The Scottish Government’s proposals to introduce statutory price caps on essential food items provide a new test of the practical effects of the United Kingdom Internal Market Act 2020 (UKIMA) on devolved policymaking. This post examines its initial approach to navigating the UKIMA, outlined in a public consultation published on 1 September 2026. The Scottish Government has engaged early on with the Act and envisages a pathway to deliver its policy objectives around the Act’s market access principles. Its ambition is not misplaced, but significant legal and political obstacles remain – alongside broader implementation challenges. In contrast to previous high-profile legislative initiatives (eg single-use plastics and glue traps), the proposed Food Price Cap (Scotland) Bill shifts discussion of UKIMA’s practical effects on devolved policymaking from considerations of mutual recognition to the assessment of discriminatory effects. This is more complex territory legally, economically and politically.

What is the Scottish Government Proposing?

The draft Food Price Cap (Scotland) Bill – annexed to the consultation – would introduce a legal duty on retailers to offer for sale, in store or online, certain essential food products at or below a maximum price (the price cap). Retailers would not be compelled to sell in-scope products. But those who do sell such products would be under a legal duty, at all times, to make at least one type of each product available at or below the price cap (cl. 1). Scottish Ministers would set the price cap (cl. 6) and designate the products subject to it, taking into account a range of considerations outlined in the draft legislative provisions (cl. 4). The statutory duty is drafted to apply only to large retailers – defined as those with an annual turnover of more than £250 million (with at least 50% derived from grocery sales) and more than 250 employees (cl. 5). Local authorities would be responsible for enforcement (cl. 10), with a focus on compliance notices backed by criminal sanctions (cls. 11 and 12).

The Scottish Government is actively seeking feedback on its initial legislative proposals, including alternative approaches to price capping (eg limiting profit margins on essential products). It is also highly attuned to the challenges of government intervention in food pricing, not least its potential effects on supply chains and producers who may ultimately bear the costs of implementation. The proposals could even face a legal challenge on legislative competence grounds: the Scotland Act 1998 contains reservations relating to competition and consumer protection (Schedule 5, Part II, C7 and C3). Ultimately, the legality and practical effects of the Scottish Government’s plans for intervention in food pricing will depend on the final design of its legislative proposals. This post cannot predict where things will land. The aim here is simply to comment on the Scottish Government’s initial approach to managing its policy ambitions against the background of the UKIMA and its market access principles.

Food Price Caps and UKIMA

The UKIMA establishes, among other things, a statutory framework to regulate intra-UK trade in goods and services. It is structured around two ‘market access’ principles: mutual recognition and non-discrimination. Mutual recognition provides a statutory guarantee that goods and services available in one part of the UK may be sold and/or provided throughout the UK without being required to comply with additional regulations applying in another part. Non-discrimination precludes the application of legislation in one part of the UK that discriminates – directly or indirectly – against products and service providers regulated in another part of the UK. Neither principle formally limits devolved legislative competence. Where engaged, however, the market access principles mandate the disapplication of devolved legislation with respect to incoming goods and services – a significant practical restraint on devolved policymaking.

The Scottish Government appears alert to the challenges of legislative design arising from the UKIMA and its market access principles. This is evident in recent legislative practice; for example, the enactment of the Non-surgical Procedures and Functions of Medical Reviewers (Scotland) Act 2026. The restrictions on the provision of certain cosmetic procedures which that Act initially introduced were carefully designed to avoid conflict with UKIMA principles. The Act therefore regulates where in-scope procedures may be performed in Scotland, rather than the qualifications of those who may perform them. Whereas the former escapes scrutiny under the UKIMA, the regulation of qualifications may conflict with Part 3 of the Act dealing with the recognition provisions governing access to regulated professions.

With respect to food pricing, the Scottish Government’s initial approach addresses some specific UKIMA matters directly. Most clearly, it frames its proposal for a price cap as a ‘manner of sale requirement’. Section 3(5) UKIMA defines such requirements as statutory requirements governing the circumstances or manner in which goods are sold, such as where, when, by whom, to whom, or the price or other terms on which they may be sold. The mutual recognition principle does not apply to manner of sale requirements (s.3(4)). On the basis of its current proposals, the Scottish Government is on safe ground in arguing that its approach falls within that express exclusion from mutual recognition. Its proposals also explicitly rule out introducing labelling or packaging requirements for in-scope food items. This is again significant. Such measures would bring those aspects of the scheme within the scope of the mutual recognition principle. Statutory measures regulating, inter alia, the composition, packaging or labelling of goods constitute ‘relevant requirements,’ triggering the application of that principle (s.3(3)).

Locating the Challenge: Indirect Discrimination

The principal challenge for the Scottish Government is therefore not mutual recognition, but non-discrimination. The consultation acknowledges this point directly:

the mutual recognition principle, which can nullify devolved policies, 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 (Price Controls on Essential Food Items: Consultation Paper, p 49)

Non-discrimination applies to ‘manner of sale’ requirements, including price caps. The Scottish Government’s proposals anticipate the introduction of origin-neutral criteria for the identification of products and the setting of maximum pricing. With respect to product selection, for example, clause 4 of the draft Bill directs Scottish Ministers to consider the following (individually or in combination) when exercising their powers to define in-scope food products: quantity (eg number, volume or weight); packaging (eg size or the number of items in a pack); ingredients; nutritional content; and condition (eg fresh or frozen).

Recourse to such origin-neutral criteria should insulate the Scottish Government’s statutory price cap from legal challenge under the UKIMA on grounds of direct discrimination. However, the regulatory risk is that these criteria operate – either on the face of the legislation or when applied by Scottish Ministers – to discriminate indirectly in favour of goods produced in Scotland. Section 8 UKIMA treats a statutory requirement, including one relating to pricing, as potentially indirectly discriminatory where it applies to goods entering Scotland from other parts of the UK in a way that puts them at a disadvantage and produces an adverse market effect. Disadvantage is defined as making it more difficult, or less attractive, to sell or buy the goods than if the requirement did not apply (s.8(2)). An adverse market effect arises where a requirement disadvantages incoming goods, but not comparable local goods – or disadvantages incoming goods to a greater extent – in a way that causes a significant adverse effect on competition in the UK market for those goods (s.8(3)).

Limiting potential intersections with the UKIMA to indirect discrimination lowers, but does not eliminate, the regulatory risk for the Scottish Government. Unlike mutual recognition, indirect discrimination will not ordinarily be established solely by reference to legislative provisions on their face. To establish indirect discrimination under s.8 UKIMA, it is necessary to adduce evidence that a price cap places particular incoming goods at a disadvantage and thereby causes a significant adverse effect on competition. That is a meaningful hurdle.

Neither the UKIMA nor the Explanatory Notes prescribe the nature or quantity of evidence required. In its Guidance for Enforcement Authorities, the UK Government characterises the assessment  of indirect discrimination as ‘highly context specific’ and advocates a ‘pragmatic, risk-based, and proportionate approach’ to the evidence relied on to demonstrate adverse market effects. It does not, however, prescribe a particular methodology.

Relevant evidence may be qualitative, including evidence from producers and retailers about costs, procurement decisions and consumer substitution. Equally, it may also be quantitative, drawing on prices, margins, sales volumes or market shares. More complex disputes may engage formal tools of competition analysis, including the SSNIP test used to define relevant product markets. That test – a familiar tool of economic analysis – asks whether a hypothetical ‘small but significant and non-transitory increase in price’ would cause sufficient numbers of consumers to switch to alternative products to make the increase unprofitable. That inquiry offers a starting point to determine which incoming and Scottish products compete with one another – an important step in assessing whether a price cap would disadvantage the former.

If, as the statutory wording implies, some degree of market analysis is required to operationalise the UKIMA provisions on indirect discrimination, this may shape any challenges to the Scottish Government’s scheme, if enacted. This assumes, of course, that the final legislation continues to rely on origin-neutral criteria in relation to product selection and price setting. Because disadvantage and adverse market effects must be established by reference to particular incoming goods and comparable Scottish goods, challenges are more likely to arise at product level (eg, a price cap on ‘boxes of six eggs’) than at the level of the statutory framework as a whole. Assuming that the Scottish Government is able to steer its proposals through the Parliament (see, further, below), these challenges may also be primarily producer- and/or retailer-led. Such action may, for the first time, therefore rely on the direct effect of the UKIMA market access principles to disapply price caps in so far as they apply to in-scope goods entering Scotland from other parts of the UK.

Identifying potential sources of disadvantage is necessarily highly speculative at this early stage. Product-level price caps may interact differently with the costs of bringing particular goods to the Scottish market. Transport and distribution costs are one possibility, especially for goods requiring refrigeration or storage or with a limited shelf life. Other potential cost differentials could include, for example, production and input costs. Where such factors make incoming goods less profitable to stock than comparable Scottish goods, retailers may reduce orders, renegotiate terms with suppliers, substitute Scottish alternatives or de-list the products altogether. Depending on their scale and market effects, evidence of this kind may support arguments that a price cap places incoming goods at a disadvantage and causes a significant adverse effect on competition for the purposes of s.8 UKIMA.

Three Pathways; Varying Challenges

Looking ahead, the Scottish Government has three pathways to deliver its legislative ambitions on food pricing in the shadow of the UKIMA market access principles.

The first pathway has already been sketched above: legislative design. The Scottish Government may continue its efforts to realise its policy objectives by drafting legislative provisions around the UKIMA restrictions. As outlined, the principal challenge here is to design and implement its food-pricing scheme in a manner that avoids conflict with the Act’s provisions prohibiting indirect discrimination. That said, a successful challenge on that ground would raise a further hurdle for the Scottish Government: justification. Section 8 UKIMA provides that a statutory requirement is indirectly discriminatory only where it ‘cannot reasonably be considered a necessary means of achieving a legitimate aim.’

The difficulty for the Scottish Government here is that, unlike EU internal market law, the UKIMA recognises only two legitimate aims: the protection of the life or health of humans, animals or plants and the protection of public safety or security (s.8(6)). Notably, the Scottish Government does not presently frame its policy with express reference to either objective. Its primary policy aim is to ‘improve the affordability of a selection of essential food items, particularly for those on lower incomes.’ The UKIMA does not recognise affordability as a legitimate aim justifying indirect discrimination under Part 1 of the Act.

If a price cap were shown to place incoming goods at a disadvantage and cause an adverse market effect, the Scottish Government would therefore need to (re)configure its scheme around the achievement of public health objectives expressly. Its draft legislative provisions provide some foundation for such a move. For example, clause 8 of its draft Bill already identifies healthy eating and nutritional guidance expressly as relevant factors that Scottish Ministers may take into account when determining which items should be subject to a price cap. But the Scottish Government would need to go further. It would need to demonstrate that the price caps could reasonably be considered necessary to protect human health, having regard to their effects in all the circumstances and the availability of alternative means of achieving that objective. That may prove difficult.

A second pathway would be for the Scottish Government formally to request an exclusion to insulate its legislation from the UKIMA’s market access principles. Sections 10(2)–(3) UKIMA empower the UK Secretary of State to amend Schedule 1 to the Act, including to give legal effect to exclusions agreed through the Common Frameworks process. In July 2025, the UK Government committed to revise and improve the process for considering such requests, which had previously attracted criticism, not least from the devolved governments (for analysis, see eg McEwen et al, 2024). That process operates primarily outside the statutory framework, through non-statutory intergovernmental arrangements.

Space precludes detailed discussion of the revised exclusions process. Under the framework announced in July 2025, however, the UK Government committed to give legal effect to exclusions agreed by all four governments through a Common Framework. Where such agreement is not forthcoming, a ‘reserve exclusions process’ is available, providing an alternative route for considering an exclusion. But under that process the UK Government retains an effective veto power. The Secretary of State ultimately decides whether to amend Schedule 1 UKIMA to grant the requested exclusion. Should the reserve process be engaged, it may prove awkward, politically, for the UK Government to refuse an exclusion for devolved legislation intended to lower the prices of essential food items for Scottish consumers against the backdrop of continuing cost-of-living pressures. Optics matter.

The considerations informing an exclusion request are slightly broader than the legitimate aims recognised under s.8 UKIMA. This does not follow from ss.10(2)–(3) themselves, but from the revised non-statutory process, under which the UK Government committed to consider environmental protection and public health alongside economic impacts. In relation to food pricing, the most relevant consideration would again be public health. The Scottish Government would therefore again likely need to configure any exclusion request expressly around public-health considerations.

A third pathway would be for the Scottish Government to persuade the UK and other devolved governments of the merits of statutory intervention on food pricing. If successful, the four governments could work together to coordinate their approaches, potentially adopting a UK-wide scheme or at least a framework of equivalent rules. This approach would have the advantage of reducing, though not entirely eliminating, potential conflict with the UKIMA market access principles: policy coordination largely forecloses space for regulatory difference within the UK internal market. Section 8 UKIMA (indirect discrimination) is not ‘switched off.’ Even equivalent rules may operate to disadvantage incoming goods in particular markets. Coordination would nevertheless allow the four governments to identify and manage those risks collectively. There is already evidence of successful four nations policymaking in devolved areas; for example, on tobacco and single-use vapes (eg Tobacco and Vapes Act 2026). It may prove more difficult, however, for the Scottish Government to persuade the UK and other devolved governments of the merits of its proposals on food pricing. But that is a political question. It does not detract from the existence of the third pathway outlined here.

A final point concerns the potential supporting role of the Office for the Internal Market (OIM) across the three pathways. The OIM has statutory powers to assist the UK and devolved governments, including, at their request, by assessing the potential economic effects of proposed regulatory provisions on the effective operation of the UK internal market (s.34 UKIMA). It provides independent economic and technical expertise and, in exercising these functions, is required to have regard to the need to act even-handedly as regards the UK’s four governments (s.31(4) UKIMA). OIM reports may provide a useful evidential resource for assessing the potential impact of Scottish price caps on intra-UK trade, including, in particular, any disadvantage and adverse market effects relevant to the application of s.8 UKIMA.

Conclusion

Food price inflation is a serious concern, particularly for those on lower incomes who are required to spend a greater proportion of their income on food. The Scottish Government’s proposed Food Price Cap (Scotland) Bill represents an ambitious attempt to address this issue through direct statutory intervention. As the consultation outlines, other jurisdictions (eg Croatia and Hungary) have experimented with comparable schemes. In the UK context, a key challenge for the Scottish Government is to navigate its policy ambitions around the UKIMA and the practical restraints that Act places on devolved policymaking.

It is far too early to predict outcomes. Everything depends on the final design of any resulting Scottish legislation. The purpose of this post has been simply to reflect on the Scottish Government’s initial proposals, which may yet change materially. In their current form, the primary challenge arises from the risk that price caps imposed on in-scope food items may have indirectly discriminatory effects. This represents a shift in emphasis in relation to UKIMA: attention has previously centred primarily on insulating devolved policies from the Act’s mutual recognition principle. As this post has outlined, three pathways are now open to the Scottish Government to manage this new frontier. Time will reveal which pathway – or combination of pathways – it pursues and what, if any, friction emerges.

My thanks to the editors for their helpful comments on an earlier draft of this post. This post has also benefited from discussions with participants at the workshop, ‘Parliamentary Scrutiny: Navigating the UK Internal Market Act,’ organised by Dr Coree Brown Swan (University of Stirling) and held at the Scottish Parliament on 8 September 2026. All opinions and errors remain the author’s own.

Thomas Horsley is Professor of Law at the University of Liverpool.

(Suggested citation: T. Horsely, ‘Legislative Design in the Shadow of the UK Internal Market Act: The Food Price Cap (Scotland) Bill’, U.K. Const. L. Blog (16th September 2026) (available at https://ukconstitutionallaw.org/))