No strength in Varun’s claims against energy drink imports
Tapiwanashe Mangwiro Senior Business Reporter
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.