Cisco or as a manufacturer controls the procurement market
Often, state and municipal purchases are divided between potential winners and in advance the Customer wants to choose a particular and known person as the winner. But sometimes there are also opposite situations when the purchase of certain goods is not under the control of the Customer, but of the manufacturer of such goods, especially if such a manufacturer has a dominant position on the market and uses such exceptional economic opportunities to manage the procurement, the composition of the participants of these purchases and the price which must be contracted.
An example is the following situation.
One good company has long been a prime partner of Cisco, which specializes in the supply of software and information technology equipment.
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Cisco is a large company, and its share in the Mobile Packet Core segment, according to ACG Research, is 24.9% of the market share in the world. This allows Cisso to dictate its pricing policy to dealers and not allow competition between them, maintaining favorable prices for manufactured products and thereby obtaining more income.
At the same time, Cisco, according to unofficial information, gives the partners of any level a discount from retail - 35-50 percent (depending on their considerations about who should win). Retail price - the recommended maximum price is theoretical (overpriced and no one trades on it). From it, discounts are given for each sale for a specific customer and for a specific seller, for a specific purchase.
So one of the partners Cisco won the purchase of goods, which through the distributor could be brought in more than 7 weeks. However, due to production needs, the Customer needed to make an urgent delivery and there was no time for more than 7 weeks. The winner had to look for the availability of the necessary goods on the Internet. He was in stock at a certain company (not Cisco's orchestra. To protect himself from buying a "gray product" (parallel import), the supplier had to request from the distributor through the distributor an extended warranty for this product (Service Package), which is given to specific serial numbers of the product Three different distributors sold the expanded package specifically for specific numbers of the desired product and no one reported that the product was illegal. The product was imported into the Russian Federation by the official importer of Cisco. That is, all the circumstances confirming the legality of the goods and the presence of the possibility of its rapid delivery to the customer. After that Cisso dealer bought the goods from a reseller of the company and carried out in the fast delivery of its customer.
It was after this that the problems began with the manufacturer of the product - Cisco, which requested all the documents on the transaction and unilaterally terminated the partnership, depriving the dealer of partner status.
Sometimes large manufacturers have the opportunity to influence the composition of procurement participants and the proposed prices, as it were, on the reverse side, while being in the shadow. Therefore, potential procurement participants need to be very careful when they intend to enter this market from scratch and simply win the purchase, and then contact the suppliers and the manufacturer with an offer to purchase this product for its further implementation.
With a high degree of probability, it is possible to predict the occurrence of difficulties related to pricing or correct refusal to sell such goods to an unknown person under the specious pretext, for example, the need to check such a buyer or the lack of goods in stock at the moment (or availability of armor for another buyer).
The reasons may be many. But the main thing is that the market for the supply of goods, which the dominant entity produces, is divided among dealers and partners, and a good condition for entering this market, including for further participation in procurement, will be acquiring the status of a dealer or partner of a manufacturer who can count on good discount or “green light” when participating in individual purchases.
Unfortunately, this factor - the distribution of the market on a territorial or price basis, is the main deterrent that prevents the development of competition. And this factor must be considered when planning its procurement activities.
Considering this problem from a legal point of view, the following aspects can be noted, which requires a comprehensive analysis and discussion:
The fact that any company has the right to sell goods manufactured by Cisco, if this product was legally entered into civil circulation. Cisco may not restrict any company to sell Cisco (Cisco) products acquired legally (for example, in the process of reselling this product by third parties). On this account there is a resolution of the FAS of the Far Eastern District of 08.09.2010 No. F03-5723 / 2010, according to which the importation of goods with the consent of the copyright holder, the goods, both produced by the copyright holder and goods produced by other persons upon his permission, is not an exclusive violation of copyright rights. A similar legal position was formed by the Presidium of the Supreme Arbitration Court of the Russian Federation in Decree of 03.02.2009 No. 10458/08, according to which the turnover in the territory of the Russian Federation of goods not containing illegal reproduction of a trademark is not a violation.
Of course, the deprivation of partner (dealer) status deprives of discounts and the ability to compete with the retail price. But from this situation, too, there are options out.
If Cisco's position in the market is dominant, it is prohibited to take a number of actions, in particular:
- refuse to conclude contracts,
- reduce or terminate the supply of goods,
- to create discriminatory conditions of activity for different subjects.
It should also be noted that in fact, Cisco has divided the market between its dealers and representatives and does not allow competition between them. It is in antitrust law is a gross violation, punishable by a large fine.
Market dividing actions may violate Article 10 (abuse of a dominant position), Article 11 (agreements of economic entities restricting competition), Articles 11.1 (concerted actions restricting competition).
The considered situation can be brought under such violations. To do this, you need to contact the FAS with a complaint.
Thus, it is possible to conclude that it is very difficult to enter the market for the sale of goods produced by the dominant entity, especially in order to participate in the procurement. As the dominant actors build their dealer network according to strict rules, distributing the territory of activity between dealers and pursuing a subjective pricing policy. At the same time, not everything is so hopeless, and in order to protect one’s rights, it is necessary to apply to the anti-monopoly service in order to apply to the dominant subjects anti-monopoly response measures. But for this you need to take the help of good and qualified specialists with extensive experience in the field of antitrust law and in the field of procurement. Such experts will help to achieve results much faster and with minimal losses, which in the end will be more profitable.
The article was prepared on the basis of an antitrust expert.
D.V. Sviridov
An example is the following situation.
One good company has long been a prime partner of Cisco, which specializes in the supply of software and information technology equipment.
')
Cisco is a large company, and its share in the Mobile Packet Core segment, according to ACG Research, is 24.9% of the market share in the world. This allows Cisso to dictate its pricing policy to dealers and not allow competition between them, maintaining favorable prices for manufactured products and thereby obtaining more income.
At the same time, Cisco, according to unofficial information, gives the partners of any level a discount from retail - 35-50 percent (depending on their considerations about who should win). Retail price - the recommended maximum price is theoretical (overpriced and no one trades on it). From it, discounts are given for each sale for a specific customer and for a specific seller, for a specific purchase.
Cisco strictly regulates the prices for each procedure, for a specific partner.
So one of the partners Cisco won the purchase of goods, which through the distributor could be brought in more than 7 weeks. However, due to production needs, the Customer needed to make an urgent delivery and there was no time for more than 7 weeks. The winner had to look for the availability of the necessary goods on the Internet. He was in stock at a certain company (not Cisco's orchestra. To protect himself from buying a "gray product" (parallel import), the supplier had to request from the distributor through the distributor an extended warranty for this product (Service Package), which is given to specific serial numbers of the product Three different distributors sold the expanded package specifically for specific numbers of the desired product and no one reported that the product was illegal. The product was imported into the Russian Federation by the official importer of Cisco. That is, all the circumstances confirming the legality of the goods and the presence of the possibility of its rapid delivery to the customer. After that Cisso dealer bought the goods from a reseller of the company and carried out in the fast delivery of its customer.
It was after this that the problems began with the manufacturer of the product - Cisco, which requested all the documents on the transaction and unilaterally terminated the partnership, depriving the dealer of partner status.
Since Cisco controls the chain of sale of each product and prohibits resellers from distributors and partners from selling this product, this means that it is not possible to sell Cisco products and participate in any procedures, even if the brand's products account for one position.
Sometimes large manufacturers have the opportunity to influence the composition of procurement participants and the proposed prices, as it were, on the reverse side, while being in the shadow. Therefore, potential procurement participants need to be very careful when they intend to enter this market from scratch and simply win the purchase, and then contact the suppliers and the manufacturer with an offer to purchase this product for its further implementation.
With a high degree of probability, it is possible to predict the occurrence of difficulties related to pricing or correct refusal to sell such goods to an unknown person under the specious pretext, for example, the need to check such a buyer or the lack of goods in stock at the moment (or availability of armor for another buyer).
The reasons may be many. But the main thing is that the market for the supply of goods, which the dominant entity produces, is divided among dealers and partners, and a good condition for entering this market, including for further participation in procurement, will be acquiring the status of a dealer or partner of a manufacturer who can count on good discount or “green light” when participating in individual purchases.
Unfortunately, this factor - the distribution of the market on a territorial or price basis, is the main deterrent that prevents the development of competition. And this factor must be considered when planning its procurement activities.
Considering this problem from a legal point of view, the following aspects can be noted, which requires a comprehensive analysis and discussion:
Cisco has the ability to deny the right to be a dealer (partner). This is a subjective civil law of Cisco, in which it can not be limited. She can choose a partner on her own.
The fact that any company has the right to sell goods manufactured by Cisco, if this product was legally entered into civil circulation. Cisco may not restrict any company to sell Cisco (Cisco) products acquired legally (for example, in the process of reselling this product by third parties). On this account there is a resolution of the FAS of the Far Eastern District of 08.09.2010 No. F03-5723 / 2010, according to which the importation of goods with the consent of the copyright holder, the goods, both produced by the copyright holder and goods produced by other persons upon his permission, is not an exclusive violation of copyright rights. A similar legal position was formed by the Presidium of the Supreme Arbitration Court of the Russian Federation in Decree of 03.02.2009 No. 10458/08, according to which the turnover in the territory of the Russian Federation of goods not containing illegal reproduction of a trademark is not a violation.
Theoretically, if some warehouse has a Cisco product for resale and is ready to sell this product to a third party, any company has every right to redeem this product if it has been legally entered into civil circulation, and resell, for example, to the Tender Customer. The maximum negative sanctions that may follow from the side of Cisco - deprivation of the opportunity to be a dealer and get benefits from it.
Of course, the deprivation of partner (dealer) status deprives of discounts and the ability to compete with the retail price. But from this situation, too, there are options out.
In fact, the deprivation of the partner’s status is expressed in the termination of the contract, which secured such status.
If the contract provides that the status of a partner company may be deprived of for any violations (misconduct), this is a good chance to challenge the decision of Cisso about the groundless termination of the contract.
If Cisco's position in the market is dominant, it is prohibited to take a number of actions, in particular:
- refuse to conclude contracts,
- reduce or terminate the supply of goods,
- to create discriminatory conditions of activity for different subjects.
It should also be noted that in fact, Cisco has divided the market between its dealers and representatives and does not allow competition between them. It is in antitrust law is a gross violation, punishable by a large fine.
Market dividing actions may violate Article 10 (abuse of a dominant position), Article 11 (agreements of economic entities restricting competition), Articles 11.1 (concerted actions restricting competition).
The considered situation can be brought under such violations. To do this, you need to contact the FAS with a complaint.
If the FAS considers that Cisco abuses its dominant position by creating discriminatory conditions for different subjects or unreasonably stopping the delivery of goods, then this company will be ordered to stop the violation (actions to stop the sale or delivery of goods, creating different conditions of activity for different customers, etc.).
Thus, it is possible to conclude that it is very difficult to enter the market for the sale of goods produced by the dominant entity, especially in order to participate in the procurement. As the dominant actors build their dealer network according to strict rules, distributing the territory of activity between dealers and pursuing a subjective pricing policy. At the same time, not everything is so hopeless, and in order to protect one’s rights, it is necessary to apply to the anti-monopoly service in order to apply to the dominant subjects anti-monopoly response measures. But for this you need to take the help of good and qualified specialists with extensive experience in the field of antitrust law and in the field of procurement. Such experts will help to achieve results much faster and with minimal losses, which in the end will be more profitable.
The article was prepared on the basis of an antitrust expert.
D.V. Sviridov
Source: https://habr.com/ru/post/299922/
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