The Office of Fair Trading has warned there could be harmful "unintended consequences" if the Government moves ahead with plans to set a minimum alcohol price of 40p per unit.
In evidence to MPs the OFT said that the new minimum price could encourage supermarkets to promote their cheapest ranges of drinks because they will benefit from bigger margins on those products.
The watchdog said supermarkets and the drinks industry would gain "additional profit for every unit of low-cost alcohol that they sell", according to the Daily Telegraph.
It also warned that similar price controls in France and Ireland meant households had a higher cost of living.
"By legitimising intervention to control prices in a competitive market, it will be harder for the Government to resist calls for similar measures in other parts of the retail sector in future," the watchdog said in evidence to the health select committee.
The Home Office is due to give more details about its plans for minimum pricing in the autumn.
By Neil Gerrard
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