TaxTMI 
TaxTMI 
2015 (4) TMI 306
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....Opposite Party No. 2 is a USA based renowned manufacturer of sports goods such as shoes, apparel, accessories/equipments and casual footwear, apparel etc., for non-athletic use. The Opposite Party No. 3 is a registered company under the Companies Act, 1956 and, inter alia, is engaged in the business of supply of footwear, apparel, accessories, sports equipment etc., in India. 3. It is stated in the information that the Opposite Party No. 2, through its wholly-owned subsidiary Reebok (Mauritius) Company Limited, owns 93.15% equity in the Opposite Party No. 3 and the Opposite Party No. 1 acquired 100% equity in the Opposite Party No. 2 in 02.08.2005. Thus, since 02.08.2005, all the Opposite Parties belong to a group headed by the Opposite Party No. 1 (henceforth, "the Adidas AG Group"), as provided in the Act. 4. Relying on a research study report of the Indian Council for Research on International Economic Relations (ICRIER) on 'Sports Retailing in India', different newspaper articles, case laws of the European Commission and India, a market study report by a group of students of MDI (Management Development Institute), on "Marketing Strategy of Reebok in India", and its ow....
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.... provisions of Section 4(2) (a) (ii) of the Act. 9. The Informant contended that though 'the Agreement' was executed prior to 'the Act' coming into force, however, the Adidas AG Group become liable since the anti-competitive effects of 'the Agreement' continued even after the enforcement of the relevant provisions. 10. Based on the above stated facts and grounds, the Informant prayed before the Commission to initiate an investigation into the matter; to restrain the Adidas AG Group from the above said activities; to recommend such clauses which the Adidas AG Group should uniformly apply across all their franchise agreements; and to pass such other and further order(s) as the Commission may deem fit and proper. 11. The Commission has perused the material available on record and heard the learned counsel appearing on behalf of the Informant. Facts of the matter reveal that the allegations of the Informant pertains infraction of the provisions of Section 4 of the Act by the Opposite Parties. 12. The first issue needs to be examined is that whether the Opposite Parties can be treated as a 'group' for applicability of the provisions of Section 4 of th....
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....ce between the branded and non-branded sports goods makes the market for branded sports goods a separate relevant product market because there are different consumer groups for the above said two types of markets. Accordingly, the Commission is of the opinion that the relevant product market in this case is 'the market of premium sports goods'. 17. With regards to the relevant geographic market, the Informant urged the Commission to consider the territory of Noida as the relevant geographic market because it is operating at Noida and for a franchisee a particular geographic area is not substitutable for another area. As per Section 2(s) of the Act, relevant geographic market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas. Based on the provisions of the Act, the territory of Noida appears to be the relevant geographic market in the instant case. Because a consumer prefers to purchase such products from a location which is easily accessible by him. A consumer residing in Noida would....
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....nd M/s Neelkanth Traders, assurance of a minimum guaranteed payment for operating the retail outlet to M/s Neelkanth Traders whereas Informant was not offered such term, M/s Neelkanth Traders was promised a monthly rent to be paid to the property owner of the retail outlet whereas Informant was not offered such term, the Opposite Party No. 3 has unilateral power to terminate 'the Agreement', no liberty was given by the Opposite Party No. 3 to the franchise to return the unsold goods, etc. As per the Informant, the said acts of the Adidas AG Group are in contravention of section 4(2) (a) (i) and 4(2) (a) (ii) of the Act. 20. It was also pointed out by the Informant that after the expiry of the term of the franchisee Agreement in 2006, the Informant and OP 3 continued to do business as per that Agreement and Informant continued to function as OP 3's franchisee till February, 2009 i.e., when the last sale of OP 3's products from the Informant's Franchisee was being made. Thereafter, allegedly OP 3 never took back the dead stock lying at Informant's store leading to insurmountable losses to the Informant. 21. After having perused these allegations, the Commiss....
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....3 and M/s Neelkanth Traders) in March 2006. It may also be pertinent to note that a manufacturer is not be obligated to follow a single template agreement throughout its existence. With passage of time and operations, the commercial arrangements may undergo a change. It is not the case of the Informant that the margin of 28% was imposed on him even after the expiry of 'the Agreement' in 2006. 'The Agreement' was renewable/terminable after 3 years (i.e., after 27.08.2006) by mutual consent of the parties. Moreover, the difference of margins is not substantial which can be termed as abusive within the meaning of Section 4 of the Act. 24. The Commission further notes that the allegation of the Informant regarding the Opposite Party No. 3 not taking back the dead stock lying in the custody of the Informant which allegedly inflicted financial harm on it, prima facie does not raise any competition concern. Otherwise also, the Informant did not provide any correspondence sent to the Opposite Party No. 3 regarding the dead stock lying at its store between February, 2009 (when the last sale of the Opposite Party No. 3's products from the Informant's Franchise was be....