Question
Answers to the Case Study should demonstrate that you understand and able to apply the sections of the Competition and Consumer Act 2010 (Cth) (CC
Answers to the Case Study should demonstrate that you understand and able to apply the sections of the Competition and Consumer Act 2010 (Cth) ("CC Act") and relevant case law in your discussion and analysis of legal issues with reference to the facts. You will need to:
(a) Identify the various legal issues arising out this Case Study. This should be based on the facts that was given to you.
(b) Identify and briefly explain the sections of the CC Act and relevant case law.
(c) Apply the law and determine any breaches of the law with reference to the facts.
(d) Provide a conclusion at the end of your answers summarising your main arguments and conclusion.
(e) Support your article with reference to appropriate secondary sources (articles, books, reports, internet recourses, etc). CASE STUDY DETAILS:
Fitness 4 Ever Ltd ("Fitness 4 Ever") is a public listed company in the ASX established in Sydney, New South Wales in 2010. Fitness 4 Ever is a manufacturer and supplier of fitness and sport equipment selling its products to a large number of distributors and wholesalers across Australia. Fitness 4 Ever is one of the largest sport equipment manufacturers and suppliers in Australia with a market share of 30% that increased significantly after a merger was reviewed by the Australian Competition and Consumer Commission (ACCC) and completed in 2017 between Fitline Fitness Pty Ltd and Liftdex Strength & Equipment Ltd. Fitness 4 Ever owns a number of patents and trademarks registered with IP Australia to protect its innovative technologies and trademarks (brands) related mainly to fitness and sport equipment. BLT Fitness & Wellbeing Pty Ltd ("BLT") is one retailer among many others located in Perth Western Australia. Unfortunately, the management of BLT recently received an official email communication from the CEO Mr Dennis Henderson advising that Fitness 4 Ever has now confirmed information from trusted sources that BLT has violated the Product Sales and Distribution Agreement signed with the company by offering a discount of 20% below the recommended retail price (RRP) to consumers in Perth, Western Australia. The management of Fitness 4 Ever asked BLT to change their price to the RRP within a period of 3-6 months. Fitness 4 Ever explained that it wants to favour consumers, however, it has concerns that any unconsidered and isolated discounts that can be offered by retailers to consumers would have negative effects on its registered trademark "Fitness Forever" and the public perceptions related to the company that is offering a top of the range and premium quality fitness and sport equipment to consumers in Australia. Fitness 4 Ever has found that its fitness and sport equipment performs poorly when repaired with inferior products imported from Asia and overseas. Fitness 4 Ever is now requiring retailers and gym owners in Western Australia to buy parts and repair servicesfrom Gym Tech Repair and Services Pty Ltd ("Gym Tech") located in Sydney, New South Wales. The company specialises in repairing Fitness 4 Ever products and frequently receives very positive reviews from businesses and individuals using their repair services. Fitness 4 Ever owns 15% of shares in Gym Tech and has no control over any business and management resolutions and decisions issued by the board of the directors. Fitness 4 Ever mainly aims to maintain the strength, safety and trustworthy of its products by providing the best experience for clients in commercial gyms. Fitness 4 Ever has recently signed non-exclusive licencing agreements with 4 major sport and fitness wholesalers and distributors in Sydney, Melbourne, Brisbane, and Perth. The agreements require fitness and sport equipment owned by Fitness 4 Ever to be sold to retailers and consumers within the jurisdiction of each state. The agreements divide the Australian market and require distributors to seek the approval of Fitness 4 Ever if they want to sell any fitness and sport equipment to retailers and consumers outside their states or any jurisdiction overseas. The distributors under the agreements have agreed to abide by any conditions for sale that may be set from time to time by Fitness 4 Ever. This may include but not limited to agreeing on any recommended retail price (RRP) to be paid by costumers and following any exporting requirements of products outside Australia. Any future agreements will be negotiated on a yearly basis between Fitness 4 Ever and each distributor depending on actual sales and business needs.
Advise ACCC whether there is any breach of the Australian Competition and Consumer Act 2010 (Cth) and consider any appropriate remedies that should be taken against Fitness 4 Ever (if any). Your answer must be based on ILAC or IRAC and supported by relevant sections of the CC Act and Australian case law related to competition law.
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