Samsung terms gray market as 'illegal'

Amrita Tejasvi

New Delhi

May 11th 2007

In a mail circulated to IT associations across the country, Samsung has
declared the gray market business as an illegal activity and has indicated that
legal action against dealers involved in it. While the vendor insists that the
move is to educate partners about gray products, the channel is questioning its
move to term 'parallel import' as illegal trade.

"Gray market products of Samsung are being distributed in the Indian
market without any authorization. It is our duty to inform the channel community
on the issue of gray-market imports," said Sanjay Sharma, VP-DIS (Sales
& Marketing), Samsung Electronics India in a mail circulated to partners.

Reacting to the mail, a partner on the condition of anonymity said,
"There is no law in India that restricts any person from importing goods.
The only reason Samsung is making a noise is because of their declining business
through the authorized distribution channel."

While New Delhi based PCAIT has clarified that it fully supports ethical
business and discourages any illegal activity, the association has requested
Samsung to mention the acts or laws that partners will violate if they deal with
gray.

Meanwhile dealers in Kolkata said the company couldn't declare parallel
import as an illegal business. "We will hold a formal meeting with our
members on this issue. We will definitely discourage this business if Samsung is
able to convince our partners that it is illegal", said Sanjay Chaudhary,
Secretary, COMPASS.

Members of the newly formed Tamil Nadu IT association Confed-ITA said that if
dealers import original and genuine Samsung products by paying all taxes, the
business couldn't be termed illegal. They insist that there are no legal grounds
on which a company can take action against the dealers. "If Samsung has any
problem with gray market then the company should go for uniform pricing rather
than creating panic in the market," said S Karthikeyan, President,
Confed-ITA.

Reacting to partner accusations, R Zutshi, Deputy MD, Samsung India, said,
"There could be various legal remedies available to the manufacturer,
including but not limited to the Trademark Law." But no further details
were given.