Amendments to the Liquor Bill, 2003

1
Amendments to the Liquor Bill, 2003

• Select Committee
• Cape Town
• 3 September 2003

2
Objective of the presentation

• To provide background to the amendments
• To present a detailed overview of the amendments

3
Background

• Public hearings on Bill in May 2003
• Concerns raised about
• Implementation of three-tier system
• Technical matters
• Constitutionality and
• Regulation of retail (provincial jurisdiction)
• The dti given opportunity to review Bill and to
  consult with industry

4
The process to date

• A series of meetings held with some industry
  players resulting in broad agreement
• Amendments effected and circulated to parties
  that made submission for further input
• Workshop held on 17 July to discuss proposed
  amendments
• Further changes made pursuant to comments
  received
• Amendments submitted to Committee on 1 August
  2003 further comments received up to 5 August
• Concurrently a Provincial Task Team established
  to develop guidelines for provincial legislation

5
Consultation

• In depth discussion with major manufacturers and
  distributors
• Consultation with parties that made submission to
  Committee in May
• Solicited comments from public interest groups,
  but limited response
• No explicit consultations with retailers only
  those that made submission in May
• Broad agreement with manufacturers
• Many of the comments raised by retailers and
  wholesalers and other parties adopted
• Areas requiring further attention
• Ability of manufacturers to import and distribute
  as part of manufacturers registration
• Ability of retailers to distribute to other
  registered persons or firms

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Principles informing amendments

• Identified key public interest issues
• Addressed constitutional concerns
• Clarified BEE requirements
• Introduced social responsibility requirements
• Sought to give industry greater certainty

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Key amendments

• Area of Concern
• Treatment of Sorghum Beer industry
• Implementation of 3 tier system - guidance and
  criteria
• Public interest issues technical concerns
  around practicality of some provisions (e.g.)
  distance from schools, definition of concoctions,
  strengthening of clauses related to employment
• Default legislation not sufficient need for
  norms and standards for provincial legislation
• Retail normalisation (easy in, easy out)
• Constitutional concerns raised
• Definitions

• Response in Amendments
• Same treatment as for other forms of liquor
• Criteria specified and system made more flexible
  by removing some of the restrictions on buying
  and selling (Ch.3 4 combined)
• Public interest issues regulating retail sale
  removed to address constitutional concerns
  clarified national liquor policy distilled major
  public interest issues strengthened clauses
  relating to employment
• Took out default legislation and replaced it with
  norms and standards in transitional measures
  (Schedule 1)
• Drafted new and revised existing definitions
  (Ch.1)
• Addressed all constitutional matters
• Retail issues addressed through separate processes

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Key features
Foreign M or D
M
D
R
Consumers
Manufacture Produce and bottle with intent of
selling
Distribute sell to a registered person
Retail Sell for consumption
Activities

• Manufacturer may
• Produce and bottle
• Distribute to M D
• Distribute to R

Distributor may sell to M D R
Registration
Subject to conditions of registration
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Questions and clarification
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Detailed overview of amendments
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Chapter 1 Definitions

• Added new definitions
• Applicable provincial legislation, applicant,
  bottle, Competition Commission, control,
  distribute, distributor, firm,
  manufacture, minor, prescribed threshold
  volume, private collection, registrant,
  regulation, retail sale, retail seller,
  traditional African beer, traditional African
  beer powder
• Changed existing definitions
• liquor, manufacturer, micro-manufacturer
• Manufacturer defined as producing or bottling
  with intent to sell Bill seeks to
  clarify intent
• inference from frequency and volume of production
  or sale, promotional activities and relationship
  between seller and purchaser

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Chapter 1 Objects and Application

• Changed to reflect comments received from
  industry and context of amendments
• Two objectives
• To reduce the socio-economic and other costs of
  alcohol abuse
• To promote the development of a responsible and
  sustainable industry
• Application of Bill excludes the sale from a
  private collection

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Chapter 2 National Liquor Policy

• Regulation of manufacture and distribution of
  liquor
• No manufacture or distribution of liquor unless
  permitted
• Outlines what manufacturer and distributor may
  do, subject to conditions of license
• References to micro-manufacturer and retailer
  necessary to give back rights taken away in 4(c)
• Prescribed threshold based on volume, formula or
  other mechanism
• Public interest prohibitions and restrictions
• Concoctions and additives
• Employment in the liquor industry
• Advertising
• Supply to minor
• Registered activities only from registered
  premises
• Regulation of methylated spirits

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Chapter 3 Registration of manufacturers and
distributors

• Provides for registration of manufacturer or
  distributor or both
• Registration may be refused if applicant is
  disqualified
• Disqualification if
• Minor
• Unrehabilitated insolvent
• Omitted in terms of Mental Health Act
• Convicted in terms of this Act or provincial law
  after coming into operation of Act and within 3
  years of application

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Chapter 3 Registration of manufacturers and
distributors

• If not disqualified, Minister evaluates according
  to following criteria
• Commitments made in terms of BEE
• Commitments made to combat alcohol abuse
• Extent to which proposed registration will
  materially restrict or promote
• New entry, job creation, diversity of ownership,
  efficiency, exports, competition in the industry
• Minister may attach conditions in respect of
  above
• Process of attaching conditions provides
  administrative fairnesss

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Chapter 3 Registration of manufacturers and
distributors

• Transfer of registration possible, but requires a
  review
• Variation of registration conditions if
• Registrant becomes registered in terms of
  provincial legislation
• Registrant has notified Minister of material
  changes
• Upon request to the Minister
• After 5 years of last review of conditions
• Minister may add conditions to license if
• Contravention of certain laws
• Registrant has not met commitments and cannot
  give reasons
• Minister must give opportunity to rectify
• Minister may cancel registration if disqualified,
  fails to meet conditions or repeatedly
  contravenes laws or fails to meet commitments

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Chapter 3 Registration of manufacturers and
distributors

• Provided greater detail on fees
• Amended section dealing with national register to
  allow Minister to publish on website and permit
  public inspection
• Powers provided to High Court to set aside any
  conditions that are not reasonable

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Chapter 4 Compliance

• Section dealing with inspectors rearranged, but
  not materially changed
• Added powers to seize liquor (s.26)
• Moved section dealing with offences
• Streamlined provisions dealing with Compliance
  Notices
• Deleted sections dealing with cancellation of
  registration and closure of premises in cases of
  public disturbance

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Chapter 5 Offences and Penalties

• Added section from previous chapter about
  offences
• Clarified penalties and fines
• Imposed forfeiture of liquor produced or
  distributed illegally

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Chapter 6 National Liquor Policy Council

• Changed composition of Council
• Added Director-General or designated employee of
  dti
• Changed requirement that provincial licensing
  authority be represented to allow MEC to
  designate

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Chapter 7 Regulations and Notices

• Defined powers of Minister to make regulations
• The form and nature of statistics to be kept by
  PLAs
• The form, nature and duty to provide information
  for registration
• Declaring any substance to be beer, liquor,
  traditional African beer, or methylated spirits
• Any other regulation permitted in terms of Act or
  necessary for the objects of this Act

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Chapter 8 General Provisions

• Removed provisions providing for appeal to
  Minister against actions in terms of delegated
  powers
• Removed references to default legislation and
  moved transitional arrangements to Schedule 1

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Schedule 1Transitional Provisions

• Liquor Act repealed, but implementation in each
  province by publication after notification to
  Minister from province
• Norms and standards for provincial laws set out
• Consistency with national law
• Provision for regulation and registration of
  micro-manufacture and retail and consumption of
  liquor and methylated spirits
• Provision for reasonable procedure for
  registration providing for transparency,
  simplicity and cost-effectiveness
• Maintenance of a register
• Establishment of enforcement mechanisms
• Provision for reasonable transitional protection
  of existing rights

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Schedule 1Transitional Provisions

• Conversion of existing licenses
• Existing licenses and Section 51 exemptions
  converted into either manufacturer or distributor
  registration within 90 days upon election from
  license holder
• After 12 months, registrant must initiate a
  review by Minister (in terms of Chapter 3)
• Sale by manufacturers and distributors
• On consumption liquor sale to employees(staff
  pubs) and visitors
• Off consumption liquor sale by telephone, fax,
  mail or internet
• Definitions for traditional African beer and beer
  powder
• Inputs from Treasury and SARS

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Questions and clarification