Lord Advocate of

devolution issues 2022 SLT 1325, at paras 71-72 and 74). The Lord Ordinary accepted that

there would be some impact on competition in the beer supply market. Whether those

effects were incidental to the Act's purpose was irrelevant; they were direct and real.

[25]

There was a lack of evidence supporting legislative intervention. The UK

competition law regime classified tied pub leases as anti-competitive. It followed that the

Scottish Parliament was imposing a new level of regulation on what were classified under

UK and EU law as anti-competitive. The intention of the 2021 Act was to interfere with the

current conditions of competition. It introduced a new concept of fairness. This could not

be described as having no more than a loose or consequential connection to how tied-pubs

were currently regulated.

[26]

The Act's provisions engaged the petitioners' A1P1 rights. It was accepted in the

Policy Memorandum that A1P1 was engaged (para 93, under reference to the code for

England and Wales). It was not necessary for the final code to be introduced before a

proportionality assessment could be carried out. Schedule 1 prescribed mandatory

provisions for the code. Those provisions were sufficient to engage A1P1. That being so, the

burden passed to the respondent to provide sufficient cogent and reliable evidence to satisfy

the court that any interference was proportionate. It was not for the court to substitute itself

for the respondent and to provide those justifications. There was nothing premature about

the argument. Christian Institute v Lord Advocate considered whether legislation, which had

not yet come into force, was beyond competence.

[27]

The Lord Ordinary inverted the manner in which proportionality fell to be assessed.

The legitimacy of an objective was not to be determined from the extent of the interference.

A proportionality assessment presupposed that a legitimate objective had been identified.

The respondent had failed to substantiate any legitimate aim. No economic evidence had

been produced that suggested that there was inherent unfairness in the bargaining power

between landlords and tied pub tenants. The size of any Parliamentary majority was

irrelevant (UNCRC (Incorporation) (S) Bill 2022 SC (UKSC) 1, at para 31). The onus was on

the respondent (Case C-333/14 Scotch Whisky Association v Lord Advocate [2016] 1 WLR 2283

at para 53 (p 2323); Sporting Odds [2018] 3 CMLR 18 at paras 53-54).

[28]

The remedies were sought only insofar as the provisions were outside competence.

Just satisfaction was sought to ensure full and proper reparation for damage caused. The

petitioners were not yet able to quantify the damage and the court should remit this issue to

the Lord Ordinary.

Respondent

[29]

The petitioners had not identified any specific provision which related to the

reserved matter of competition law. Rather, the challenge was to the legislation as a whole.

It was first necessary to determine the scope of the reservation (Imperial Tobacco v Lord

Advocate 2013 SC (UKSC) 153, at para 26). This was to prevent the Scottish Parliament from

legislating to provide what is or is not an anti-competitive agreement; what is exempt which

would otherwise be prohibited or to remove an exemption. It did not extend to regulating

the terms and conditions of an anti-competitive agreement so long as they did not seek to

prescribe whether the agreement was or was not anti-competitive.

[30]

An anti-competitive practice was one which may affect trade within the UK and have

as its object or effect the prevention, restriction or distortion of competition (Competition

Act 1998, s 2, adopted from TFEU Art 101). Nothing in the 2021 Act prevented landlords

from continuing to enter into tied pub agreements where the terms of the block exemption

were met. The purpose of the 2021 Act, ie what it was "really about" (Reference by the Lord

Advocate's Reference of devolution issues at para 77), was the regulation of unfair contract terms

and improving contractual fairness between private parties. The petitioners' interpretation

of C3. would preclude the Scottish Parliament from legislating in any way which may

impact upon tied pub agreements, no matter how remote. C3. was designed to regulate

competition in the sense of legislating for situations which might require UK governmental

intervention. It was significant that the Advocate General had not sought to intervene.

[31]

The Lord Ordinary was correct to consider it premature to assess proportionality.

The Code had not yet been adopted. The petitioners' attack on the 2021 Act was confined to

the terms of schedule 1. The Policy Memorandum made it clear that these provisions

pursued the legitimate aims of: (i) improving the position of the tenants; and (ii) redressing

the balance of power. The purpose of the Bill was to confer on Scottish tenants similar

statutory rights to those enjoyed by their English and Welsh counterparts. The Scottish

Parliament had been entitled to conclude that the evidence placed before it supported the

general principles of the Bill.

[32]

The Policy Memorandum considered alternative approaches and addressed the

striking of a fair balance between the competing interests (Bank Mellat v HM Treasury (No. 2),

at para 20). It was impossible to weigh all the relevant interests without first seeing the

terms of the Code. The provisions as enacted provided a framework. The Code would

provide the detail of how the competing interests were to be balanced. The parameters of

the MRO and guest beer offer requirements remained to be determined. The proportionality

of the mandatory provisions could not be assessed. They had to be set against the terms of

the Code as a whole. The provisions which were enacted to create the framework were

proportionate to the legitimate aim pursued. The petitioners had not established either that

the provisions or the legislation as a whole would always, or almost always, unjustifiably

interfere with their rights (Christian Institute v Lord Advocate at para [88]). It followed that

their challenge must fail.

Decision

Reserved Matter

[33]

An interesting, if not unique, feature of the central issue, of whether the Tied Pubs

(Scotland) Act 2021 encompasses a reserved matter in terms of heading "C3. Competition"

in Part II of Schedule 5 of the Scotland Act 1998, is that neither the Scottish nor the UK

Parliaments nor the relative Governments appear to think that it does. From a practical

point of view, it could indeed be, as the petitioners put it, an "easy case" if that were

determinative. However, in legal terms, it is not so simple. The intention of the UK

Parliament, in using the words in C3., must be ascertained from those words in their context

within the particular section, group of sections and the statute as a whole. Thereafter, the

court will require to apply section 29(3) of the 1998 Act to determine whether the intended

subject "relates to a reserved matter ... by reference to the purpose of the provision, having

regard (among other things) to its effect in all the circumstances".

[34]

The petitioners' case closely mirrors that in Imperial Tobacco v Lord Advocate 2013

SC (UKSC) 153. There, the Scottish Parliament had passed an Act which, in broad terms,

prohibited the advertisement of tobacco products and the use of cigarette vending machines.

The appellants in that case argued that these were reserved matters. Paragraph C7.

("Consumer protection") of Schedule 5 reserved the "Regulation of (a) the sale and supply

of goods and services to consumers". As in the present case, this was, superficially, an

attractive argument in so far as it is said to give the words their ordinary and natural

meaning, if no regard is paid to their context. Taken in isolation, the words are not

ambiguous; or so the argument ran.

[35]

Lord Hope rejected that approach as follows:

"[28] It would be surprising if the words used in section C7(a) had such a wide

reach. Responsibility for Scots private law, including the law of obligations arising

from contract, belongs to the Scottish Parliament. This is made clear by section 29(4)

which deals with modifications to Scots private law as it applies to reserved matters

but leaves Scots private law otherwise untouched, and by the definition of what

references to Scots private law are to be taken to mean in section 126(4). The sale and

supply of goods is part of the law of obligations and, as such, is the responsibility of

the Scottish Parliament. The appellants' argument as to the reach of section C7(a)

does not sit easily with this conclusion or with the way Scots private law is dealt

with elsewhere in the 1998 Act. This makes it necessary to look more closely at the

context in which the words of that section appear."

[36]

The court agrees. The UK Parliament could not have intended C3. to mean that any

legislation which touched (however tangentially) upon the regulation of an anti-competitive

agreement, such as provisions in relation to the form in which the agreement should be

expressed or its mode of execution, is "not law" because it relates to a reserved matter.

Equally, specifically in relation to tied pubs, regulation of the licensing conditions, such as

opening or closing times, cannot have been intended to be reserved. To understand what

the UK Parliament had intended, regard must be had to the context.

[37]

The context in which the words "Regulation of anti-competitive practices and

agreements" appear in paragraph C3. is under the heading "Competition". That is

important as is the setting of the words alongside "abuse of dominant position; monopolies

and mergers". The heading may be looked at as an aid to construction once, as here,

ambiguity is detected (Imperial Tobacco v Lord Advocate, Lord Hope at para [17]). It is part of

the wider context within which the paragraph sits. The wider context of the statute as a

whole is that of defining matters which have pan-United Kingdom effect and are thus more

appropriately regulated on a UK, ie by the UK Parliament, basis. When seen in these

contexts, the regulation of anti-competitive agreements is to be understood as applying to

measures which will affect the anti-competitive regimes already in place across the UK, and

previously the European Union; notably those which fall under the prohibition in section 2

of the Competition Act 1998. This applies to a range of "[a]greements etc" which may, inter

alia, affect trade within the UK or have as their object or effect the prevention, restriction or

distortion of competition within the UK.

[38]

That is the objective or intention of the wording of C3 set in its proper context. It is

not designed to prevent the Scottish Parliament from introducing measures which have as

their object the rectification of inequalities in the relationship between landlord and tenant in

particular leases. It is to stop the Parliament from legislating in a manner which will affect

UK anti-competitive measures. The position becomes even more apparent when it is

realised that the UK Parliament has, in Part 4 of the Small Business, Enterprise and

Employment Act 2015, already introduced similar provisions in large part to England and

Wales. It presumably does not regard this as distorting the competition regime. The

Scottish Act brings the two jurisdictions more into line with each other than hitherto, rather

than increasing any perceived divide.

[39]

It was accepted that tied pub leases were anti-competitive but that they were exempt

from challenge on that ground. The 2021 Act does not alter that. Its purposes do not

include preventing a landlord from entering into a tied pub lease with a tenant; nor do they

terminate such leases. The introduction of a Code which will grant the tenant certain rights

in relation to altering the lease into a market rent only one or to permit the sale of a guest

beer are not per se anti-competitive measures; rather the opposite. If the Act does have some

effect on such measures, it is no more than a "loose or consequential connection" (Imperial

Tobacco v Lord Advocate, Lord Hope at para [16]). The challenge, in so far as it is based on

reserved matters falls to be rejected.

A1P1

[40]

The objective of the 2021 Act is a legitimate one. This was, as expressed in the Policy

Memorandum, the improvement of the position of tied pub tenants by introducing a Code

to govern their relationships with the landlords. Although there are differences between the

provisions in England and Wales and those in the 2021 Act, the Scottish legislation is, as the

Memorandum states, "broadly similar" to that south of the border. The stated intention is to

afford Scottish tenants similar protections to those acquired by tenants under the 2015 Act.

It is anticipated that the provisions of the Scottish Code will mirror those in England and

Wales concerning fair dealing, and equivalence with the non-tied tenant, as well as

introducing a fair share of risk and reward. Dr Salsas may disagree on the legitimacy of the

objective, but there was adequate, albeit in part contradicted, material before the Scottish

Parliament to demonstrate a systematic imbalance in bargaining positions between

landlords and tenants which led to unfair business practices. That being so, an objective

which is designed to cure that perceived social injustice is legitimate. The proposal to

introduce a tied pub Code which attempted to redress the balance, was rationally connected

to the objective.

[41]

The issue of a less intrusive measure was addressed in Mr Bibby's research on the

effectiveness of the voluntary code. No realistic alternative to cure the perceived ills of the

tied pub systems was advanced. The achievement of a fair balance between the rights of the

individual (in this case the landlord) and the community as a whole is something which, as

the Lord Ordinary found, cannot be assessed until at least the promulgation of a Code and

probably not until it is seen in operation in relation to a particular tied pub or lease.

[42]

This is a root and branch challenge to the whole 2021 Act; not to a specific provision

or provisions. In order to succeed in such a wide-ranging attack on the prospective effect of

legislation, the petitioners require to demonstrate the Act, as a whole, cannot be operated in

a manner which is consistent with the petitioners' A1P1 rights in "all or almost all cases"

(Christian Institute v Lord Advocate 2017 SC (UKSC) 29, Lady Hale at para 88). This is far

from being demonstrated here. This ground of challenge also fails.

Conclusion

[43]

The reclaiming motion will be refused and the court will essentially adhere to the

interlocutor of the Lord Ordinary dated 9 December 2022. That interlocutor correctly

sustained certain of the respondent's pleas-in-law. The effect of that is not a refusal of the

petition, which has been accepted and adjudicated upon, but a refusal to grant the remedies

sought in statement 6. The interlocutor will be corrected accordingly.

[44]

Had the court found that there had been a breach of the petitioners' A1P1 rights, it

would have declined to remit the case to the Lord Ordinary to assess any award of damages

by way of just satisfaction. This is a reclaiming motion to a Division of the Court from a

final decision of a Lord Ordinary on a petition for judicial review. The court is not

accustomed to remitting matters, which it is dealing with on a motion for review, to the

Outer House for further procedure. All relevant issues ought to have been dealt with by the

Lord Ordinary before the case reached the Inner House. If they were not, this court might,

in certain circumstances, deal with any issues left unresolved. In this litigation, if any

substantial damages were to be sought, that ought to have been specified in the written and

oral pleadings in the Outer House. The absence of such pleadings means that there is no

basis for this court to make any award by way of damages.

Postscript

[45]

The Practice Note (No. 3 of 2011): Causes in the Inner House, was designed inter alia to

complement new rules of court which were intended to enhance case management and to

focus the true issues for determination on appeal. Paragraph 86 outlines certain general

principles which apply to written notes of argument. One of these is that, where an

authority (meaning a judicial precedent) is cited, it should be accompanied by the

proposition of law which the case ostensibly vouches. More than one authority should not

normally be cited in support of one proposition. Paragraph 91 provides that bundles of

authorities should not include those which vouch propositions which are not in dispute. No

more than 10 authorities should normally be cited. It has, for some years, been the practice

of the court to require parties to enrol a motion where they seek to cite more than 10 cases.

This ought to be done some time before the Summar Roll hearing and preferably at the stage

of the Procedural Hearing, by which time the written notes of argument should have been

lodged (RCS 38.13) and thus the scope of the precedent to be cited ought to be identifiable.

[46]

Neither party's note of argument complied with what are now well-known rules or

practices. Both cited multiple cases in support of a single proposition and in some cases for

propositions which were not in dispute. When the joint list was lodged, it contained

18 cases. A motion to refer to another case was made on the eve of the Summar Roll

hearing. The petitioners' application for these to be cited in oral argument proceeded on the

basis that the terms of the Practice Note were not conducive to the proper development of

the law; the inference being that they or their counsel did not agree with the object of the

PN. They should therefore be entitled to cite whatever case, and however many, they

deemed fit. Reference was made to the practice in a particular tribunal, before which the

petitioners' counsel had recently appeared, to allow the citation of many volumes of

authorities.

[47]

The court refused the petitioners' application. The terms of the Practice Note have

been devised for sound reasons, after consultation with the profession. As part of the duty

of counsel to assist the court, Practice Notes ought to be complied with, in the absence of

good reason to the contrary. No attempt had been made to prioritise a core number of cases

or to justify citation of the others. After a short adjournment, the parties were able to confine

the list to 10 authorities; and the petitioners' counsel graciously accepted that they probably

did not require to cite the disregarded cases. The court agrees.