Straight one for the parallel importation of Nokia

By Zhana Chankova, Capital newspaper, issue 22, 3-9 June, 2006

Does the customs detain a low-price originals as well as counterfeits on the demand of “Arsis Consulting”?

It is hard time for Nokia importers in Bulgaria. For approximately half a year, law firm “Arsis Consulting” has been clearing the market out in favour of the official importers of Nokia mobile devices and accessories with the assistance of the border control units.

“Arsis Consulting” acts as a legal representative of Nokia corporation for Bulgaria. Until now, the only authorized importer was “Alphacopy” company (which imports Nokia products into Greece as well). Since the beginning of June 2006 “Total Telecom” (property of Cyprus off-shore company, managed by a Romanian citizen) has been designated as a second official distributor. The corporation itself has representation only in Sofia.
The affected - the so called parallel importers, think that the dispute acquires the nature of a local mob law and bends the market. These are firms, which import Nokia products into the country, without being specifically authorized by Helsinki. They assure that their products are original, but imported from different markets, where they are cheaper than in Bulgaria. The unclear question is whether under the dictatorship of “Arsis Consulting” the customs authorities stop not only the counterfeits, which is permitted by the law, but also the official products of Nokia. Such practice is not permitted by the law and violates the interests of the consumers. This is one of the market battles, in which the answer to “who is right?” sinks somewhere in the Bermuda Triangle among the customs, the basic operating persons and the court.
The saga begins in October, 2005 when “Arsis Consulting” became the legal representative of Nokia for Bulgaria. The firm actively began to utilize the petition for border control of the merchandise with Nokia trade-mark, filed to “Customs” agency as early as May, 2005. “Their predecessor “Borislav Boyanov&Co” law-firm detained shipments only when in case of doubt for counterfeits and these check-ups were over within a week.” says Georgi Mitov. He is the manager of “Joelli”, a company that has been in the cell-phone business for six years. He additionally claims that he expresses the opinion of other importer companies, among which are “Jeff Co.” and “Handitel”. Mitov claims that in fact “Arsis Consulting” tightens the control of the importation, including that of the original merchandise, for all the companies outside of the two authorized.
Yet at the end of last year, “Arsis Consulting” warned the rest of the importers that They will not tolerate parallel importation of cell-phones. Afterwards they started detaining shipments. Mitov says that, as a condition for the release of their shipments, a declaration to sign was presented, stating that from then on they were to surrender the rights to import Nokia products into Bulgaria. Desislava Mateva, a lawyer from “Arsis Consulting” assures that it was not a declaration, but letters of notification, that were given to all the importers in order to inform them about the taken precautions. According to Mitov most of the companies declined and the border was closed for their goods.

Usually the goods are detained for customs control up to 20 work days, which is the time limit, allowed by the law, claims Mitov. Afterwards “Arsis Consulting” sent a statement on the allowance of importation. In addition the criteria for the allowance of importation were exceedingly vague. The firm explained that the information was confidential and all they said was “they are not produced for Bulgarian market”. “In the meantime, however, we witnessed a release of shipment, intended for South America. Actions of this kind create conditions for disloyal competition” says Mitov. The law-firm claims that they send information for every single shipment of the Nokia corporation to Finland. Thence they receive refusal or approval for shipment. According to Miteva the South-American shipments were probably imported during the gratis period, which is given to all companies after the first border detention.

. According to “Arsis Consulting” for the last few months an average of five shipments have been detained monthly. Around New Year’s period, when the market was the busiest, there were over 30 detentions in a month and a half. A permission for importation has been refused for most of them. “Every detention of shipment is related to huge financial damages for the correspondent companies and repeated detention means destruction of our businesses” says Mitov. And adds: “The goods we import are original and are not of worse quality compared to those of the original distributor.” We follow specific instructions of Nokia”, claims Desislava Mateva. According to the corporative policy of Nokia for the Bulgarian market, distribution of cell-phones and accessories is allowed only if they are manufactured in three factories in Europe – in Germany, in Hungary and in Finland, which are the original suppliers of the official importers. The products manufactured there have the standard characteristics of quality, instructions and production-installed menus in Bulgarian. “From the company’s point of view, it is unacceptable 90% of the products on the market to enter through Dubai and UAE”, adds the lawyer.

Nokia’s excuse for its strict policy is that it guarantees standard high quality of its products, which is beneficial for the consumers. The strongest trump of the parallel importers is that they provide original products of almost the same quality on more acceptable price. For example, the original importers offer the new Nokia 6230 at 430 BGN, V.A.T. included. Mitov assures that he can import it to the country from other markets at the final price of 380 BGN, V.A.T. included. “At this time, the prices are determined by the sole importer, they are fixed for a month ahead and it takes a minimum of two weeks to deliver. This is preposterous for such a dynamic market, where the prices change every day” he adds.

If it is accepted that in most cases the parallel importers work with original products, it is obvious that someone outside the law and to the harm of the consumers prohibits the parallel importation, declaring it a counterfeit. The proof of this violation, however, passes thorough court and through the assistance of the company-producer for the verification of the origin of the confiscated goods. And by a lack of interest from the Committee for the Protection of Competition this can turn out to be a very expensive and continuous process for the smaller importers of mobile phones.



WHAT THE CUSTOMS SAY
The law of the trade-marks and geographical symbols (art. 78, par.1) claims, that the customs detain goods, for which there is a reason to be considered carrying registered trade-mark without the consent of its owner or they are its imitations. According to Par.2 the precautions are not applied for goods with the trade-mark, when manufactured with the consent of the copyright owner. “Customs” Agency explains that the border precautions are applied for counterfeits. “In the Nokia petition, Finland, a detention is requested of goods that bear marks, identical or similar to the Nokia’s registered trade-mark but are not produced by Nokia. At this time, the customs detains only this kind of goods”, explains the agency. And specifies that only the court can verify whether there is really a violation of rights.