Injunction issued vs Red Bull Thailand

MANILA, Philippines - A Quezon City Regional Trial Court has issued an order of preliminary injunction restraining TC Pharmaceutical Industries Company, manufacturer of Red Bull Energy Drink Thailand, or any of its representatives, from terminating the exclusive distributorship rights of Energy Food and Drinks, Inc. (EFD) in the Philippines.

The resolution handed down last Jan. 19 by Judge Santiago Arenas of QC Regional Trial Court Branch 217 also prevents authorizing anyone, in any form, other than EFD to act as Red Bull distributor and to use any of TC Pharmaceutical Industries Company proprietary marks; and directly or indirectly publishing or airing any form of advertising medium, be it on print, television or radio, holding out any person or entity other than Energy Food and Drinks, Inc. as Red Bull’s official distributor in the country.

In a resolution handed down last Jan. 19, Judge Santiago Arenas of QC Regional Trial Court Branch 217 said that pending the resolution of the civil case filed by the local firm for what it considers an unjust termination of its distribution contract with the foreign firm, TC Pharmaceutical Industries Company is to honor its distributorship agreement with Energy Food and Drinks Inc.

The court restrains TC Pharmaceutical Industries Company from terminating the exclusive distributorship rights of Red Bull products of Energy Food and Drinks, Inc. in the Philippines, or licensing any businesses from distributing the product.

On March 1 1993, plaintiff Energy Food and Drinks, Inc. entered into an exclusive distributorship contract with defendant TC Pharmaceutical Industries Co., Ltd to distribute Red Bull energy drink in the Philippines.

It was agreed that the products would be consigned to the plaintiff which will pay in advance or upon delivery.

Because Red Bull energy drink was then unknown to the Philippine market, the plaintiff invested millions of pesos to market the product.

The business relationship between the two firms lasted 15 years.

On Aug. 28, 2008, however, the defendant sent a letter to the plaintiff informing it of its intention to terminate the distribution contract effective Oct.31, 2008.

During the hearing on the preliminary injunction, Energy Food and Drinks Inc. said TC Pharmaceutical recognized the success of its efforts in building up the Red Bull brand in the Philippines.

The plaintiff stated that Saravoot Yoovidhya, managing director of TC Pharmaceutical, wrote a letter to its president Jaime Chua on Aug. 20, 2009 acknowledging the promotion and distribution of Red Bull in the Philippines.

“We would like to take this opportunity to thank you and your team for all your effort and cooperation for the past 15 years that has built up Red Bull brand in the Philippines with success,” a portion of the letter said as quoted in the decision.

The defendant, however, said that it decided to terminate the distributorship agreement with the plaintiff because of continuous decline in sales, delayed payments of purchases, reduction of market share, requests for re-scheduling of payments and shipments, lack of clear marketing strategy, shrinking budget for advertising, failure to meet sales target, and non-payment of outstanding balance.

In the Jan. 19 resolution, Arenas granted the plaintiff’s motion for preliminary prohibitory injunction pending the resolution of the civil case because it had already spent resources and “tremendous” efforts to establish a national distribution network.

“The requirement that there is an urgent and permanent necessity for the issuance of a writ of preliminary injunction in favor of the plaintiff to prevent serious damage to the movant-applicant has been met by the latter because the continuing acts of the defendant cause irreparable damage, (and is) prejudicial and destructive to the business operations of the plaintiff, if no injunctive remedy is issued by the court,” Arenas said in the resolution.