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Tuesday, August 7, 2012

Butting heads with RED BULL in the Philippines

The Department of Justice (DOJ) has found probable cause to indict officers of the Thailand-based manufacturer of the internationally known energy drink RED BULL along with its Filipino distributor . The violations are alleged to in relation to IPRs and food safety regulations. TC Pharmaceutical Industries (TCP), manufactures Red Bull Energy Drinks, and now sells them through a Philippines company called Maryland Distributors Inc. (MDI)

A complaint was filed by the former distributor Energy Food and Drinks Inc. (EFDI), which still has a valid product registration certificate for Red Bull. The complaint is based on false / misleading labeling. As EFDI is still listed on the product registration as the exclusive distributor, its name must be indicated in the label of Red Bull products. However bottles of Red Bull with “MDI” stickers superimposed on the portion of the label that identified EFDI as the product’s exclusive distributor are on sale in the Philippines. The DoJ has concluded that TCP and MDI “acted in unison” in violating the rights of EFDI.

Clearly there is a civil dispute over the product distributorship arrangements and this was the reason the case never made it first time around. But EFDI has now persuaded the DoJ to in effect use the strict regulatory regime to gain leverage in its dispute with TCP. The Philippines has a rule based legal system and does provide some pretty strict criminal remedies for breaches. Exclusive distribution is a protected right, albeit somewhat archaicly by the criminal law. This can trap unwary companies into failing to get their regulatory position in order.

But while the Philippines legal system is a stickler for form over substance that same point means that for TCP the criminal system is so slow most cases take a decade to reach trial conclusion! Most of those accused will probably have retired.

1 comment:

  1. There is a civil dispute over the product distributorship arrangements.
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