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ACCC takes Allphones to court

Commission launches class action and contempt of court case against retailer

The Australian Competition and Consumer Commission (ACCC) has launched class action and contempt of court proceedings in the Federal Court against Allphones Retail for its alleged treatment of franchisees.

The action is based on existing Federal Court proceedings brought by the ACCC in October 2008 against Allphones and its CEO, Matthew Donnellan, director and COO, Tony Barker, and its former national franchising manager,Ian Harkin, for breaches of the Franchising Code of Conduct and the Trade Practices Act (1974).

The class action brought by the ACCC on behalf of 74 franchisees alleges Allphones received commissions and bonus payments from telcos that weren’t discussed with or passed onto franchisees; that it behaved similarly with mobile phone handset supplier rebates; and that it made deductions from commission payments meant for franchisees in breach of franchise agreements.The ACCC is seeking damages for losses sustained by the class action participants along with legal costs. Justice, Lindsay Graeme Foster, is set to hear the case for directions on September 8.

In a separate contempt of court action, the regulatory body is also alleging Allphones Retail breached two undertakings made by Justice Foster in the Federal Court on October 9, 2008.

Undertaking eight aimed to prevent Allphones from refusing franchise agreements because the franchisee hadn't signed a liability waver for the company. Undertaking nine required Allphones to give the ACCC seven days of written notice when it intended to withhold the assignment of a franchise because the new franchisee had to enter into a new agreement. According to the ACCC, Allphones allegedly violated undertaking eight once and undertaking nine three times.

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More about: ACCC, Australian Competition and Consumer Commission

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