Amendments to the Liquor Bill, 2003 Select Committee Cape Town 3 September 2003

Objective of the presentation To provide background to the amendments To present a detailed overview of the amendments

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

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

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

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

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

Key features MDR Consumers Manufacture: Produce and bottle with intent of selling Distribute: sell to a registered person Retail: Sell for consumption Manufacturer may Produce and bottle Distribute to M & D Distribute to R Distributor may sell to M & D & R Activities Registration Subject to conditions of registration Foreign M or D

Questions and clarification

Detailed overview of amendments

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

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

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

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

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

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

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

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

Chapter 5 Offences and Penalties Added section from previous chapter about offences Clarified penalties and fines Imposed forfeiture of liquor produced or distributed illegally

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

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

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

Schedule 1 Transitional 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

Schedule 1 Transitional 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

Questions and clarification