Saturday, May 23, 2015

Subway doesn't have dominant position in fast foods restaurant chains due to presence of Pizza Hut, KFC, etc: CCI


Competition Act: Due to the presence of many competitors in the market of fast food restaurant chains, like Pizza Hut, KFC, Mc. Donald's, Cafe Coffee Day, etc., consumers have several options to choose from. Subway neither has strength to operate independently of its competitors, nor the ability to affect its competitors and consumers. Therefore, Subway does not enjoy a dominant position in the relevant market of fast food restaurant chains.

Facts:

a)The Informant and Subway Systems India Private Limited ('Subway') entered into a franchise agreement for operating "Subway" at Chennai. The Informant alleged that certain clauses of the franchise Agreement contravened the provisions of section 4 of the Competition Act, 2002 ('the Act').

b)The Informant alleged that the market share of Subway in the market of fast food restaurant chain exceeded 30%, thus, Subway had abused its dominant position by imposing unfair conditions in franchisee agreement.

c)Based on the above allegations, the Informant prayed for initiation of an investigation against the Subway under section 26(1) of the Act

The Competition Commission of India held as under:

1)Commission observed that these allegations did not have any appreciable adverse effect on the competition in the market of fast food restaurant chains since the size of such market was huge as compared with the market size of Subway. Therefore, the impact of alleged unfair conditions in franchise agreement, if any, was negligible. Thus, conduct of Subway would not contravene any provision of section 3 of the Act

2)Due to the presence of many competitors in the market of fast food restaurant chains, like Pizza Hut, KFC, Mc. Donald's, Cafe Coffee Day, etc., consumers had several options to choose from. Subway neither had strength to operate independent of its competitors, nor the ability to affect its competitors and consumers. Therefore, Subway did not enjoy a dominant position in the relevant market of fast food restaurant chains. - RAMAMURTHY RAJAGOPAL V. DOCTOR'S ASSOCIATES INC (2015) 57 TAXMANN.COM 357 (CCI)
Post a Comment