Creed Gym And Curefit Services Pvt. Ltd.

Case No. 27 of 2022 1 COMPETITION COMMISSION OF INDIA Case No. 27 of 2022 In Re: Creed Gym Through Mr. Vangari Prithviraj 1-55/3/2, 4th Floor Madinaguda, Above Green Trends, Miyapur, Serilingampally Rangareddy, Telangana -- 500050 Informant And Curefit Services Pvt. Ltd. No. 17/17C, BDA 3rd Sector, HSR Layout, Bengaluru – 560102 Opposite Party CORAM Ms. Ravneet Kaur Chairperson Ms. Sangeeta Verma Member Mr. Bhagwant Singh Bishnoi Member Order under Section 26(2) of the Competition Act, 2002 1. The present information has been filed by Creed Gym, represented by its partner and authorised signatory Mr. Vangari Prithviraj (hereinafter, ‘Informant’) under Section 19(l) (a) of the Competition Act, 2002 (hereinafter, ‘Act’) alleging contravention of provisions of Section 3 & 4 of the Act by Curefit Services Pvt. Ltd. (hereinafter, ‘Opposite Party’/‘Curefit’). 2. The Informant has stated that it is a registered partnership firm which is in the business of fitness and wellness and running a well-known gym /wellness centre under the name, ‘Creed Gym’ in Hyderabad, State of Telangana. Case No. 27 of 2022 2 3. Curefit is a company incorporated under erstwhile Companies Act, 1956. It is engaged in various businesses one of which is the business of offering subscription or membership services under the name Cult-Pass to individuals who are already members of established gyms/fitness centres. Curefit ties up with gyms/fitness centres to offer its users/members, the benefits of using multiple gyms under one subscription as per their convenience. Facts and allegations as stated in the Information 4. The Informant has alleged that Curefit approached the Informant for collaboration whereunder the Informant would be listed on the online platform of Curefit (website and mobile application) as one of the gyms/fitness centres where Curefit would provide subscription/membership services, i.e., a single subscription plan to the customers of the Informant strictly through Curefit’s platform [cult.fit application]. 5. The Informant has averred that considering the nation-wide pandemic and its financial impact and believing the representations of Curefit in expanding its clientele, the Informant accepted the proposal of Curefit, and executed a collaboration agreement with Curefit on 21.12.2020, which, inter alia, entailed sharing of its customer database with Curefit. It is alleged that the said agreement provided that all the customers including those of the Informant could avail services of the Informant only through Curefit’s platform. The Informant would not be able to entertain its customers directly or access their database on its own. Upon gaining access to the customer database and confidential information of the Informant, Curefit not only disabled the access to its own database but also exploited the same to endorse and sell its own products such as sportswear, footwear, nutrition products, fitness equipment, wellness and care product, lab tests, therapies, food etc. without any permission from the Informant. 6. It is alleged that Curefit is committing such data exploitation all across the country with more than 300 gyms/fitness centres with whom Curefit has collaboration with. It is further alleged that such practice is not provided for in the agreements and is being practised by Curefit in an unfair manner by exploiting its dominant position and has thus, affected the working of gyms with which it has collaborated. Case No. 27 of 2022 3 7. Further, in terms of clause 9 of the collaboration agreement, Curefit was obligated not to collaborate with any other third-party gym fitness/ wellness centre falling within a distance/radius of two kilometres from the Informant during the subsistence of the agreement and in the event of any intention to open a new centre within such distance, Curefit was obligated to offer the right of first refusal on such expansion to the Informant. 8. As per the above understanding and the terms and conditions of the collaboration agreement, the Informant commenced its services through Curefit. The Informant averred that it was completely responsible for the operation of the gym and Curefit did not provide any assistance for maintenance and operation to the Informant. 9. On 22.06.2021, it was discovered that Curefit had collaborated with one Fit Max Gym, which is within the two kilometres radius of the Informant, to provide gym services, which was in breach of the stipulated contractual obligations under Clause 9 of the agreement. The Informant questioned Curefit on the violations and called upon Curefit to comply with the contractual obligations under the agreement vide emails dated 22.06.2021, 27.06.2021 and 30.06.2021. 10. Curefit orally agreed to cancel the aforesaid collaboration with Fit Max Gym. However, Curefit continued to advertise its collaboration with Fit Max Gym by displaying the advertisements hoardings and boards at Fit Max Gym. Thereafter, it was learnt that Curefit collaborated with another fitness/wellness centre i.e., Naren Cross Fit, located within the two kilometres radius of the Informant. Curefit is displaying a different location on its platform to show that the centre at Naren Cross Fit is beyond the two kilometres radius of the Informant. However, upon physical verification and by digitised mapping, it was clear that the distance between the Informant and Naren Cross Fit is within two kilometres. Thus, the Informant has alleged that such conduct of Curefit amounts to misusing its dominant position as it controls the data and information of the Informant. Further, Curefit restricted the access of the Informant to only those customers who availed the services through its platform. It also restricted the Informant from providing its services directly to any customer. This completely paralysed the business of the Informant. Case No. 27 of 2022 4 11. It is also alleged that Curefit is blatantly sharing the Informant’s customer database with its competitors. The Informant was under the bona fide belief that the confidentiality of customer database shared with Curefit would be maintained and the customers could access the Informant’s gym to avail the services. The Informant was completely unaware that its customer database would be misused and made accessible by Curefit to the Informant’s competitors in the market. Curefit is committing unfair trade practises by deceptively inducing Informant to part with its customer database and then giving access of the same to its competitors, and by keeping the Informant in dark in relation to the access to its customers and services. Thus, Curefit has completely handicapped the Informant from conducting business leading it to severe financial loss. Upon collaborating with Curefit, the Informant has not only lost its customers due to such acts of Curefit but is also facing severe financial crisis. 12. The Informant has also alleged that Curefit has not been transparent and been paying a lower share of revenue to the Informant. This came to its notice during reconciliation of statement of accounts for the period February 2021 to May 2021 when shortfall was discovered in the revenue share. On being questioned about such discrepancies, Curefit informed that the issue would be resolved within 10 days. However, as per the Informant, it was not resolved. Neither the requests and concerns of the Informant were addressed nor Curefit paid the revenue share payable to the Informant as per the agreement. 13. Further, Curefit had introduced a process for payment of revenue share with the Informant whereby payments to the Informant were to be kept on hold and released only if the customer checks in at the preferred centre continuously for 7 days. In other words, Curefit would hold the payments for the said 7 days despite having received the payment from the customer. According to the Informant, no centre can monitor or dictate to the customer to come to a specific centre for 7 days continuously especially when Curefit markets the concept of its services as giving users flexibility of usage of different gyms. This is illogical, unilateral, arbitrary and an attempt to deny payments to the Informant. When Curefit was questioned about the same, the said practice was withdrawn.