Massey Ferguson brand license in limbo; AGCO terminates, TAFE moves Madras HC

U.S.-based agri-machinery maker AGCO has terminated its decades-old Massey Ferguson brand license agreement with Chennai-based Tractors and Farm Equipment Limited (TAFE) with immediate effect. TAFE has filed a contempt petition in Madras High Court against AGCO’s decision as the Court had, in an interim judgement on April 29, 2024, ordered status quo with respect to ownership claims of TAFE and AGCO over the Massey Ferguson brand in a case pending before Court. TAFE owns a 16.2% stake in AGCO and is a significant shareholder in the US Company.

AGCO says the company has delivered termination notices, with immediate effect, of its Massey Ferguson brand license agreement with TAFE, a distributor agreement with TAFE for the markets of India, Nepal and Bhutan and an intellectual property license agreement with TAFE for the markets of India, Nepal, Sri Lanka, Bangladesh and Bhutan. “These terminations follow inappropriate and unauthorised actions taken by TAFE that the company believes breached the various agreements," it says.

Meanwhile, TAFE claims that the Commercial Court in Chennai has ruled in favour of TAFE with an interim status quo order with respect to the Massey
Ferguson brand and it is therefore impermissible for either party to disturb the position as of April 29, and any attempt to do so will be a violation of the court orders. TAFE has filed a petition against AGCO for disobedience of the orders of the court in a contempt petition in Chennai.

AGCO is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. Its brand portfolio includes Fendt, GSI, Massey Ferguson, PTx and Valtra. AGCO had net sales of approximately $14.4 billion in 2023.

TAFE is the second largest tractor manufacturer in India with annual sales of over 180,000 units and an annual turnover of over $1.6 billion. With a 2,000-plus strong distribution network, it sells four tractor brands -- Massey Ferguson, TAFE, Eicher Tractors, and IMT in India. It also exports tractors to more than 80 countries. TAFE has been selling Massey Ferguson brand tractors in India and neighbouring countries ever since the take-over of Massey Ferguson India in 1960. The company claims its products to be India-centric in design, distinctly different from AGCO’s products and ideally suited for small and medium farmers of India and across the world. TAFE also claims that AGCO’s global brand website has historically for six decades made no mention of the Massey Ferguson brand in the context of India, Nepal and Bhutan ever since its take-over of  Massey Ferguson India.

AGCO states that the company has commenced legal proceedings against TAFE in India related to the use of the Massey Ferguson brand following the delivery of these termination notices. “As a result of these notices, TAFE is no longer an approved licensee/user/distributor/seller, as the case may be, for AGCO’s Massey Ferguson brand or Massey Ferguson products for trade in India, Nepal, Sri Lanka, Bangladesh and Bhutan. This termination(with immediate effect) is in addition to and distinct from the termination notices AGCO served on TAFE in April 2024 regarding the at-will termination of certain commercial agreements,” it states.

TAFE says the company acquired shareholding in AGCO Corporation commencing in 2012 to become its single largest shareholder and strategic long-term investor which strengthened the collaborative relationship between the companies,  resulting in TAFE and AGCO signing ‘Letter Agreements’ that have for over a decade assured AGCO of steady support.

“As TAFE’s strategic influence (in AGCO) increased, rather than addressing issues plaguing AGCO that have repeatedly called attention to, including flaws with AGCO’s corporate governance, wholly inadequate engagement with shareholder and financial and operational performance in key areas, AGCO has sought to stifle TAFE’s ability to seek changes through contentious and ill-advised moves with respect to brand usage that has for over six decades been an uncontested area," TAFE says in a statement.