The Liberal Democratic Party is moving to tighten regulations against discount sale of alcohol as a measure to protect small-scale liquor stores, whose number has been declining rapidly since deregulation in the 1990s led to greater competition with supermarkets, convenience stores and other large retail chains. Unfair competition through unfair discounting needs to be regulated. But the party should think twice about cracking down on legitimate discounting as higher prices would hurt consumers.
Last month, LDP panels on financial issues agreed on submitting an amendment to the Liquor Tax Law and related laws in the current session of the Diet. The amendment sets legal standards on liquor production and sales, and imposes fines on businesses that violate the standards. Those that refuse to comply with correction orders could lose their liquor licenses.
According to the National Tax Agency, small-scale liquor stores accounted for 78.8 percent of the market in fiscal 1995, but their share plunged to 33.1 percent in fiscal 2012. Before the deregulation of liquor retail business that began in 1998, the issuing of liquor retail licenses was tightly regulated according to area population density and the distance between existing stores. But the deregulation paved the way for the entry of large-scale retailers such as supermarkets, discount stores and convenience store chains to the business, and the increased price competition with large retailers is reported to have nearly halved the nationwide number of small liquor stores in the past two decades. The LDP has reportedly been lobbied by the national association of liquor stores to tighten regulations on discount sales.