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AMERICAS: ARGENTINA

A small change in the original formula: How much harm might it cause Red Bull? A brief report on the Red Bull case in Argentina
Authors: Gonzalo Barboza & Dámaso A. Pardo

After a first battle, Red Bull Argentina was obliged to modify the original formula of its popular drink Red Bull. The war, however, will continue since the ordinary lawsuit is still pending, and a final decision, eventually from the Supreme Court, is not expected until 2010.

Factual Background - the approval of the energy drinks by the Health Authority

Red Bull GMBH (“Red Bull”) is the largest worldwide producer of energy drinks. It is the producer of the RED BULL energy drink, first sold in Austria in 1987 and internationally since 1992. In 2005, it sold over 2.500 million units of the energy drink. RED BULL energy drink is actually being sold in more than 120 countries.

In 2000, Red Bull entered the Argentine market and started the process of approval for the commercialization of its drink RED BULL with the Argentine health authority, called ANMAT (National Administration for Drugs, Food and Technology).  At the time Red Bull had started the proceedings to obtain authorization to sell the product, the so called “energy drinks” were not classified within the Argentine Alimentary Code (CAA).  However, in Austria, and many other countries, RED BULL was sold as a regular food product. On the other hand, the German health authorities classified the product as a caffeinated soft drink.

ANMAT finally classified the energy drinks as a “dietary supplement”, one of the most strict categories in terms of control for the health authorities, and authorized their commercialization in Argentina through Resolution 6611/2000 of November 16, 2000. Since then, RED BULL beverages have been sold with no restrictions in Argentina.

The resolution provides, in connection to the subject matter, that non-alcoholic beverages that contain in its composition a maximum caffeine concentration of 35 mg/100ml, with or without vitamins, minerals and other ingredients, shall be considered dietary supplement.

The following considerations were taken into account by ANMAT in order to grant Red Bull and its other competitors the referred authorization:

• these kinds of beverages have a caffeine concentration of 32 mg/100ml; the Argentine Alimentary Code (CAA) establishes the limit of 20 mg/100 ml for caffeine concentration in non alcoholic beverages;
• the amount of caffeine incorporated does not have harmful or toxic effects since one 150 ml cup of tea contains between 60 and 90 mg of caffeine and one 125 ml cup of coffee provides between 95 and 125 mg of caffeine; one 250 ml can of RED BULL provides 80 mg of caffeine (32 mg/100 ml);
• there are no objections regarding the other typical ingredients of these beverages;
• although these products (energy beverages) do not comply with the requirements of a drink, they can be classified as dietary supplement;

Post approval period

Once the authorization was granted, Red Bull started selling its product and was soon in control of a large market share in Argentina. The product was originally designed to help prevent car and truck drivers from falling asleep while driving. However, at least in Argentina, those who ended up consuming the drink were young people, who mixed it with alcoholic drinks to resist long-lasting dancing nights.

Argentine physicians have cautioned the authorities against the excessive consumption of this kind of beverages in combination with alcohol, such as vodka or champagne, something very popular among young people nowadays. They claim that “beverages like RED BULL eliminate the feeling of fatigue and delay the symptoms of drunkenness, which in turn might lead the unprepared consumer to a heart attack or to an alcoholic coma.”

Likewise, the Argentine health authorities received many complaints by citizens due to the negative effects that the consumption of these energy drinks together with alcohol produced in many young peoples´ bodies.

Red Bull counterclaimed: “One can of Red Bull has 80 mg of caffeine, the same quantity as a cup of tea or half a litre of any cola drink, whereas one cup of coffee contains between 90 and 120 mg, and mate (a very popular and traditional infusion in South America) has also a high rate of caffeine”.

Nevertheless, ANMAT reviewed the case and decided to set up a new resolution obliging Red Bull and its competitors to modify the formula of its energy drink. At the same time, the National Food Commission (CAN), responsible for drafting and proposing the bringing up to date of the Argentine Alimentary Code (CAA) is studying the subject matter in order to issue a recommendation.

New ANMAT resolution

The frequent use people made of these types of energy drinks in combination with alcoholic beverages was the main reason that prompted ANMAT to reverse the original Resolution Nº 6611/00.  On June 27, 2005, ANMAT issued its new resolution Nº 3634/2005, by which it obliges producers of energy drinks such as Red Bull to modify the formula of its beverage.

The resolution determines that non alcoholic beverages shall be considered dietary supplements when their caffeine composition does not exceed the amount of 20 mg/100ml caffeine. So manufacturers of energy drink beverages such as RED BULL would have to modify its formula in order to be able to continue selling its product.

In addition to the ones referred to caffeine concentration, the resolution includes other type of restrictions, namely:

1) The labels of these products should include the following inscription: “The consumption of this product together with alcohol is harmful to your health”, in a size and colours that can easily be read by consumers (5% of the size of the can); (ii) advertising of these products shall not be associated directly or indirectly to the consumption with alcoholic beverages.

2) Advertising of this kind of beverages (i) shall not be presented as producing welfare or health; (ii) shall not be linked with ideas or images of great success in love or sexual life, or in sport activities, or together with the exaltation of social prestige, virility or femininity; (iii) shall not include young people who are 18 years old or younger.

Red Bull filed the corresponding administrative recourse against this resolution. According to Argentine procedural law, administrative regulations such as Resolution 3634/2005 can only be challenged as null and void in Court if it has been previously refuted before the same organism who issued it and said organism has confirmed it.

Injunction

As well as the aforementioned administrative appeal, Red Bull filed an injunction before the Federal Court requiring the judge to immediately and totally suspend the effects of the resolution Nº 3634/05 issued by ANMAT until a final resolution is issued by this same organism to Red Bull´s administrative recourse.

On October 25, 2005, the judge granted the injunction, mainly based on the following arguments: (i) the ANMAT Resolution 6611/00, which authorized the commercialization of energy drinks such as RED BULL made clear that the amount of caffeine used in these products do not present harmful effects on people and it has not been scientifically proven otherwise when issuing the 3634/05 Resolution; (ii) Without a concrete evidence on the risk energy drinks might represent to people, it appeared as an arbitrary decision to force the plaintiff to change the formula used for producing RED BULL product in more than 120 countries.

As a consequence to said injunction, the effects of the ANMAT Resolution Nº 3634/05 were suspended, but only until a final resolution of the administrative appeal made by Red Bull is decided by ANMAT.

During the first days of December ANMAT finally issued its final decision to Red Bull´s appeal, confirming its previous Resolution 3634/2005. Therefore, on December 9, 2005, the same judge who granted the injunction resolved that the injunction was not in force any longer since the term during which it was granted has been fulfilled.

Lawsuit

From the time ANMAT issued its final resolution on this matter, Red Bull was able to stand before Court to challenge ANMAT´s decision. Red Bull has stated publicly that they will continue the legal battle. It appears they will start an ordinary lawsuit against ANMAT, in order to obtain the reversal of the ANMAT resolution Nº 3634/2005 and a new decision allowing Red Bull to sell its beverage with its traditional caffeine concentration. When the courts reopen in February 2006, we will have more of an ideas about what Red Bull’s next move will be.  Besides, there are at least four bill drafts being studied now at the National Congress to give this matter a definitive solution.

Most of the proposed drafts forbid the selling of energy drinks to young people under the age of 18 in commercial stores, discos, pubs and similar places. Some of them even determine that commercialization of these products should only be allowed in pharmacies under prescription. They also contain strict restrictions in the ways these products should be advertised.

If the National Congress passes any of these bills, then Red Bull will be in a worse situation. Their only legal recourse would be to enter into a new ordinary proceeding and obtain a final ruling by which a judge declares said eventual bill unconstitutional.

Conclusion

As we have seen, the first battle was won by ANMAT, the reason for which Red Bull will have to modify its formula in order to sell its product in Argentina. But Red Bull is determined to continue the case until its last consequence and so the war has  not yet ended.

The present case shows a conflict between two rights: on the one hand, Red Bull’s constitutional right to trade and engage in any licit business, on the other hand, there is the right and the obligation of the Argentine health authorities to protect the population and avoid harmful consequences from the consumption of any food product.

But, do the health authorities have the right to prohibit the selling of a product because if used together with alcohol or other substances produces a negative effect? If we stretch this argument, the government should prohibit the selling of cars because people drive them drunk causing the death of many citizens or the commercialization of aspirins because if people take 15 at a time they may also be harmful. Yet cars are very useful transportation tools and aspirins have been proved very effective to combat headaches and other ailments.

What we know for sure is that Red Bull will apparently fight until the end and it is quite uncertain what the final decision will be.