Adidas AG and Reebok International Ltd. not abusing their dominant market position with regard to sale of premium sports goods in Noida

Competition Commission of India (CCI): CCI has rejected a complaint filed by Kalpataru Enterprises, a franchisee of Reebok India Co. alleging that Adidas AG, Reebok International Ltd and Reebok India Company, as a group, abused its dominant position in the relevant market of sale of premium sports goods in Noida. It was alleged in the complaint that the terms and conditions of the Franchisee Agreement signed between Kalpataru Enterprises and Adidas AG Group are not only unfair but also discriminatory vis-à-vis other franchisees as other Franchisee owners are receiving a higher rate of commission and assurance of a minimum guaranteed payment for operating the retail outlet was also given to other franchisees. It was averred that such discriminating practice of the Adidas AG Group had put some franchisees/retailers at a competitive disadvantage position vis-à-vis the others thus, causing an appreciable adverse effect on competition in the downstream market. It was further stated that the said acts of the Adidas AG Group amounted to imposition of discriminatory conditions which is in infringement of the provisions of Section 4(2) (a) (ii) of the Competition Act, 2002. After hearing the parties, CCI observed that though Adidas AG Group appears to be a dominant group in the relevant market, allegations of complainant seem to be baseless and not amounting to an abuse of dominant by the Adidas AG Group within the meaning of Section 4 of the Act. CCI said, “the Commission finds two fundamental flaws in the allegations made by the Informant. Firstly, the Agreement which was termed as unfair and arbitrary was entered into in 2003 when the alleged dominant group had not even come into existence. Secondly, even if the submission of the Informant regarding dominance of the Adidas AG Group is accepted post the formation of group in 2005, the conduct of the Adidas AG Group vis-à-vis the Informant remained same (as the Agreement  was said to be continued on same terms and conditions). Further, as per Informants own submissions, the agreement with M/s Neelkanth Traders was more favourable than the one with it which fact goes against the allegation of abuse by the Adidas AG Group.” “A manufacturer is not being obligated to follow a single template agreement throughout its existence. With passage of time and operations, the commercial arrangements may undergo a change,” CCI added. (Om Datt Sharma v. Adidas AG, Case No. 10 of 2014, decided on May 13, 2014)

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