1.1 This case was initiated on the basis of information filed by M/s GKB Hi Tech Pvt. Ltd. (hereinafter "GKB") against M/s Transitions Optical India Pvt. Ltd. (hereinafter "Transitions") to the Competition Commission of India (hereinafter "Commission") under Section 19(1)(a) of The Competition Act, 2002 (hereinafter "Act") on January 06, 2010. The Commission, upon examination of the facts of the information, passed an order under Section 26(1), on January 19, 2010 recording its opinion that 'there exists a prima facie case, and directed The Director General (hereinafter "DG") to investigate into the matter.

1.2 DG submitted the investigation report on August 23, 2010. The investigation report was sent to the parties seeking their response on the same and further process of inquiry was undertaken in accordance with the provisions of the Act and relevant regulations there under. Full opportunity was given to both GKB and Transitions for perusal of all relevant records and making their submissions, both in writing and orally before the Commission.

2. Factual Background

2.1 The Informant viz. GKB is engaged in the business of manufacturing glass and plastic ophthalmic lenses for both exports as well as domestic markets and reselling of products of various lens manufacturers after value addition. The value addition is in the form of coating of lens i.e. hard coating or anti reflection coating. Carl Zeiss Vision International is a majority shareholder in GKB having a share of 50.15% as in 2007. Carl Zeiss is a German Company and one of the world's leading companies dealing with ophthalmic products.

2.2 The Opposite Party, Transitions India, is an Indian joint venture between Transitions Optical Holdings B.V., The Netherlands and Transitions Optical Inc., USA. The core business model of Transition India is to purchase substrate (semi -finished lens) from its caster partners, process the substrate (i.e. apply the Photochromic coating), and to sell the finished goods back to the lens casters. Transitions India has stated that it is the marketing arm of Transition Optical Inc., USA and does not undertake Photochromic treatment or manufacture lenses in India. The lenses are photochromically treated in plants located outside India and finished products are imported by caster partners.

2.3 The Related Party (to Transitions), is Essilor India. Essilor India is 100% subsidiary of Essilor International which is a world leader in ophthalmic lenses and other allied products. It entered the Indian market through a Joint Venture (JV) with SRF Limited, New Delhi in 1998. SRF Limited exited in 2004 and since then Essilor India is 100% subsidiary of Essilor International. Essilor International is a holder of 49% stake in the Transitions Optical Holdings B.V., The Netherlands and Transitions Optical Inc., USA. The majority stake in Transitions International is held by PPG Industries Inc. Thus, the parent company of Essilor India is a 49% stakeholder in the parent companies of Transitions India. At the operational front, Essilor India is also a lens caster like GKB and in competition with GKB and other similar players.

2.4 The case of the informant is premised on the proposition that Transitions India is a dominant enterprise in the business of Plastic Photochromic Lenses (PPL) in India and that it is abusing its dominant position by indulging in a number of anti competitive practices. As per the allegations, the Caster Partners are forced to suffer discriminatory and exclusionary conduct because of the dominance of Transitions India. Accordingly, the informant viz. GKB alleges the infringement of the provisions of Section 4 of the Act. The informant has also alleged that Transitions India and Carl Zeiss Vision have entered into an agreement that violates Section 3 of the Act.

Allegations

2.5 Transitions India, imposed discriminatory and unfair conditions on GKB in violation of Section 4(1) read with Section 4(2)(a)(i) of the Act by: (i) supplying the pr