National government muscles in on liquor industry regulation

Legislative changes are afoot that will see national government increasing its control over the retail sale of liquor in South Africa, despite a Constitutional Court decision that recognised it was a provincial competency. 

In terms of the Constitution, the “control of undertakings which sell liquor” is a municipal competence and some provinces have accepted that municipalities may, therefore, determine trading days and hours for liquor sales.

Over the past few years, the national department of trade and industry has published various pieces of legislation that appear to encroach on the provincial competence to govern the retail sale of liquor, the most recent being the draft National Liquor Policy, published on May 20 for comment. 

The draft policy includes proposals that specifically affect the retail sale of liquor.

These include raising the age for the purchase and consumption of liquor, restrictions on locations where businesses selling liquor may operate, and proposed restrictions on the advertising of liquor.

It seems that, despite the Constitutional Court decision, national government is determined to exert its influence in this sphere.

The far-reaching proposals contained in the policy again focus attention on the legislation governing the manufacture, distribution and sale of liquor in South Africa.

Activities in the liquor industry are currently governed by legislation at three levels.

The Liquor Act 59 of 2003 governs the large-scale manufacturing and distribution of liquor. Distribution is defined as the sale of liquor to a business with a liquor licence, and the quantity of liquor manufactured annually determines which manufacturers are classified as large-scale manufacturers.

In terms of the thresholds prescribed in the Act, only the major producers of beer, wine and spirits are large-scale manufacturers whereas wineries — excluding the producer cellars (former co-operatives) — are micro-manufacturers.

The activities of micro-manufacturers and retail sellers are governed by provincial liquor acts.

Retail sellers are businesses that sell liquor for consumption off the premises, such as supermarkets, liquor stores and wine estates, as well as businesses that sell liquor for consumption on the premises such as restaurants, pubs, clubs and hotels.

In 1998, the Liquor Bill (which became the 2003 Act) was referred to the Constitutional Court, which -confirmed that the regulation of micro-manufacturers and the retail sale of liquor is a provincial competence. Subsequently all the provinces except North West and Limpopo promulgated their own provincial acts.

Despite the Constitutional Court ruling, amended National Liquor Regulations were published in December 2013. Aimed primarily at the large-scale manufacture and distribution of liquor, it introduced restricted times for the delivery of liquor. This obviously has a direct impact on the activities of retail sellers because it determines when they may accept deliveries.

In February 2015, the trade and industry department published the National Liquor Norms and Standards.

Although the Liquor Act authorises the minister to determine such norms and standards, their scope is very limited. The norms and standards that have been gazetted, however, are aimed at regulating specific aspects of retail sales.

They prescribe that businesses such as restaurants must ensure free- issue condoms are easily available on site, that free drinking water must be available, and that there must be separate toilets for each gender and for disabled persons. 

A provision in the norms and standards states that it trumps provincial liquor Acts in instances where they are in conflict.

The department has subsequently admitted that the norms and standards have to be adopted by provinces before becoming enforceable.

It does not seem that provinces will oppose the introduction of the norms and standards on the basis that they interfere with their constitutional competence to regulate retail sales.

At a recent stakeholder meeting, the Western Cape Liquor Authority requested “early adoption” of the norms and standards by licence holders and indicated that these will be included in future amendments of the Western Cape Act.

The Western Cape Liquor Authority confirmed recently that it intends to draft its own liquor policy that will precede major amendments to its provincial Act.

Even if stricter controls are imposed on the retail sale of liquor, the question is whether they will have the desired effect on the harmful consequences of the abuse of alcohol when approximately 74 000 outlets in the country have liquor licences, but about 220 000 are not licensed and operate outside the law.

Danie Cronje is director of liquor law services at Cluver Markotter