No strength in varuns claims against energy drink imports

Varun Beverages has failed in its bid to push for regulatory intervention against “imported” energy drinks it claimed posed unfair competition on the domestic market after the Competition Tariff Commission (CTC) said it had not seen enough evidence of this.

In its third quarter report, the CTC said Varun Beverages, which manufactures Pepsi products, Aquaclear water and Sting Energy drink in Zimbabwe, had lodged a complaint of unfair competition, whose evidence the regulator however deemed not fit for any further action.

“In May 2023, the Commission received a complaint relating to alleged increased imports of energy drinks from Zambia and South Africa. The commission had to assess concerns submitted by Varun Beverages (Pvt) Ltd (“Varun Beverages”), to determine whether a trade remedy investigation could be undertaken and make recommendations on possible interventions that maybe considered by the Government to protect local industry,” the report read.

According to CTC, the request by Varun was for a ban on imports of energy drinks being imported into the country. “As alleged, Zimbabwe imports energy drinks from Zambia and South Africa using SADC preferential rates and/or COMESA,” CTC said.

However, Varun Beverages reportedly failed to submit strong evidence and supporting arguments to the commission as requested in order for its case to be pursued further.

CTC added, “The situation is exacerbated by the fact that the industry has only one producer, unwilling to divulge pertinent information to prove injury. This therefore implies that there is no alternative producer of the relevant product that can supply the commission with information to prove injury.”

In its conclusion, the CTC said the possibility of dumping and subsidisation of the imports, in light of revelations that the local prices were lower than those of imported products, was dismissed.

“The commission engaged the only local energy drinks producer to avail information relevant for the investigation, which information was not forthcoming. While the commission, in accordance with the safeguard regulations, can initiate an investigation on its own, however, evidence is still required to prove injury to the local industry. It was therefore concluded that, without the domestic industry support to furnish the information and evidence required, it could not proceed to initiate a safeguard investigation,” they added.

The commission also concluded that allegations regarding smuggling of energy drinks did not fall under its mandate and it recommended that the Ministry of Industry and Commerce could better engage other Government agencies to deal with smuggling of energy drinks into the country.

Imperative to note is that traditional trade defense tools such as import prohibitions, quotas, and tariff hikes are not permissible as a result of existing trade agreements under the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).

As a result, protective measures implementable are trade remedies such as anti dumping duties, countervailing duties and safeguard measures, prescribed by the World Trade Organisation (WTO) agreements governing such measures.

Anti dumping and countervailing duties are additional import duties imposed on goods in addition to normal applicable duties. Anti dumping and countervailing duties apply to imported goods sold in the domestic market at prices substantially lower than their normal value and they are meant to protect local industry from possible injury caused by dumping of low priced goods on the Zimbabwean market. herald

drafting service contracts/

The use of contracts for the provision of commercial services is used widely in business. Some of the services include engineering, maintenance, information technology (IT), human resources, legal, accounting and auditing and healthcare services.

Some professionals have standard or specific contract templates, for example, engagement letters in the case of legal practitioners, accountants, and auditors.

In the construction industry there are construction contracts which are guided by the standards used in the industry.

Generic or universal service contracts

In this article, I explain generic or universal contracts, which parties may then vary or tailor make to suit their situation. Key provisions in such contracts include those explained below.

Parties

The parties to the contract have to be legal persons in the form of natural or juristic persons. Where trade names are used it is important to include the official or registered name and then indicate “trading as”.

Their contact details have to be included as well.

Preamble

This is important to give context or background to the contract. This may include a description of the parties, the intentions of the parties and any relevant background.

Definitions and interpretation

These are necessary in the case of complex contracts to eliminate or reduce ambiguity or differences in understanding keywords or terms.

Tenure

The duration of the contract ought to be agreed upon and stated clearly. This may include a renewal option.

Services to be offered

The services that the service provider will provide under the contract have to be captured correctly and in sufficient detail. In the case of a company a representative with sufficient knowledge and instructions has to represent the business, for example, an IT or maintenance person. Input from procurement may also be important.

Performance standards

Standards required for the service are usually specified in the contract. In some situations, this may be done through service level agreements (SLA). It is normal to find standards such as a reasonable degree of care or skill. Industry or professional standards may also be set.

Fees

In most deals, pricing can easily be a deal breaker. In contracts, it is important to agree on the currency to be used. Determination of fees is of utmost importance, for example, whether fees are based on hourly or daily rates or they are agreed upon per assignment or activity.

Warranties and guarantees

It is standard for the service provider and client to give each other warranties and guarantees such as availability, turnaround, skills, equipment, staff, payments, etc.

Liability

It is advisable for parties to agree on who is responsible for what in the event of delays, extended timeframes, or a mishap such as an accident or damage to equipment.

Confidentiality

This is a normal clause in most contracts. It is meant to protect the confidentiality of the parties and the contract.

Termination

Conditions for termination have to be stated clearly. I have been confronted with agreements with no provision for termination of contracts as if they were drafted by a young couple on honeymoon where the idea of a divorce is foreign or never imagined.

Force majeure

This clause provides for situations such as acts of God, natural disasters, war, civil unrest, etc.

Conclusion

Services are used widely in business. Their provision has to be documented properly in the form of service contracts or as per the standards in specific situations or industries.

Disclaimer

This simplified article is for general information purposes only and does not constitute the writer’s professional advice. It is not targeted at anybody.

Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deal and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He writes in his personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com herald