Gkb Hi Tech Lenses Private Limited vs Transitions Optical India Private ... on 16 May, 2012

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Competition Commission of India

Gkb Hi Tech Lenses Private Limited vs Transitions Optical India Private ... on 16 May, 2012

BEFGRE THE €3GﬁJ'§PET§T.iQN €3C3ﬁi'§M§S8§QN {I}? ENQEAA {EASE N€3.G'3i2ﬁ'§£} bag. MC; = 533"' Z?i¢""'W-~ iNFCiRf\/EANT SR8 Hﬁ TECH LENSES PWVATE LEWTEB OPPOSITE PARTY TRANSSTEGNS ﬂPT§CALM§ND§A PRWATE L§¥§'§§T¥"E.Q Order 1;'? This case was iriitiated on the hash; of informatian ﬂied by Mia 'GKB Hi Tech Pvt. (hereinafter "(SKEW against {W3 'Transiﬁans Crpticai indie Pvt. Ltd. (hereinafter "Transi"tions") in the Competition Ccsmmission of india (hereinaz'ter "'Ccxmm§sséon"4) Uﬁﬁﬁf-SECHQH 19(f1__}(a) of The .Competition Act, 2002 {hereinafter "Ac;t"') can January (38, 2010. The Commission, upon examinatican of the facts of 'the 'informaiion_, passed an order unesfer Secfion 28(1). on January 19, 2{}"IQ recording its opinion that 'there exists a prizwa facie case, and directed The .Direc;tor*Genera! {hereinafter "£3G") to investigate into the matter.

1.2 The [)6 submitted the investigation report on August 23, 2010. The irwestigaiion repart was sent to the partées seeking their respanse on the same and further process of inquiry was undertaken in a:ccz:2rdance with the provisims of the Act and relevant reguiafticzns there urnder'. Fuif opportunity wa5 given it: bath GKE3 and Trawséficans far perusai of aii reievant records and making their submissions, both 9 in writing andaﬁraliy before the Commésséon.

2. Factuai Backgmund The infmmi-an': vi:-:. GFCB is engaged in fine business :31' .=':'.anufa mastic ophihainwie: Senses. for both expoﬂs as we}? as dam ..» .

. , . , . . ,. , W3 .r'«3.s'-=3H:ng C3? prsuucts 0: v1anoi.,z$ :ens m:anu:aL:'turers aner vafue )gicg'§'£.san.'§.:% ;

_,/"' '\ Q '9' . 7- 'la I!' \ F' " ..""-' "

' 2 ' ,. > 2.3 2.4 addition is in the form of mating of isms Le. Marci cciatirig or anti mfieiciian coating. Cari Zeiss Visian iriiismaiionai is a miajoriity sharehoiitier in GKB having a share of 50.15% as in 200?. Cari Eeiss i3 as German Gcmpany and one of ihe we.-.rii:i's ieading companies cieaiing with Qphihaimic products.

The Qpprssiie Party, Transiiicms india, is an Indian joini venture §}E»"fW£':€'f'i

- Transiiicnns Opiicai Hoidirigs ,B.\»'., The Neiiieriarids and Transiiicns Dpiicai inc, USA. The core ,bussir:esa: made! of Transition iriciia is in purchase substrate (semi «finished isms) from its caster' partners, process the substrate (Le. appiy the Phoiechromic coating}, and is seii the finished gomzfs back to the iens casiers. Transitions india has stated that ii is the marketing arm of Transition Qpiicai ini;., USA and does not undertake: F'hoiochromic1treaimeni or manufacture ie.-rises in india. The ienses are phatochromicaiiy treated in pianis iocaied autside India and ﬁnished products are imported by caster partners.

'The Reiated Party (ta Ti'ai'i€-'si'ii0i'iS)', is 'Essiic:r India, Essiior inciiia is 180% subsidiary of Essiior inieriiaiicmai which is a wcirid ieader in Qphthaimic ienses and ether aiiieci products. it entered the indian market tiiiaugh 3 mini Venture {JV} with SRF Limiteci, New Deiiii in 1998. SRF Limited exiiieci in 2004 and sirice than Essiier inciia is 100% subsidiary of Essiicar iriiemaiionai. Essiior iriiemaiicmai is a hciider of 49% stake in the Transiiiansi Opiicai HQidii'igS B.V., Tim Neiiieriands and Transitions Qpiicai Inca, USA. The majority stake in Transitions iniernaiionai is hard by PPG industries ins. Thus, the parent campany of Essifor iriciia is a 49% staiiehoider in the parent cempanies of Transitions indie. At the opeirationai front, Essiirir inciia is aiso 3 iens caster iike GKB and in competition wiih GKB and ether simiiiar piayers.

The case inf the iriiorrriaiii is premised on the proposition that Transitions gkisiia as ciominaiii enierprise in the business of Piasiii: Phoiochromic Lenses (PPL} in india and that ii is abusing its ciominani posiiion by induiging in a member of anti» cornpeiiiive practices. As per the aiiegaiiaris' the Caster Partners agfe-""r"' .-,~":_.\ suffer ciiscriminaioiy and exciissioiiary ccinduct because of 'i§'ii-'§.f:;§Z\)_§i . s' ~'~'15'.§." 1 Transiiitms irioiia. A-zxcorciin iv, the infomiani viz. GK8 aiie 'hé iriiiiii 9« 9 i \ x the ;:>i'5visiciris 2):' Section 4 of the Aci. The im'<:ii'mani has aiiiiiitfiaiie Transiiians inciia anti Cari Zeiss Visian have entered mic: an agreement that violates Se-ciicxn 3 at' the Act.

Aiiegatiaiw 2,§ 2.5 W

-«J 2.8 fransiiians inciia, imposed discriminatsry and urzfaii candiiions on GKB in viciatiztm 0? Seciion =i{'i} read with iSeecii0n 4(2}{a)~(i} of the Act by: {i} suppiying the prociucis is Essiicsr india at prices iciwer than those being afiared to i3'i{E3{ii) aiiowing 3 credit period :31' 5:30 days as against the standard inciustry praatice af Q0 days (iii) not aiicwing GKB is jiake advantage 0:' investing in hard seating piant by rediicing the price ciifference iaeiweeni Limzoafeci and hard mated ienses as is appiicai::ie 'to the resfmf ihe wcarid ics inﬁireciiy 'benefit Essiior inciia which doea mat have mating faciiiiies and; {iv} requiring GKB 1:0 provide cietaxiis sf aii customers which is a business sensitive informatim and if shared with Essiiorlinciia, it wmiid raise wmpeiitian concerns Furthennore, Transitions india imposed unfair ccsndititsns on>Gi<B by nczi aiiowing them in EXQOH the product even after they have uridertaken vaiue addiiicsn on the product after purxziiasing from Transiiians inciia uniess GKB paid them the difference in prizes in 'two cmsniries. Aiso saie to cusicwners in india What: iniencied ta export ihe praducts 'Eco other cauniries was not aiiciwestzii There: were aisc:

aiiegations cf arbitrary changes in suppiy chain, suppiy' pariad being more than assured supipiy period, reustricting the saie of oicier gemeraticm cf preciucts even when there was demand for the same,' and RC! seitiemeni of dues against amounts owed ta GK8 by the OP.

Trarisiiions in-ciia aiso iimiteri the market mi Gi<E$ in vioiaiion cf Sectian 4-ii) read with Section e='i{2}('i::){i_) of the A«::i by forcing GKB to sail ihe product of Transiiitins india on%'?: egggizesive basis and stopping GKES from saie of "Acc.:iimaies"' brand of Transiiimws. V Transitions iridia aisa impiamenied praciicas resuiiing in 'V i Access" to GKB and theretiy vioiaiing Section 4{'2}{s:_} of {hi}. Act re"

E _ the pravicaus aiiegaiiions of restriction of sai:-3 of Acciimates, exporiregric <2- x '_,\ rs-zsirisztirms in <ie=2*=ii;"igs iii' -L'-'isZi~é.E'i' generaiim Di Q."Q('.'3'..iCi.";'«. '.19 « '9.

5.:

2.9 Transitions inciia is aisizi aiiegeci to have abused its dominance by ieveraging its posiiicsn in the upstream meme': of processing or PPi..'s ta secure the maria"-at of 2.10 GKB aiso aiiegeci that Transiiians. india have istapped supplies to GKB and terminated the business reiaiiariship. This aiiegaiicin has the impact 9'? 'Refusing to Deai' under the Act.

2.11 Finaiiy, GKB vide its ietier dated May [22, 2019 has aiiegied that Transitizsns india and Cari Zeiss Vision have entered into an agreement caiied as 'Strategic Partnership Agreement' fmm January 2013 to Deseniber 3014 and this wauiai have the effect of ariificiaiiy increasing the prices of PPL in india.

Reiiefg Sought 2.11 issue an interim wider direciing Ti'E}i'iSiii€.¥i'2S inciia to restore suppiy of pracriuczi its GKB cm i'}€.')i'i-Cii&'>rL'i'ii"i'iii"i3fE>i"y' basis.

anti $23353 anii-compeiitive conduct.

2. 'i3 impinge maximum penaiiies on Transitions india for their anii-competitive conduct in vioiaiicsn of the provisicms of the Act.

3. Summary of mbmisgians sf Gpposiira Party The Qpposiie Paiiiy viz. Transiiiiens indie suiamiiteci its repiies to HG during the course of investigaticin and is the Commission. The summary of the respizznse inf the apposite party is as foiiows:

3.? Transitions iridia stated that the reievsmi produci mar _.} «ﬁx oﬁ'-W3 5 the mar'kat for Piastic Photaciironiic lenses and is ., I' g' "9 ',\ _. ﬂ. '( ,-.

"aii types: of opiiiiiaimic iensea

3. Q3 3 3:».

Liitrsvioiei rays and reduce glare". in suppmi sf this, Trsnsiiians iridia stated that have same advantages czvsr Giass Phoiochromic Lenses {€3F'L},bLii on the other hand GPL aiss has scsme sdvsntsges.

wiziisi, PPL may 'i'ransi'(ions india stated that it is not dominant it has been stated that even based on other factors under seciisri 'iE¥(4} of the As? such as size and rssourcss of Tra.nsitii:2ris iridis, degree car' vsriicsi iinisgraiiari, swntswaiiing i3U_y€:~i"'pQWei", rziaminsncs cannsi be csnsiudsd.

was sisca meant in be uriiform for aii caster partners far Semi Finished Singis Vision (SFSV) iensss and Progressive Aciditiorisi 'Ls-rises ~{PALs) fer Essiior, GKB and 'Hays. .i~ir3wsvs=r, an account sf negotiations the inisnderi increase in SFSV isnses of USD 1 was roiisci [back both for Essiisr and €3i<B but far «PALs the increase in prices by USO 0.25 was rcziisci bask €.1f'i'§},i'§p{f1i' Essiior and not EKB. The reason cited for the same was that «Si-{E§'is PAL purchases were soisiy lower tier sinsciaiity products, which has smsii margins, as compared is Essiior india and the 'fact GKB did mi raise any serious sbjsciions to the "miriisi:uis" price increase. Thus. the 2808 price for PALs was msrgiriaiiy higher fczr i3i{B bui ii snjoysri a favourable credit period, marketing suppers? sic. The r.iiffsi'srice in 2099 prices was an account cf isrsign exchange mechanism agreed between the parties On the issue of prices far Hays Optics! being higher the OP stated that 'the quantities purchased by Hays were signiiicantiy isss and Transitions India muici not achieve the same sccsriczmies of scsis with them and corissqusritiy the prices were: iiigiisr for' Hays indies.

Trarisiiicms indie stated iris': the price difference for seated and uriscistsd products exists not an acsciuni of isvauring Essiior indie against Giiiii. Transition iriciia confirmed that the price diﬁersncs existed since the time it start in india. The prints difference between coated ans' iincoaisd isnse ﬁg.' iridis is iixii? 20 {US$13 0.45} for india while the price difference ' ';" "q~'f' foéifmiigisi' r appmximatsigg in the ' Thus ii'ic":'§Z ml' 5?. \... "

{$5553 '£0 U~E$=I.") Q1 3.6 9,?

G3 On the issue nf nbsoiescence policy, between the mated and uncoated ienses in india is in line with the rest cf the warici and existed right frcim the time Transitions entered business in india.

agi'een':e=:nis between the casters and Transitions india were siuhxmitted to the DG, which denmnstrate :that it does not require its caster partners to provide any cusmmer details but oniy saies data, by product categcnr and cmintry wine in access inxn-:-ntnry requirements etc. No ban 'or iegai restrintions cm expcﬁs have been placed by Transitions indie. ii mereiy required the price reccnciiiaticns to be seﬁier-ad in the event of exparts by fans casters far the differences in prices of Trarzsiiinns ina:iia.fcr'indian market and reievam' overseas market. Transitions indie stated that it faiiows regional pricing poiicy based an exercise sf its trademarks, patent and ether inteiiactuai property rights which actuaiiy benefits cnnsumers and is value enhancing and this difference in prices between the indian and overseas market require the 'framework af price reconciiiaiions.

Transitions indie contended that if foiinws 3 genercius obsolescence poiicy. it gave GI-'CB, Hike any nther custcmer over 'F8 months in phase out the czbsoiete praducisi during which period Trsnsiiicins inciia continued to suppiiyi the aid product. it aiso aiccepis the return 'of absoiefe prwucts during this time periad and has ccanipensated itg; mistamers, inciuding GEE, fer the r:eiurns. Transitions iy indie submits that eve manufacturer has an commeiciaiiy feasibie :5 centinue producing aid versiianisi' arieraiicn of rnducts and Q csbsaiescenca pcviicy as it is no:

if so directed, wouid hamper the ability of such an »:,=nie=.r;-:n"ise in cieveiap z"i5:":W and better technaingies for the benefit 0:' the nusinmers. Transitions india obsoiescence poiicy is in fine with its giobaf poiicy practiced amass ail caster partners. Cm the arbitrary changes in esupiniy chain, Transitions inciia contended that f3i<;8'.~:». aiiegaiion 'that one nay notice}; ' bafare suppiy chain charige is faisei fl.

Traiisiiions india has never insisted on exciusiviiy with its caaitss » ' 3?}:

cusxtc>imas*:a. iiiiititsdimij GKE3} tenses of other manufaci agsw o '\X.:'F ',-

\ I 5%.!' /<l2'=-xi» . -.3-\:i\2".?.«**' \\':-'-" ;'N'*'/_',~v>"' ' /5 A 'xx-.\"a.\-~"' L':

3.9 3.16 3.1'?

3.73 cantpetitiors csf Transitions India. it by Transition Dpticai US and GK8 affiiiates may not continue sates cit' is aisa stated that the agreement entered into tar "Acciimates" provided that GKB anti/or its PM. of rather manuiactuztars in india but tint said ciause was never esnforceti against GK8 as is evident tram the fact that Gt-(E3 Transitiens inciia;

The sate sf Acciimates was restricted by "iranrsitions india in order ta prevemt customers tmrn being misied between the high and and iow end ;:>rodur:ts and to protect its brand and gocciwiii as GKB was sailing a low enci product _prc»jet.:ting it as a high emci prodtmt.

'Transitic;-ns indie submits that there is no unjustified data}; in ciaiivery by Transitions india to GKB, ittrecasts provided by GK8.

the deiays if any were an accaunt of inaccurate Regarding entry cf competitors in indian market, Transitions indie stated that .2009, various ccimpeting brands of Pitotnchrainic lenses have been iaunched in india iike Q Shade Pius (distributor: Prime), Sun Sensor {{3ii5ti'ibL!i'i2)i'1 iicarning} and a few rather brancis. ivioreczver. GKB has 3350 iatmched its awn "Swiss". Cari Zeiss Vision entered the indian market and has since brand of Pmtczcmbmic tenses under the tnraraci name internatimnai Gmbh has in October ;'€Oi'i iaunched their giobaiiy intraciuszeuzi izirartci "Pi1otot'usion". Other instances cw' brand introduction by Visitm Rx and Essiictr have been stibmitted. V Transiticms India stated that it was never its intention to temiriate the business with GK8. it was tczrced to stop su_t3pii&$ ewing ta CDn'iif':LiQi.!S; defaults in payment is US%5.i:'> iteiiiiicm: {plus interest} which was iradiefs business:-"

of ceutstanciing dues amounting adverseiy affecting Transiticms Lastiy, Transitiion India txanterideci that the market for i"-'izatocitrovpigggifeitgttr: °§i I highiy -competitive with many brands avaiiabie t0 the end f3{}i'JSi.!m Trartsitions mdia is ccmstrameti by gicbai piayers launching their , '7 ' apart from facing competitive constraints tram manufacturer'-V i». 'L js._;risci.=cticms such as (Shine.

4. £C.'1=$'$ Findings

4.?

iii. if so, whether the 033' has abused The DC} investigated the matter with respect to the foiiowing issues:

i. What wouﬁd be the Relevant Market in the saicf case'? ii. Whather the OP has a daminarst pesiticm in the refevant market as determined?

its dominant pczsitian in '(he refevarzt contraventkm G? the provisions of Section 4 oft%1e.a%«:;i?

§v,. Whether the Strategic Partnership Agreement entered intc» by Q? and Cari Eeiss Visian is viciaiing the provisions of Section 3 0?' .ihe=z< Act?

fsaﬁsihndafﬁogy 4.2 4.3 ophthaimic ienses in Endéa.

After examinationof the repiiesfdocuments etc. received from the parties, the subméssitzans of the ¥nfarmant, DC-3 anafysszd the varimzs issues.

Reﬂevant Pmdascté market 4.4 The SE3 examined the infurinanfs deﬁniticm 0'5 the Reiswant Fmduct with refemnce to the deﬁnition of Reievani: Producf Market as provider; under Sacziion Eff} read with the factors enumerated under Secticm 1E?{?'} of the Act Upon evaiuation in terms of these factors, E36: upheid the mfcrmanfs deﬁrsiiien cf 'Plastic F'm3tochrcmic Lensesén indéa'.

On issue of Vsubsiitutabéiity cf PPL's with <3PL's and Cﬁear Lenses, DG 'tack into accczum' the effectiveness cf PPi_.s in terms of speed of aciivation and iifespam teimaeratures sensitivity etc. DG conciudeci that the advantages that PPL5 have over (391.5 such as mrare effective 13!') deactivatécn, cguaémes and dameninég sf ienses owing to umform iightweighi and camfortabée in wear, dur'abiiéiv, and greater f§<.-;{:<i.b§}fy mg .9 v' , . . 5:3? I'-' -

ﬁtting ii": frames and vamus siydes make PPL. 3 :'ale\.r;:2nt h':arkef.§:n agffgei Reiavarrt Geagraghic Market 4,23 GS examined 'the: business mode} sf Transétians indie and concluded that Transitions indie has the main objectives to iiaiscm with caster partners, procure ardws, suppﬁy Phniachromic ienses in India and promote the Transitions brand in India. The caster partners provide the substrates to Transiﬁcms India. Trarssiticans India converts these substrates into firrai product sie. PPL through its promfetary process. The Photochromic piamfs af Transitions india are Eacaiecé in USA, Ereiancé, Brazil' Thaiiand and Phiiippines and not in mdia. These PPZLS afterthe Fhotochromic treaimenr are again bought by me caster partners for onward saiees. Thus based on the and use of PPL the relevant geagraphic market is india.

Reiexrani Market

4.?' En View of the analysis with regard it: the: reievani product and geographic market, the DG corrcﬂuded that the reievant market in the current case in terms of Section .'-3{r) ef the Act is the marketfcrr 'P¥as>:§c Phutmciiramrc .Lensees' in India.

E)G's Assessment 0? Qaminance 4.8 Having determined the relevant market, the DG asssasaed the dominance of the Qppasite Party rn accordance with the deﬁnition cf dominant position provided in E;<p3ar1=aticm (3) to Section 4 and the factors Vprescrrbed under Section 19(4) 0? the Act.

4.9 DES éderrrifieri the major crrmpanies which undertake er conduct Phorochroméc ireatrrrenr. or Ch&'r'n§S;33 coating of various mcmomersr etc. on the basis of data Qbtained from vérirous parties rriurmg the course of Invggiigaticsn as Transitions Optrcari irra, Cormng §rrc.., Hays Gorgmratiorw and Rcderrstock Gmbh. ii was noticed that these csmpanies have specialized Photochromic materéaé or proprietary chemicai coating technoiogy which converts the dear Senses mm Photuchromic ienses, e">J' r H' 4330 Corning inc. statedrha': defining the Corrrings share of irrdrarngfﬁﬁﬁ prrssébie as rrEsto»r'£car£§y it has said rrniy Photoctmvrnic r'nronc7n7e2r§\s,<:?o§g'; ﬁr: +¥ \ 5:' there' knowledge, the share wcruid be approxirrrateiy 10%. \ 4,1'; it was noticed that Hoya indie had rim' ieunched its product in indie neither it had $.32 4.33 4.14 :11: 35».-

4.16 BS aiso ccinsidereti other facztms specified under Section 19(4) of fig:

'13":

em-

piansi to impcrri these ienses in india iii! its netwerk was stranger and better set up. Hcya indie is a processing and iracfing unit and purchases ihe PPL from Transiticms indie. it has been set up far saies in india and has new expert activities from india.

Rodensioci: Gmbifs market share was found in be negiigibie. its' brand Coiormatic had said cmiy 217' thousand pieces in a span of 5 years from RG05 to 206$? in india.

After examining the meri<ei Sheree of the competitors of Trensiiiczns indie in the BG "i<::e:;i< into account the data on downstream market prcavided by the infcmnent. Acccsrding in data submitted by GKB, 50% 0f Essiior indie was 38%, Hcaya indie was 5%, Techtran Pciyienses was 5% and other whciiesaiers who was 10%. it was estabiished by SS that as and Hoya deaf exciusiveiy in the upstream 'market, it had a market share of in the downstream 'market of PPL whiie the shares import the generic pmducif sriirectiy GKB, Essiior products cf Transitions indie, their 85% market "position reﬁects the market position sf Transiiions indie.

The Respcmdeni aisa eubmiiieo' the data an imports of Qphihiaimic Lenses for the years (3908 and 2009 sourced from Cybex Exim Soiutiens Pvt. Ltd. DC: caicuiated percentage of Transitions indie PPLS imparted to the imports of iota} PPLS in india. The figures were obtained as ?'8.9% for i-ZDD8 and 8?'% for 208$).

Based on the data prmzided by GK8 far the downstream market, impart data pmvided by Transitions india and repiies of other entities engaged in the business of Phcrtoishremic lenses, EEG acmciucied that Transiiisns indie is a majar piayer and enjoys deminant posiiicri in both the uestreem and downstream "iarkei for Pi-'--'Le in india.

aisseesment of dcnmiriance viz;

3. Considering the size and resources of the Transitions inciia EEG 'C that ii enjcsys cicmiiiani position not oniy in india but edge in U-. '=5";;=

5 __,a'' £2. Consitfering the séza and resources cu' compestitors DB mmziuded that some of the Vc<::mVpetEtors of Trsmsiﬁons have Iimited presence GI" no presence in maﬁa.

2:. Considering ecanomic pawer of the enterprise inciuding cammarcial advantages, D3 concluded that the same shouid be ieoked in the ﬁght of pmprietary fechneiogy empiayed by Transitions india which is of supericr quality and gives Transitions 3 commercial advantage over its campetitars.

:1. [JG aiso cnnctuciedé dependence of the ctmsumers an Transitions given the suparicr features of the PPL 0:" Transiténns.

lens requires appﬁcaticsn of a chemicai proesess which requires heavy investment in research and deve£opmem',. Thus; the techneiogy employed for conversion {sf clear fans to PPL is an entry barrier caupieci wiih high (:08? 9f' Fﬁesearczh and Deveiopment. DG further conmuszfexri that the Cauntewaiiing buying puwer 23f caster partners is negﬁgibie given the importance af Phoiochremic technoiogy possessed by Transiiiorzs.

4.1? Based on assessment 0? the factors as above and market shares, Dis conciuded Examinatéem sf aiiaged abusa cf ﬂominam.:e gags Price Eiscriminéatéon _ "W 4'38 GKB aiieged that Transitions india is suppiying the product to pf"§C&'S fewer than those being offered to GKB even though EVssifor§?

are competitors in the same geog:'aph§ca£ and moduct market. price discrimination. {)6 made the fcmwing absarvaiionsr a} in 2085 and 230?, the benefit of a favourable fa:-eign exchange fiuctuaiian of 14%, was extended in a cscunsacgueni price deciine to Essiiczr but not is: GKB. in another instance, the unfavourabfe faraign exchange fiuctuatiori -93' ?.S% was passed on to GKB and Hoya in a consequent price inrsreasa, while it was ricst passed on tcs Essiiar india, The reasaans cited by the OP was that me permiasibia foreign exchange hedge band agreed between Transitions and Essiior mafia in 2004 was +:'--10%, whereas the hedge band agreement with GK5 and Hoya was +!» 5%.

in} in 2008, Essiior iriciia was favoured over rather caster partners Le. GKE and Hcsya irzdia with USD 0.25 price increase can pragressiva gsrciducis.

4.19 D8 rejected the submissions of Trarisiiiona Errdia that the price ariomaiy was a result 02' the foreign exchange fiuctuaticn mechanism agreed between Transitions india and Essiier india in 2:304, when GKB and Hoya iredia were not in business. {JG crmciudad "ma: since the new mechanism sf 5% fluctuation benchmark was agreed in 2005 itself, Transitions India was waif aware about the difference that existed on this accenurzi. Q 4.28 E38 aiso presented a comparative chart showing the price difference for 2039 between the ccimpeiitczra far different preducts. The chart as prepared by D6 is as under:

Fré§F;>IZ§E>"§"" ''''' Ii "i5r5Ei' 551} 'M WW'Aw"TC§'?:E§'ﬂ'A'wHW"%""f?i'§3?é"iAr?5ia gf ' ' ' ' ' ' W ( f Feb Jun Der: ; Fab Dar: J Mar Dec 1'

- ! § ____W__EWm__W____%___L_A__~__*_A1«__H__L___m__+*______; V: . rta;ar5g'*"r *" T" i i , i i J i i i i i ___,__.___..___._,'__ﬁ___,__j_____...,,'__..:,...._._.......J_.L......<.._.........r«....._ﬂ.L....@_\., r-?sw~r'* ;-i.5 r232 i;:.«'2;2«si =;»~:: i:r«:=; $3 SF3\?'i3"f:W§T§W"j"§ﬁ"T"§§7?"T"4?§§"'"f7%?z§TéT7}l21?Té'T'E%2i§T2~§§'"TE°7%""'TE£§§""

g":>"§""'f":=:%s*"'3LTs"::~'s:.h'é'5"'» @*"'**§a"§"j : »

5 1 =3: 2's""aTJ'{:*" <::::r"i"3:«;'é"";""s...:;.5'=;" 4*%§""'7*ﬁ's"":-"§i':>;'T 5«2i"3""'""' "5§:"as"""

. % E & I E I A E gs? 28"}??é"'T%T?5""gLZ'77i%""§"x"i7é1é"'f"E<?:5"5""'?'""é§"' [533 58? 3 _. E , N. V "L _..~.....§ ..... , Vsau:-céT?i§a:a sibmariiaﬁéy ﬁfe Q? to De [ be substantiated.

DEscr.imir':.at§on in credit peri'a»d 4.22 GK8 afieged that it is aiicwed 3 credit perslzxd cm' 85' days as against the standard industry practice of $30 days. {JG ccmsidered the details/dcscuments with regard in the credit period avaiied or provédea' '22:: Essifcrr 'india and Hoéya indie. an examination mf the same it was notead that GKB was favoured with credit periced of 90 days: in comrxarisan 1068 days offered to TEssE§er lndia and .HQya Encﬁa. The credit period was reduced to 80 days in fine with rather zzasiar partners can acccxum':

of CSKB irregufaritfes in meeting the payment obiigations. Thus, DG did not ﬁnd the aiiegation to be substantiated.

¥ensas of Transitions mdia is iess in iqdia as compared in rest of the wczrld. it had been aiiegecz' that this has ﬁve inteni rendering the investment made by GKB in Caaimg Pfants as fuifie and favouring Essiior Endia which does net have rsaaiing faciﬁfies.

4.24 EH33 considered the submissions made by Transitions inciia stating _i J difference across rest of the worki is USD (3.48 to USD 1 and sh :/N x

3.', _ .

USD 0.453. The difference is same fmm the "Sims Transitionsf 'ﬁggira bUSi'ﬁ€35S. {)6 accepted the submissions and aim considered oﬁ1§:2_';;ast_f' , ' V conciude that the aﬁiegéatirm was neat substantiated. 2 ﬁeekirrg Gusiomer Detaiis 4,25 GKS aiieged that Transition india requires GKB is prcwide deiaiis of aii the' customers and pariicuiars of quantity of the prariuct that they purchase. £'.2i{B suspected that the information is not kept confidenrtiai and instead shared with Essiior entities given the reiaiionship between Transitions India and Essiior India.

-21.26 Transitiaras indie started that it requires saies data for evaiuaiing tha marketing campaigns, far aiicsctaiion cf marketing funds, urrciersianding the piraduci demand etc. and has never requested or scsughi detaiis ofthe customers er the quantities from iii}: caster partners.

4,:-37 EH23 made the faiiewing observaiiornis in this matter:

a} Hcrya india submitted the saies infarmation to Transitions by safes proiziuci only and has nut given the customer infbnnatiun.

in} Essiicsr inciia stated 'Transiiiens india has scught the H3: of custarrsers and detaiis from it but ii: has rm: provided any such iisi to Transitions India as they {rear the sales information with strict cnnfidentiaiiiy.

G} GKB subrnirteci an e--maii from Trarrsiricns india attaching the minutes of the Goa meeting heid cm Augtmi 218, .2009, The minutes iccintairzed prescribed fmrmai in which information was in be submiitied including the names of the customers aiaa. ' 4.28 Based on above firzciings, {JG ccsnciuded that seeking of saies infrnrmaiien is mi discrirriination per se but insisiing on crsstomrer database from caster partners is unfair and <:iiscrin1§naiary condition and thus cormiuded the aiiegaricm as substantiated.

am.

Unfair Restrictian can Exports 4.29 GK8 aiieged ihai it intends to export the ;:sr<>dur:: of Transitioris';zfrﬁ'r§§£'é*:va§_@ . where the prices are i"1§gi'i:'.-'iv!' than that 02' India. Howevar, it *~.m'.".i??x' '- "

iv Sc-._ ﬁt' ' do so; ever; after 'vaiue addition by £7.-':i*«'(B unirzss it pays gTra_§isiti":r.' 7 ,j7dia'iIi1_ei difference in the price car' the Transitions inciierrs ;or<::-:iu"r" f' _' \\ ﬂ- -

'3 _'§.-§, 1'" ' ' u ) ' 'M 4.35} 4.3'! Simiieriy, Trensiﬂone indie akaoe reeiricte GKB from eefiing the pmduct ﬁe oueeteomere who intend to export them to ether countries.

Trensitiens indie on this issue submittecf that it dues not have a uniform giebaf price and instead fcaiiows regime? pricing peiicy and an caster partners are free to either purchase products fmnv came 9%' Transitions regionef feciiities et epprepriete regime! price for safe in the reg'ione'coun':ry er eftemetiveiy recencife prices with Trensitiene fer the pmduct purchased at ioceﬁon but ﬁcswing Erato mufﬁpie iocetione D65 'teak note cf the regime! pricing policy and the scope of arbitrage for the caste" partners because 0? price ciifferenees. DG efeo C'C9i'ii'$3c§8:"ed the aspect ef eveiue edditien by the caster partners befere experts and conciudedé thaf these reeiriciiens eimpesed by Treneiffens preveni reeiizeiion of investment undertaken by caster partners fer vaiue adciiticm. "Tee incentives arising wt of veiue ecfdiﬁon are reduced and hence the aiiegeﬁon on restriction of experts is found to be substantiated.

Changes in Suppﬁy Chem, ﬁeiivery peried 4.32 4.33 GK8 aﬁeged that Transitions mere arbitreriéy changes the euppﬁy chem of products 20 {SR8 without any reeecmebie notice and the feet that it takes eraund 8 ﬁe deiiver the preduct egeine': the assured suppiy period of 3 days without eproviding any juetificatierj or reescsn to 21 days thereby affecting the sates of GKB.

On the issue of eupgaeiy chem change at Sheri notice, éiis submitted a scam: ef e-- maii frem Transitions dated March 31, 200% specifying the change in suepiy :::'ne§n from Aprﬁ 'L 2009 onwards. in its response, Treansiiicne indie pcsinfed out that the ciiscmseéone far changes in suppiy in Nevember 2008 .\ Nevember 2038, e e'§.é%1§3'{1e!d cm March 1:3, was we}; aware ."« with {ZEV and submitted minutes ef the x,~'-:_.:' ;:

copy of emeii elated March 3, 2009, min£§ie:;f"3'A§ dated March 12; e efthe changes in sugxmy chain.

2335? am another emaii 4.34 DG carisiciareci the documentslrepliies and conciuded ihai the ailegatiori of Giiﬁ for arbitrary change in siippiy chain is not fmind to be siubsitantiaied.

Basia}: in deiivery inf PPL ibeyomi the assured supepiy periazi cf 3 days 4.35 On the issue cf delivery of PPL be)/cmd the assured suppiy period of 3 days, 3328 submitted a copy of emai! ciaied .ii.me 30, 2099 to substantiate the 85% accuracy forecast for the two qiiariers 01' 2009!. Transitions India in their repiy,sui::mitied copies of numerous e~maiis to GKB during 20Q8--09 reminding anti seeking the arsciuraia forecast and actual cider tpesition. Transitions inciia aiso submiitied that 4.36 DG considered 'the deiaiis.'do<:umenii:a pmciuceci sanci conciuded that the business here requires mcwemeni 02' raw material fmm diifererii iocaiions and supply of ﬁriai product from different iocaiion, thus accuracy ft? forecast is impatient far smooth funciiening of suppiy chain. The aforesaid aiiegaiicn pertain mere 'ii: the axieni GKB and Transitions Enciia meet each cathefs cztmiraciuai obligations. Thus, the aiiegaiion is rim faund to heisubsiantiated by DC}.

GKB subjected in arbitrary price 'increase without a reasnnaiaie imtice 4.3?' On this issue GKS subniitted a capy of emaii dated December 38, 2338 specifying rise in priice. DG asked Transitions to provide instances in iasi: 2 years wherein they raised the prices wifiiaut giving reascmabie rmiica in the easier parinem 4.38 Transitions submitted iiriai price was increased in the yaar 2038 owing ta iridian Customs Tribunai -siecisirm in Eiecember 200?' wherein cusiams duties on semi- iiriished ieiises were more than doubted to 34%. To implement {he price i'is;e, caster partners were given one and a ihaﬁisinonih notice.

»...--v-

4.39 in the year 2009, Transiiimns india increased the prices on accaurzi of forex fiuatuaiions. ii further stated that discussions iagmmgg rise were siariescé in .»~<"'.°v . _ _ V , December 2068 but it was made efiectixie \ V 3, _ -JG ;"' 0 4.40 DG teak note of an the submissions and (iii) } . 5 on acczount an' tisscisssioii es' if'iIi3'T'33IiQi7 mi rs:

':5 ReeirEctingiPreventing the eaie caster peﬂtners were duly infermed in aii the cases. Thus, DC-E conciudeci that the eiiegetion csf arbitrary increase in prices by Transitions indie is ncaf euisetentieied.

of eider genereizicm ef pmducte and reietegi issues 4.42

-4.43 Reimbursement fer ebeeiete precincts 4.4-51 Transitions indie confirmed that during the fast 5 years oniy izmsze in April 2008 it iaunched the new generation product 'NE which resulted in the phasing out an' the eider generation precinct. it further stated that 6% months befcre the precinct ieunch, ii: not oniy accepts the reium ef cabsoiete inventory but eiee prevides ene year to enable caster partners in phasing out the inventory of sides" preduczi. Even after an year cf Saunch, caster partners are not prohibited to eeii eid inventory but Treneiiiene indie does not aciiveiy support the cusiemere with spares ef the discontinued product.

{JG considered the pros of advancement ef products with changing techneiegies and conciuded the same is imporient for the benefit of the consumer and for a firm to remain competitive. However, DC-2 aise considered that non pmvisien of suppeﬁfsparee iimits the market of easier partners whe wish to eeii the discontinued product on account of ciemend fmm consumers. DG eise considered that GKB being the mejer seiier of Transitiens indiefie mere dependent on spares and siuppmi cempered to ether caster pertnere.,..§5ienc:e, the aiiegetion of GKB being prevented substeniiafee'.

frem seie of cider generation products siencis GKB aiieged that Transitions indie does net 5 obsoiefe products and steps supplies of the CSKB aiieged that the practice is unfair.

4.45 Transitioms inciia in their repiy stated that the obsniescerice amount due ic; CSKB 4.46 was adjusted' by GKB in their outstanding biii of May 2008. For overseas exports, Transitions Optical {US}, Transiiiions India, Transitirzns Optical (irei.and} eniered iriicz an agreement with GKB pursuant to which GKB agreed is deaf rjireciiy with Transiiicsns Gpiicai {ireiaric£). 'i"rar:siii::zns Opiicai (iraiand) entered into an ebsoiescence agreement with CZV reiateci to iE1:um3i'} of TV! and discoriiinuance :31' TV generation Senses for the European region The compensation on account 9?' obsriiescencze was paid to CZV Eumpe considering tiriat DEV wctuid in turn compensate its subsidiary in india. ie. GKB. Further Transitions india aisc:

provided copy of ieciger accoiunt to Show that reimbursement had been made.

DG considered ihe abave repiies and dcicuments made avaiiabie by the parties and conciucied that the aiiegatiori reiated in non-reimbursement of obscsiescence amount is not subsiantiaierzi.

Raimbursement for marketing sasppnrt 4.47 4.48 GKB aiieged that Transitions india does not setiie the dues in respect of marketing fund and steps suppiies of the products is GKB for fate payments.

GKB aiieged that the practice is unfair.

DG considered the issue and made the foiiowing observations:

3. Marketing funds were iiriked to saies targets achieved by caster partners.

in. Accordingiy marketing fund suppcart was being provitzieci cmiy to GKB and Essiier as Hcya had insignificant sales.

C. Aztuai ﬂows czf n"rari<:eting fzmcis over a perior:i 92' time to GP-(B and Essiior were C£3'.:".iS§C§8F8d is conciude CSKB had received higher pro%::tic»n Qf marketing fund compared to Essiior owing to higher share in safes voiumei «--~ d. it was aiso noiicraci that marketing fund cammritred by Transitions inciia for FY 200108 and 2OCi8~G9 were duiy reieased to r FY 2069-10, it was nmiiceci that in some ii"iS'{E3i'iC€S paymentsfﬁiygiggé/yﬁi'. ,' \e:iirect§y in the . .. .. ,i ., c .1'-9 " -:3-_ 'L . ,., _.

agencies by Transiticns india am commiriedffuigﬁs égnot gegngttea to =.::.K8. This czonoiucr ccizriciciecr with Erie dispute behI\J*33§3:": {i'iB$> anfa cr.in3ec;Lier1i VA \ '.~\_'&* ' 3 "

stoppage mi suppiiesr \:.~:*' :3' <.~;>:,«¢.r '*~ " =;?;: '29"

x\;_% W M", ..,> 03' 4.49 an the basis of aforesaid discussion, £36 concluded that aiiegation made by G818 regarding siappage of reimbursement sf mai'i~:et1'ng supperi is rm: substantiated.

Exciusivity requireinents 4'5Ci 4.5'?

4.52 SR8 aiieged that it is being forced to seii exciusive basis and is not aiiowed to sell the pruciuct of Transiiicrns inciia on an simiiar pmducis of ather manufacturers who are competing with Transiticms indie. Such praisiice is a restriction on the f'I'i3i'i(&'L and Abuse of {luminance by Transitions indie, Transitions inciia stated that it has ncii entered infra any exciusive deaiing agreements .wiih the caster partners. it further stated that the Acciimates Lenses never enifnrceci against G318.

{JG examined: a} :thieA;:iricing ietirers issued by Transitions inciia to GKB fmm 'time to time; b} fetter of agreement dated February 20, 2007' between Transitions iﬁpticai U8, GKB and iZ1Z\/, in reiaiion in safe of Transiticms 'v'(TV} ienses; :2) ieiter of agreement dated May H, 200?' beiween Transitions Opiticai US, GKB and CZV in refatian to the 33362 of Transitions New Generation {NC-.4) iensesg and d} Acciimates Lenses Purchase and saie agreement dated Juiy 1, 2308 between Transitions Opticai (US) and GKB in reiaiion to the saie uf Asciimates ienses.

On examination of terms and comtiitions of the aforesaid documents, if was noted that the Acciirnates Agreement coniaiiied Exciusiviiy Ciawse. The specific ciause {iv} {{3} provided:

"Suppfy aim' £Jisi'n'£>ufioii.' (iusfomar agrees, on beiiaff of itself and £33 afﬁlfafes, iliai if ii/ii! discciniinue sales in the Territory of Phoiociiromic ierises of omer inanzifaciurers, if anjy"i ' .-'I, 21.,' dated June 8, 2§§."Z3'E'3'__ to GKB. Tiwe canienis C»? the maii were a3 uiié E326 aiso took. note of emaii 5% .

\\ Q "I" {"3-""

. ' .« -:-1* J' \ >1:-" Q.*~'.="

_\- «x , :_¢ . .~''.\\ » i . .~. -.. . V" .4' »u\ er. r;l. :- '(\\§\.4'N..~ 'M .;.._ ...«»~* ._..2.

02) 4 .55 4.58 "Hi Neeraj I just heard fram the Mumbai refail thsz' sanm re2'.aife.r's are no: getting i';'3&1l"

Tfé3f3S1}'iGf3S suppfies. The 2 outlefs which fncficaied W5 am '1") Eye? Care 8: 2) Sana;/.an bath from Andheri (E). They were irzdicaiecf thaié they can be given 5'm3Sansc:=r.9 f!?S:'9e3z'f, These are both 'T:'ansif:'cms Pm Partner' Program' parﬁcipéanfs «E: are unabie so mmprefzend this message, Can 1' request you to intamene & ask your Mumbai team to refrain fmm this? Caur' issus wiil be resmived in 3 (I _;«= 0r so bu? me znarﬁzef need noﬁbe given inciicafions otherwise as recovererfng fram maz' wili take a .mach !onga:'.rime, Plus yau have all 'aiong rrrezaiiajned that forlrzdian market ycs.-.1 have sz:;3;3!:'e~s mar will £332' for ax' Ieasf 3 weeks!!' Th aniaz for your understanding.

E§'egar'cfs Devan D6 alsa tack note of the submissions of Gﬁ-(B, Esséior and Hays that they were deafing exclusiveiy in Transitémjs praducts. GKB gubmitted that it entereé into 20a? and from 'then an §t has not said PPL in ¥n::iian rnarket e>:ce_pt that at' Transi'i§c:2n~s findia. Essiier had stated that it caters to premium segment prcxducts hence Transitions imifia cniyi "Hoya iindia which had its own brand business agreement with Transiiions indie {ram Aprif source PP}. fmm 'Suntem' did not iaunch the Sanka in india and was not cieaiing in hither brands such as Sunsansors and Coiomwatic.

Based on the Ciause {£\f){c) 03' the Acciimates Agreement eemaii frcsm Transiticsns . dated June 8, 2809 and the submissions and cebgervatiores of 33: caster partners, DG cancfuded frcam deating in the PPL {sf other that Transitions mdéa trieci to prevent or restrict its caster partners competitive cmnpanies and hénce the exclusivity ailegaticm stands sutrsigntiaied.

Restrﬁctiecm cm saﬁe af Acciimaies 4.5?

§m~ india after value addition byQE}3-ia 'L V' , pmduct and , 'nd"~$heA Thy prevented' 5 xv': T 'qr ' GKB aiéeged that it irjﬁended to 563?? Acciimates in use of freefcrm progfgéssive*.iech:noiogy Over the \ be made avanabie to the cansumers m incua 3 33$-2g;:3_§' Transitions inciiéa immediaieiy stapped GKE3 fryém .

L').

saie of cheaper pmduct in India causing res:\3ri%ﬁ'<::'§ on Q s ' 4'\ H." g \,.I' x EC?

#58 4.5% 4.60 {)6 on the basis of Ciause-s {Mitzi} and (i\»*')(c} On this issue Trarisiiioris India subrrritteczi that Acciinmtes was an entry ievesi PPL brand offered in Finished Single Vision (FSV) term in iriciia. it was ricii Bffefed uncier PAL in india as as superior' progressive Pi-"*1. airaady existed under the Transitions Brand. it however, stated that Gi-{B by using the treetorm teechnoitigy was CGi'iV&i"7Iii'iQ trtis cheaper brand into higher and brand "Pr:.:zgressive". The iaw and precinct was itzeing project:-ad as high and and said at high anti prices damagirigti'ie reputation and gociciwiii of Transitions India.

D63 apart from aforemenrtirmeci submissions of Transitions indie 3180 considered the Ciause (i\/){t)) at the Acciimates Agreement which provided "Brand Strategy.' The parties acirmwiedge that the gear cf czﬁering Acciimates Lenses is ta cagxiaiizie an apporturiiiies in India where Transitions Brand lenses have limited penetration. The long term grief is to of the Acciimaies agreement conciuded that Transitions india was more interested in restricting the sate of Acciimaies and these restrictions forced the caster partners to undertaiira restrictedfiirniteci promotiun of Acciimates in order to deveiop the mariwzei for its premium high and products. BG aiso constricted that this kind at duai policy at' iaurtching: a prciciuct on one hand and restricting its premotirzri on the other hand is antmompeiitive in nature.

Strategic Partnership: Agraement betw&i.-'art the GP and Cari £?';ei$s Visicori {t3Zii»'§ in contrairentimt at Sectian 3

-c1,ﬁ'i <3i~'£E3 3% iettrer dated :22" May 2010 aiiegeci that Transition India and CZV are induiging in certain practices to artificiaiiy increase: the prices of PPL in inrziiai GKB stated that £32."! and Transition Qpticai US rr§§g_§,__meritei'ed into a Strategic "3 xi ~ srsv PPL, to gym the cost of ' * agreement, .-

a t§v- .

s (3; 5 ' .

Partnership Agreerrient based an wiwich Tran' isubrsidiaries cit CEV, {including GK8) at a A . . , S .

SFSV Transition for CDi'iSi.ii'ﬂi32i'S; and at tit? etaci \ _.

\\-S'? O. ., «in EU

5.'?

price to CIEEV outside mdia.

C363 examined the said agreement and hated the? the main purpose of CZV and Traneiiien Qpticaf US was to undertake promeiien ef eeies, marketing, co branding, training of safes and service persarmei etc. Nee, the said ccxmgaensetion scheme was anefysed and it was noticed 'ihat such payment ebﬁigations does not inciude purchases made by GE/(B. it was 3150 neied that the said agreement was entered on account of discontinuance of business eperations between Transition India and GKB.

On the basis of the study of agreement BS eonciudeed thai ihe allegation made by GKB with regard to section 3 dees not stand substantiated, Anaiysie and fimﬁéngs ef the Cemmiesien Having examined the DC-'2's Report and responses the issues fer cieterminetien in this case are:

i} Whether the agreement between CPA! and T'rensitiens indie is in contravention ef Section 3 of the Act? And; j 5%} Whether Transitions ¥nc1ie is in a dominant positien in the reievent markeft, and has abused eueh deenwinence éra contravention 02' Section 4 ef the Act?

5.2 'v'ie§a<;§en ef Secticm .3 5.3.1 The Commission took, note of the strategic partnership agreement entered inica between CEV and Transitiens indie, .2§'_i'\*;1-ear the terminetéen of business separations between Transitions ihdie and The main gsurpese Bf agreement is prcmotien of safes, marketing, co-branding, training of safes and service personnel em, The "Singie Vision Strategy Cen1pensatican" scheme was examined. Under this scheme, Trahsiiicms Dptécai US agreed ﬁe make a onetime payment to CEV for net price differenﬁa! associated with 206% 'sihg£e vision' price changes. This compensation was meant differemials incurred by ezv during sesame, we and fourth .9' an of 2am. The Ede by GKB= whilst {iligkge -:3.' that this 5 P . |\-.,_

-3 P"§~'V;,<"' ceicuiation of conwpensaiien was not it» ghﬁeaee .+ n \ ., M. ,ﬂ .£ .

it was 3 JV gzwarmes' of L-z.',\«'. The <Jemh1a5:§,se§*;agr l '-.

Ix?

at-e--' is an independent agreement between CZV and Transiticms siipticaf em} aiisgetion made under Section 3 is not substantiated, 5.3 Anaiysis ens findings on abuse at siemtnaince An anaiysis of aiiegsticsrz of Abuse at Dominance .{A:3£3) must start with defining at the outset the retevant market and determine whether the respendent. is in a dominant position in order to assess A533 as aiiegect by the infmnenti s.s.i assassination of Retevant Market Thespiveiai inquiry in a case at aiieged abuse of dominance is whether the GP is in a deminsnt positian in the rsievant market. As per expianatien ta Sectien 4 at the Act," dcminant msiticsn means a 'DD5:«iﬁ€}i7E csf strengm snjeyed by an enterprise in the teievant "market.,.' Ti1srsfers,.esssssmsnt of denwinence is to be preceded by deiineatian at the cerrect reievant market in which dczminsnce of the enterprise under ccsnsideretion is to be assessed. ' Reievant market has been defined in ism: sectioh ii} at Section 2 at the Act, read with sub sections Esfs) and 26:}. Further, whiis examining the issue of reievant market with respect is a particuisr case, the Cemmissien must give due regard to:

any or sit factors mentieried in section 't9(8} with respect to "reievarit geographic meritet" and section 18(7) with respect ts "reievant pmduct market";

in the instant ease, it is important to uncisrstand the market structure of Gpihthsimic Lenses. The pmcsss at nteriufscttiring an ephttzaimic items starts with the seieictian of refractive media is the raw rnateriai for the substrate. The choices at this stage are: 2') the organic matsréai such as eiastic, ii) miners? i.e. giass, or iii) ether matgﬁsi :=ig_gh as poiyzzzarbonates er Trivex etc. Foiiowing the stage of seiection of substrate materiai, the next stage is vaiue addition in term at cetouréng aimed is reduce the amount of tight gcxing intcz the eyes, iirnéting the glare as eiso pmteetien from UV rays. This UfJ§E§3V'é?§é\{7EI§§§9{:?hi8VE£i in the form * ??.

of Peierized tenses, Seiar tenses, Pmtectiv .,_f.

if éa' aibeit with different laws! of etiec.tit='eness. §'i"tzi_§f'fin'° . i . N e mi: ;

::iear.z.a'nd coioureat tenses is costing. differs as antwefiectivei hydrognhcbit; and anti-resist .\J (".0 Photechromic tenses {PR}, wherein the prices in inciia of 8231. sf Carmng, start fmm as low as Rs;€:38 whiie fhe prices cf PF°'L}of the Transiticms india start fram Rs.}"¥O90. Thus huge price difference implies t0 the P that the two {GPL and PPL) are net substitutes and the same according to IP can be verified by appiicaiicn cf VSSNHE test alscz.

Views Ca'? GP: Transifians India submitted that the reievant product market shczmici be defined to mciude "all types of ophthaimic Senses {glass and piasﬁc) that protect eyes from uitravicﬁet rays. and reduce giare, gaarﬁcuiaajiy afi Phofochmmic 55 Submitted that the EEG has conmiuded the definition based on relative advantages of PPL over GPL. But advantages over PPL.

D3 has faiied ta consider that GP}. also has some Seconrﬁy, the OP referred to the prcsvisions of ihee Act and internatééonai jurisprudence. The OP referred to European Commission's Notice an Definition er"

Reéevant Market far the purpose Qf Con1a114.g1i$§'§.§§iQ 7 'cm Law {OJ 199? G I itutabiféiy, supply ,.

A ' '-1.

3?2.:03; which §danﬁfée<:% three factors »re£e/éfgéanf market, The OP ~>.-

'.3 .reg{;~by'}DG. The «:3? aiso substitutabiﬁity and potential competition fé <:i:._a§f}Vr:~é . ﬁr 52' Cc:»niez'z«de.=.»:i that none of mesa factors havei beg". * ~/I' __.« 24-?

referred to OFT's Guidance cm Reievarﬁ Markets mate (OFT 4833) which explains fhrs concept of substitutes. It states "substitute prcducrs do not cared to be identicaf to be incfuded in the same markest.r.,sim§Early the products prices dc not have ta be iderrticaiﬁhre question is whether the mice cf? one sufficferrﬁy constrains the price of rhe other Aithough one is cf Icwer quaiity, customers might stir? switch to this product if the price of the more expensive product rose such that they no icrzger ref: that the higher quafity justified the price differeniiai".

The OP submitted that there is run evidence given by [)8 on {mac issues, Lastéy the GP presented their View on srubsﬁiutabiiity .betweer: GPL anti PPL. rr stated that from the and !..*S':z'E%l"5 'perspective, bath polarized tint and Phctcchramic ienses (berth grass and piasﬁc} achievathe same end resuit, end users who wish to protect their eyes from urtravioiet rays and grarc are equafiy abie ic: choose between poiarizerﬂfixed tint and Praotcchrcmic ierrses, A5 such, they are irsterchangeabie and .thes'cfcre part or the same reisvanr market.

5.3.2 Findings cf the Commission Thc Ac': defines the reievant product marker as "3 market ccmrprfsrng air those prociucis cr services which are treated as inierchangeabiie cr substitutabie by me ccnsumer, by reason of characteristics cf the products czr services, ihssir prices cr intended use." Further, Section 79(7) of the Act iltustrates some factcrs that may be considered in determinaiécn of reievani market such as physicai A? the outset the Ccmmissien considered the characteristics of the product to identify the broad parameters cf the r'cr%?'}":21n:_,r1rcduci market. The basic objective of an 'Dphthaimic Lens' is its provide a refractive media for correctirm of vision disorders such as myopia, hyperropra or asiigmatrsm. Clcrrtinued inrncrvaricn in this area has red to adding the characteristics of 'coj'r;nr,rr_r';mgj'§':3,<:rr::\Ierzrse5 in order to :.2'._'..._'_*:+,\' .4' ,.'< reduce the glare and prcvrds prcrzecrron rrcam 'cér§§ﬁg,\Q1ay* add some H _ ' " x 2. .

mare characterarstrcs its the product. As stateﬁ ezﬁrer $3', -E.-*s't;._,r_*x':%ter"ra£s can be used as refracrave merira and dsffrsrrsrt t:rear.='g§§rr§§ c- 'es«:;§?ﬁ.e<;§ ta apciy the r -~:: 5 *4 'r;omun'ng'. The varimas ciasstfirsatian of cotouretd tenses are potartzedt. protective, sotar and photozzhromic: tenses. Out of these types of cotmtred lenses, the phatochromic lenses are unique in terms at automatic tratnsitian from tight to dart:

'and vice versa. Now what ts to be considered in determination at retevant market is whether at! the phcatochromic lenaes farm part at mtevant market or the differences in materia! and ccansequent differences in characteristics and price Lead to deftneattczn of GPL and PPL as distinct markets. For this purpose, a detaitietd anatysis foitows.

Firstty, differences in cztsaracteritstics of GPL and PPL are anaiysed. The majcsr points of compariscsn and the retative advantagesfdtsadvantages of (EFL and PF-'L are as under:

a:. Optics: GPL are supposed to .offer the best optics Scratch resistance: GPL are scratch resistant while TPPL are net. Weight: GPL are heavier as wmpareci to APPL.

Shatter impact: GPL is shatter prone white PPL is not.

Effectiveness of Photnchmmic treatment: The speed of transition fmm "marina 'tight to dark and vice versa is faster in case of PPL as cczmpared to EFL.

DG has reited on the advantages of PPL ever GPL to canctiude that the reievant rnarket is PPL. This conctusicm arrived by D6 is in tine: with the submtssifms of ﬁt? The GP in its response has pointed czut that the ctetiniiian of {)6 does not ccmsider the crass merits that GPL hotd over PPL which ntakes GPL gnd PPL functionatly inttetrchangeabte. The OP aztscs made 3 point tc: inctude the €;s'F't. in the definition of retevant market atong with PPL.

The Cammission finds that each at the two pmductts Le. GPL and F'F'L, have certaén advantages as wait as disadvantages vis-a-»vis the other and préma taste appear in be distinct products. However, since both the pmducts are used for stmifar purposes, further anatyisis is necessary for a 'finat determination 35 ta whettzer they constitute different product rnas'ket%§'ﬁ"<:é'7C;§?é,; ' that given the facts of the case, the d€%f£5SiO:'}/gt. . S woutd require assessment of consumes' betlxaxgétzr I :-1:

differing rnae'§ts/cternerits aver each ether, atgtd Qrothy cm consideenation of characteristics aiene. in dsing so, it wcvuici atscr be important tr:-i assess the weightage given by crpnsumers to the different factors white making a choice. ideatiy a market survey wouid be 3 usefui instrument far this purpase, but in the absence at a format survey, the Commission can cmty nets' withmrt making it 3 determining factor, that generatly there appears to be a preference for tighter and uniareaitabie lenses. What is ever: mrnre important is the fact that the speed of transitions from right to dark and vice versa is faster in case of PPL. Since the primary griurpese of buying a Phetnrstiromic tens is pratectian tram UV rays and reducing the gtara, the higher effectiveness» at PPL in this impartant characteristic would naturatiy contribute substaritiaity tea the consumer preference in favour of PPL.

Apart tram tectmicai characteristics price differences between the 'tWt'.'> ;3i'GC§uCt$, as a factor in consumer choice, was examined in this case: price ccinsiderations have taken precedence in defining the raiavant market, on the .appreciation at the fact that indian consumers are universatty acknowledged as being generaiiy very price sensitive. According to the submission of the H3, the price at GPL starts from as low as Ft;-3.58 and PPL starts "from around R31'? 00. Hcwever, same enquiries retreated that the starting price range cit GPL is around 'Rs.3D£3 and of PPL around Rs.'i8QG. The wide differences between prices at the two products according to them tend to confirm the View that the twin products tieieng to separate reievant markets. tt further urtdariines the fact that a certain ctass of consumers is wilting to pay a rmicti higher price far PPL, because of its advantages in regard to some important characteristics, white another class is either riot interested in the characteristics and prefer advantages at' GPL or is unataié to pay much higher prices of PPL. However, submissions by the iritormarit arm} the OF' that the iridiam martx-zet for F-'PL is grewing pheriomenaity fast, posed the questian whrether price differences were sufticigitiy strong to maintain separate rttarkets or whether' there is a tzriurririg of markets where price is reflective of quaiity and desired characteristics. White no doubt the growing irzciian middle ciass tends to suggest the possibiiity \i:%?€§f'8~t'l2_i'ifit"iLtL1i'.?'§. but in In 1:"

higtiiy differentiated product markets and C0t'IS€:q{_t§¥;'}§ . . . . , T . r""<:---" ' the ccmtmuum exists on an imra-product basisgangg no

e)(Git.iSt\ft'i}/ prevails. 2 "-

\ '.\ } 3..

F 9-3 ~ 2 Behawimirai economics ales seem in suggest that these price differences do not act as 3 czempeiitive cunsiraint, as the percepticin (3? higher quaiiiy cf PPL may not be in propoition to the differences in prices. Sn. it is possibie that-ihe consumers may not switch to GPL even if the prices of PPL increase further. Therefore, 'there appears ta be insignificant or negiigiirnie demiand substiiuiabiiiiy between GPL and PPL. From the iimiied evidence avaiiabie the Ccimmissiizm aiso mites that GPL is avaiiabie in a wide range of quality and prices enabiing intra- prcaciuci rather than inier~;oroduc't' sutssiiiuiabiiiiy as aiready pointed cut with reference ta price quaiiiy continuum anaiysis. As such GPL and PPL may be considered to constitute ciiffere-nt relevant prmziuct markets.

The marizeiing strategy iii the OP aisc seems to support the above conciusiori. it is noted that fhe OP had been foiiowing the regioriai pricing paiicy cffering the PPL at iower prices as compared io ihe rest 0*? the worici especiaiiy USA and Europe. This strategy to an extent impiies that the UP cansidered the faci that inciian ccimumers are price sensitive and iherefare fciiioweizi .3 strategy of inwer prices of PPL. The subsequent iniraduciion of "Acciimaies" brand which is an entry ieveii PPL, in cenjuinciicm with the brarici strategy mi Transitions forming part of ihe Acciimates agreemerii of non~ai::iive gzmmoiicin, aiso §iTi§)i§€§S that the OP considered PPL as a distirici and preferred product and was making an effari to persuade the cansumers of GPL to move to the PPL market by making it available at more affarciai:iie prices.

in View 0?' the feregoirig anaiysis of characteristics cf the products, factors reievani to demand decisions, imporianiiy price anci the Sack of competitive constraints refiecieci by price differences between PPL and (3i'--"L, the Commissiizm finds tiiai the market far Plastic Piiotuchmrnic Lenses in india is the reievani mari<ei in this case.

Having defineci the relevant market as ma;'i§j3§gi' ' s " ;..:' .-

in im:iia", the next step is evaiuaiicm of cia:§mi:i';éaiic . . . . . , 1; §'."f« based an __U,"i'E';'f'C}1i€.'3'»,i'~Jii"!gi points: ' .22. Market Shares: One of the iciremest iaciars in anaiysis 02' dominance is the niariiet share cii' the oppasiie party. in the instani case, different sets cii data have been siibmitied by the iii' and the GP in suppciri of their asseriiizms.

The iii' has subniitted the niarkei share of iens masters in the dewnsizream niaricet according to which the share of me iii' is 50%, Essiior India is 30%, Hays India 5%, Techiran: Paiyienses 5% and other wiiaiesaiers who imgiort the generic prciciuizi direciiy as i0"/o. The De has considered these market shares and 5213:» stated that Gi-(B, Eissiior india and Hoya india were cieaiirig exciusiveiy in the PPL of Transitions and therefura the combined market share {if 'these three iens casters in PPL market is the representative of markets share nf Transitions india. Whiie exciusivity has been stated as estabiisheci by DG, stiii there are semis factors that are reievant to this an:-iiysis. "The data reiiabiiity is obi/icuisiy a big factor. Linfortunaiteiy, the ciaia submitted by H3 coiaid mt be verified by the 'vaiumes of SaiESi'i'JLii'Ci'i3$€%S of iens «casters and the saies of Transiiions indie. This crass verification might have pniwided better insight abciui the size cii' the market. Aiso Earning in their submission had stated that it has iiisioricaiiy said Phoivachromic monoriiers in india, which supports the possibiiiiy that theirs: exists 2: domestic F'i'iO€OC:i'ii'0miC industry far wihich data is net avaiiabie on reccirci, {)3 has stated that the 85% market share of Transitiari inciia is based on the tniai quantity of PPL bnughi by these ihree different castei' pariiiers frcsm Transiiicri india' HOWE\i8i', nu': of the purchases made by these three iens casters, there wmiid have been re- exporis. The impact of re-exports on the market share in india aise waded to be taken into accaufit.

.-'V. /' . 2"

Transiiimn inﬁia had aisci submittecti ine_,»_if lie $98 and 20022 'I '(.>"__ aza§h»i§%i§epr%iced as

-2.}.-J-'~ 3:3', sourced frem Cybex Exim Sciiutions Pigif igjﬁd,"

under:

I"-J (C5 Tabie 2: import :3'? ophthaimic iermes in india ZQEES and 2899 Year 2085 _ _ ' _ _ _ » . ' _ _ j _ _ _ ' { _ { ' mm Units Giass "" i Wm' 353231 ""

H Piastic Photinchrciinic Lenses {C3ih}'er ihén Traiiﬁicrisii " mim§§§-245 Piasiic Photcichmmic Laiisésﬁiranéiiionsi T " 499441 "ciear i3iastic.i-ei1s-es ' T T 54?124.25 Toiéai wM"75:¥§i3'--§§3"37i3;m W ._w.,,, --_J J Year 2009 __ '-ﬁwpe [ [ . [ ___j__Units T Giass 3803200 Piastic Piu::t:3chmmi:é Lenses (Either than Transitions) W "i?'44?2 Piasiic Photcchminic Lenses (Transitiansi M 'i2'i '$775 Cigar Piastictenses T 49295621 W Glass Piwicmhromic i i " 22650 "

"Tera: ' SS'iG8:=iQ'i8 "

L_ The D3 obtained the percentage of imporis of Transitions PPL to tat:-3i impaiis sf P531. in inciia as 7'8.§% for .2008 and 87% fer £863 The data wouici have been substantiated had the H9 pmvided the volume cf purchase of Transition ieensas in supper': of the stated market share cf 85%. Aiso, the data c:ontra:cii::is another submission by the OP made from the SVW Remit. The repnri piaces size of PPL ienses in india as 6 miiiicxm. Transiiitma has stated that their saies far the year 2009 were 1.8 miiiion lenses which impiy Zﬁiﬁﬁiié siwarevofmiiae market. Though, the basis of size of market opted by SVW remains unsubstantiated, it is noted that th.§_;aai§:_.<:i~ Transitions of 'i.:';'3 miiiicm ~ " m'i''\I'':£i ata by Cybex. This V some importers may noi be disiinguisiiing between §§i\iiii%i§ent%§¥3gg§::'§§§\Qf§;p£h3;}haimic ierises, as \' impart ciuiy an aii types of ienses is sa§{i&ef5f::= \ ' ienses is higher than 1.2 miiiion cioniradiciion between data 'testifies ;.:-- .

,4-' .«-"Ar Trans.itEc:=ns tndia had aisc sutsmtitted their estimates for 330512009 market. The post 20093 markat size has been estimated to be 12.9 mitimn and Transitiens share at the same has been stated as 8.173 mittinn which is amund 25%.

While the import data puts PPS. market size as amund 1.4 miiiion tenses, the SW't' report puts the same as 6 miiiion ignsets. Transitions tnctia puts the post 2009 estimates at 253 miiiion. GKB has submitted the percentage markets share but nut speciﬁed the numbers raquireeﬁtor authentication and vetiidaticsn of data. The different estimates at markets share "resulting from ciifteresnt sources of information, ccsupéetté with tact: of data an domestic: market for making PPL cut of impcrrted monemers and the figures reiating to re~e>tp::orts of the purchases made by Hans casters tram Transitians makes it difficult far the Cammission to gonna ta :3 deﬁnite conctusian atmut the 0? being ciominant Gt" non~dc>minant based on market shares. A seiactive reiiance on a particuiar data may be §3?T0ﬁeDUS. Thus, the data is incczncﬁusive and canmt be remﬁciledt.

. Size and resource of the entterprise: Transitions is apparentiy the mast popuiar brand wf Photoctzromic tenses which, in fact, has ted same eye care pracztitianets and even consumers to can aﬁ Phatcchrmmic tenses as "Transitions" Lenses. Thus, the superior proprietary technoiotgy far Photocxhrontic treatment is the most important rescaurcs which gives Transitions same market power.

. Size and resources csf compezfters: The compestiters at Ttansitiona are glebai piayers such as CZV, Cceming, Htqyxvé and GKB have the resaurces to iaunch their own products. in fact, as éubntitted by the CAP, sirtce EGGQ, various cotntpeting brands of Photochtomic tenses have been launched in india tike, C3 Shade Pius, Sun Sensor, Anyiite etc. and the GK8's awn brand "SWtSS". it was atsa pointed nut by De that Hays India dtghggzuggggttx Jan to import its awn PPL {SunTs-ch) untii its network is strange; Thus the size \ and resources are not constraining the act§§'*ea7§g;ttr§t;' t N dissotutiun of JV with the H-3' has aisa entertatd the in set R =;.t-

.'w_ 'ta erg. CIZV pest marfsﬁétrvgiirectiy.

{.5} d. Eccmomicr Power 0:" the anz'erpn's:3 including: camm<=2rc;'af am/aniagas aver cmrnpetimrs.' The fact that the iechnoiegy of Phetechraméc treatment of Transitions is superior provides commerciai advantage but that is stemming out pureiy from efficienczy cf the mayer and not anything eise, e. Verficai integration: There is game degree of reiation between Transiiirsns and Essiictr inciia which can be Eaaked at while eva%iuatin»g the Abuse of Dominance if any.

1'. Counfezvaiiing Buying Pam/er. The W' by its own submission has stated that in "the narrcawer market 0f PPL. ii has arcaunciv50% share in the downstream ma'r'Ket. Aiso the same gets coupled with the fact that .1? thmugh its distribution netwar}: and retail shuns has direct access to »eyeg3ass wearers which vgivgs it the abiiiiy ta infiuence mnsumers' chaise. Thus, considering these, 'it is ctonsriuded that there is substantiai couniervaiiing buying pzswer in the dmxfznstream market.

~5..3.-4-mmciusﬁzm on daminance Thus, considering the unsubstantiated, incompfete and incansistent data on market shares, and at the same time giving ragérd to the facts of $326 of resources of the competitors, <:oLmtenrai¥ing buying power of the iens 'casters, and putting these factars against the size of resources sf Transiiians, cammsrciai advantage to Transitions given the supericsr proprietary technoiogjy, the Commission does not find adequate evidesme in conciude that Transitions is a ciominant enterprise in the relevant market in ggma ' .~v~..;_ , '-

.-o"' '-'.=- '.

'~")__'\ \ ' >' .

gaff"

E»-2.3' 'Me in View of the above conclusicm can the issue mt" OPS daminance in the reievant market, the question of abuse of daminamze dczes mt arise.

Grﬁer Based on the fcsregoingi the Commissicn finds that me case csf contravention of any :2? the provisians of Seciian 3 and Section 4 is made out against the Qpg3o~s.iie party Transitions India. The pmceedings in this case therefore deserve it: be dosed fcmzhwith.

The parties aczcordingfy.

Secretary is d§rectes:! ta cenvey the riecisioﬁ of the Commission is the ya/~*'" V *6 eeia.%mr§'"f"'"'""

Memberiﬁﬁ) Qfﬂ Anurag Gee?

§'¥§emba:j'q'AG) Gupta beriﬁ} £3) ' L')

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Gkb Hi Tech Lenses Private Limited vs Transitions Optical India Private ... on 16 May, 2012