LAS VEGAS, NV (BRAIN)—Bell Sports has filed a lawsuit against Specialized Bicycle Components claiming that the Morgan Hill, California, company has engaged in unfair and unlawful business practices. (Click on title to download PDF of Show Daily 3).
In the complaint, filed Sept. 9 in the Superior Court of California, Santa Clara County, Bell Sports alleges that Specialized is attempting to force dealers to agree to not sell its Giro brand of cycling shoes.
“We received notice about this Friday and responded to the court on Wednesday,” said Mike Sinyard, president of Specialized. “The court held a hearing and we are respectfully awaiting the judge’s decision.”
According to the court documents, Specialized issued an addendum to its dealer agreement asking dealers to agree to no longer purchase or sell Giro cycling shoes, and that Bell “suffered and continues to suffer an increasing decline in market share as a result.”
“The dealer addendum has unlawfully restrained and will continue to unlawfully restrain the sale of Giro cycling shoes … and will substantially prevent Giro cycling shoes from competing with Specialized’s cycling shoes,” the complaint stated.
Bell Sports alleges that Specialized threatened to withhold high-end bicycle inventory from dealers carrying Giro cycling shoes and that some dealers were told they would not receive their year-end purchase volume incentives or manufacturer rebates if they continued to sell Giro cycling shoes. As a result,
Specialized dealers who carry Giro shoes have canceled existing orders, retracted on verbal product orders or asked Giro to take back inventory on their shelves, the suit documents stated.
“A line has been crossed,” said Greg Shapleigh, senior vice president of Giro and Easton Cycling. “They’ve stopped simply providing financial incentives for retailers who support their brand and their business to telling them what they can and can’t buy even if they’ve met the obligations of the agreement they signed with Specialized initially. Retailers can’t buy the products they think are right for their business and consumers don’t in many cases have all the choices that they should have. All we want is the ability to sell our footwear to dealers who want to carry it.”
In addition to the lawsuit, Bell Sports filed for a temporary restraining order and preliminary injunctive relief asking that Specialized cease and desist from engaging in these practices.
As of press time, no ruling had been reached on the case and the next court date was scheduled for Feb. 14, 2012.