There is no provision in the Constitution authorising central government to regulate in areas of exclusive provincial or local competence if provincial or local governments choose to leave matters unregulated.

It is in any event a perfectly legitimate and frequently desirable policy to not regulate something. Arguably, in terms of the government’s GEAR and NEPAD policies, it should be more inclined to deregulate than to regulate, and there should be no default assumption of an omnipresent regulatory imperative.

This sub-section should be deleted along with Schedule 1 to which it refers for these reasons and the reasons given in 3 above. It is simultaneously unconstitutional and undesirable.

§ 2.(1)(b) Objects of Act – promoting entry of new participants

The objects of promoting entry, diversity and social responsibility are contradicted by provisions in the Bill and the Schedules which inhibit these laudable objectives, sometimes explicitly.

§ 3.(2) Application of Act – Section 4.4 and Section 2 will not apply to provinces that exercise their legislative competence

For the reasons given in 3 above central government has no national competence to regulate micro-manufacturing or retailing, and provinces should be free to leave liquor unregulated (although it is unlikely that they will exercise this constitutional option).

§ 3.(3) Application of Act – Provinces passing legislation must conform to "norms and standards"

We suggest above that the mere expedience of calling national legislation in areas of exclusive provincial competence a matter of "norms and standards" does not convert incompetence to competence. Circumstances have not changed since the judgement on the former Bill. This sub-section appears to misconstrue the Constitutional Court’s ruling in that case and indirectly in others.

§ 4.(1) Prohibitions on manufacturing, distributing or selling liquor

Since the Bill envisages a prohibition of sale for consumption by manufacturers and distributors we submit that there is no case to be made for restrictively licensing these two tiers. They are, and should be, governed by the same laws that govern all manufacturing and distribution.

To the extent that regulation is truly justified, it should be confined to common law or the sort of regulation governing the quality of other products, especially foodstuffs and beverages. In this context, the regulation of health and social aspects of liquor should, as we have argued, be a matter for concern and control by the Department of Health not the Department of Trade & Industry.

A minor terminological point is that here and elsewhere the term used is "register/ed". Since the Bill does not provide for registration but for restrictive licensing it should be amended either by having genuine registration (ie a formalistic procedure) or references to "registration" should be replaced by "licensing".

If there is to be a formal status, we recommend registration, not licensing. The term "license/ed" is used correctly with reference to the formality envisaged for micro-manufacturing and retailing.

§ 4.(2) Prohibitions on manufacturing, distributing or selling liquor – importer may sell liquor if "a registered person"

The legal status of imported liquor is anomalous in the Bill. It is not clear whether manufacturers, distributors and retailers may themselves be importers, and if acting in any of these capacities, to whom they may sell.

If the vertical separation and provincial regulation of activities is maintained, it makes sense to permit distributors and retailers to be importers for sale to retailers and consumers respectively.

§ 5. Prohibitions of concoctions

It is not clear why "concoctions" should be banned. Is it to protect manufacturers of alternatives? If so the idea is an illegitimate form of protectionism. It discriminates specifically against certain individuals in communities.

If the concern is a matter of health and social policy, prohibition should be replaced by the same regulations applying to other forms of liquor, and should, in any event, not be regulated by the DTI.

§ 5.(2) Prohibitions of concoctions – "manufacture, sell, supply or consume concoctions"

Apart from the above criticisms this prohibition is out of touch with reality. Everyone knows that thousands of South Africans produce "concoctions" for their own consumption and will continue doing so. If they are permitted in practice to do so, as they are and will be, the law should reflect the real world. If "concoctions" are treated as any other liquor product, they will, like all liquor, have to be safe and healthy, sold only by licensed persons, and not sold to minors or drunk adults.

The separation of concoctions from other liquor products is contrived, discriminatory, elitist and unrealistic. It should be scrapped.

Note: concoctions are not defined

This section relates to liquor retailing which is an exclusive provincial competence. It is, however, one of the few provisions relating to retailing which could be defended on the grounds of being a national norm or standard. Even so, it should remain a matter of provincial discretion.

The above comment on § 6 applies.

§ 7.(2) Prohibition of sale or supply of liquor near schools - sale of liquor within prescribed radius

Point 4 above relating to discretionary power without objective criteria applies.

Although the purpose of a school radius restriction is not stated, we presume that it has to do with a concern about the influence of liquor retailing on school children. We suggest respectfully that the legitimacy of this provision is more apparent than real. It does not make sense for various reasons. Firstly, there are schools in buildings that have shops or restaurants in the same building or the immediate vicinity, especially in inner cities.

Within whatever radius is envisaged, there are already many liquor outlets. These are exempt from prohibition under the "grandfather clause" (7. (3)). In other words, the Bill envisages that there will be many schools with liquor outlets inside the radius, and there will be many more – almost whenever a new school is built. It is hard to imagine the logic whereby it is assumed that those schools that have new liquor outlets established near them will suffer adverse social consequences while new schools that establish themselves near existing liquor outlets will not. Furthermore, such a provision constitutes an unfair discrimination against new business.

Secondly, whatever radius is prescribed, there will be anomalies and contradictions. Children going to and leaving school will pass liquor outlets. The only conceivable effect of a radius restriction would be that they pass liquor licensed hotels, restaurants or grocery stores after, say, 10 minutes instead of 5 minutes of walking.

If the concern is that school children will frequent liquor outlets during school hours if they are too close to schools, the matter is taken care of by the prohibition on sales to minors.

Well-intentioned though this section is, we suggest deleting it on the grounds that it is probably unconstitutional and certainly ineffective and impractical.

As with the age restriction under § 7. we assume the desirable intention is not exposing children to potential social harm of alcohol. In the real world children under 16 tend to be found in liquor outlets in relatively safe contexts such as shebeens, taverns and private homes serving the country’s poorest communities, and in small family-controlled inns and B&Bs. Questions regarding the employment of youth in such conditions is and should remain the responsibility of the Department of Social Services, which already has elaborate laws supported by a network of professional and empowered social workers. Child labour is also already governed adequately by the country’s labour laws.

To introduce new controls relating to youth employment in this Bill is anomalous, over-lapping, unnecessary and confusing. It creates needless legal duplication and uncertainty, and brings within the DTI forms of control for which it is not equipped.

§ 9. Prohibited behaviour on registered premises

Again, good intentions behind this section can be presumed, but again, there is a needless and confusing duplication of law. Being "drunk and disorderly" is already unlawful whether or not on "registered premises".

§ 9.(3) Prohibited behaviour on registered premises

It is interesting that the "owner or occupier of the premises" is regulated by this sub-section, as opposed to the registered trader. We presume this is an inadvertent error and should be corrected. The owner of most registered premises will often be a property developer such as the owner of a shopping centre and the occupier may be someone like a hotel or restaurant chain.

Point 3 above relating to exclusive provincial competence applies.

§ 12.(2) Qualifications to be registered as manufacturer or distributor of liquor – separating "manufacturer", "distributor" and "licensed to sell liquor"

This sub-section seeks to split the liquor industry into three strata, with a fourth anomalous "importer" not properly provided for. The stated objective for the rigid separation of manufactures, distributors and retailers is to promote entry, diversity and social responsibility. It is well known that one of the governments objectives is to create opportunities for black South Africans. However, the provision as it stands is likely to be counter-productive and impractical.

A major unintended consequence would be to exclude the majority of liquor traders in South Africa, shebeen and tavern owners, from vertical integration upwards. They, who are best placed to expand into distribution and manufacturing in a new liberalised environment will be precluded from doing so. They will be subjected to a regulatory ceiling and straitjacket.

The empowerment transactions that have already occurred within the industry are of this nature. An unintended perverse consequence to this provision will be that black South Africans who have enjoyed market-driven empowerment will be forced back to where they were. They will not enjoy the benefits of integration and increased expertise.

As far as distribution is concerned wholesaling is not a characteristic of the South African liquor industry or the liquor industry in other countries with normalised liquor law. In almost all other contexts there is a view, often mistaken, that the "middleman" is an undesirable exploiter. In agriculture, for instance distributors are presumed to widen the gap between producers and consumers, and to increase prices disproportionately. Whilst this belief is based on faulty economic thinking, the government should not be in the business of forcing a "middleman" into an industry where direct, efficient and low cost methods of distribution have been developed over many decades. This will defeat the object to "reduce the social economic and other costs of alcohol consumption" – § 2.

At the upper end of the market, manufacturing, the idea is impractical or undesirable. It is well known that South Africa’s largest and internationally competitive manufacturers are integrated public companies with rapidly growing numbers of black shareholders. These companies are characterised by vertical and horizontal integration in complex groups. They are sole owners or hold controlling or minority interests in, companies that manufacture, distribute and retail. One company, for instance, has a controlling interest in the country’s leading hotel and liquor retail chains. The effect of this prohibition could be, although this is unclear, that such groups would have to cease to exist at great detriment to the economy and cost to the country.


If the terminology in the Bill is interpreted by the Courts to refer only to specific companies (persons) and not groups of companies, the relevant provisions would be superfluous in that the envisaged degree of separation already exists as a standard method of business organisation.

In other words, depending on what these provisions mean, they are either exceedingly undesirable and impractical, or essentially meaningless and superfluous. In the latter case their only practical effect will be severe unintended discrimination against the people the Bill intends benefiting.

§ 14.(3) Point 4 relating to discretion without guidance applies.

There seems to be a confusion regarding the purpose of this provision. To the extent that this Bill governs manufacturing and distribution, a legitimate national competence, there is no need to regulate structural aspects of the premises. Is it truly envisaged that a liquor manufacturer is going to have the structure of its premises regulated? We can think of no reason for wanting to do so. If this section was drafted with retailers in mind it is subject to points 3 and 4 above relating to exclusive provincial competence and discretion without guidance.

As a general rule of good law and in accordance with the constitutional requirement of separation of powers, administrative discretions of the kinds envisaged in this Bill should be subject not only to review but appeal. We point out that 23.(1) is superfluous in that all administrative actions are subject to review automatically.

Since the Minister may delegate ministerial powers to any government official, which presumably means that delegated powers will in practice be exercised by officials rather than ministers it is all the more important for there to be a right of appeal.

It is obviously inappropriate and unrealistic for the Minister to exercise powers conferred in this Bill personally. Such far-reaching discretionary powers without objective criteria are, as we have argued, undesirable and probably unconstitutional. The reason for subjecting discretionary power to such checks and balances is that discretion creates obvious and probably irresistible temptations for corruption and abuse. An additional essential mechanism for reducing the propensity for corruption is to subject discretionary power to appeal (on the merits).

§ 45.(2)(b)(i) If the Director of Public Prosecutions has declined to prosecute that should be the end of the matter. One of the essential requirements of a rule of law, which is a binding provision in our Constitution, is that people should not be exposed to prosecution more than once for a single transgression. If the state cannot persuade the public prosecutor to prosecute it should not have a second option. This will lead to needless victimisation and will compromise the objectivity of law.

§ 56. Default provincial legislation

This section amounts to subterfuge in an attempt to legitimise what the Constitutional Court has already declared to be unconstitutional. The Bill should not try to subvert unambiguous constitutional provisions and Constitutional Court judgements.