Printer ink distributor, Tonnex International, has spent the past week defending itself in the Federal Court against rival distie, Dynamic Supplies, which claimed it breached the Trade Practices Act 1974 through misleading and deceptive conduct.
The premise of Dynamic Supplies’ case revolves around three main points:
- Tonnex claimed its products are “100 per cent genuine OEM products” when it purchases some of its supplies off the grey market from companies overseas. Dynamic Supplies also purchases stock from the grey market.
- Tonnex told its resellers they could participate in HP’s reward programs and get rewards ‘tax free’. Dynamic Supplies claimed this was untrue and that tax is payable by resellers in some cases.
- Tonnex used the sentence, “Because you are buying genuine Australian products, you are protecting more Australian jobs” in three advertisements for HP products and two for Brother products. Dynamic Supplies claimed this was an attempt to convince customers Tonnex was selling Australian-made products.
Tonnex, an authorised HP sub-distributor, has undertaken a vigorous defence on the first point while acknowledging uncertainty on the second point and mistakes on the third point.
Tonnex director, George Kozman, told the Court it was reasonable to claim his company provided 100 per cent genuine OEM product because he only bought from companies listed on the vendor’s website and investigated their reputations before entering into business with them.
“I couldn’t even guarantee where the authorised distributors get their stuff from because I’m not inspecting all their invoices and I’m not in their warehouses looking at their products,” he said. “I could not categorically state even the authorised are free from counterfeits. Does that mean nobody can make the assertion they sell genuine products? I make the assertion that we sell 100 per cent genuine products free from counterfeits.
“Until proven otherwise I stand by that guarantee… it appears on many documents from our business and we’re proud of that fact. The manufacturers are very vigilant when it comes to counterfeits… yet we’ve never had, not one inspection not one phone call from a manufacturer saying ‘Can we come through your warehouse’…we’ve got an extremely reputable and good business.”
Kozman said his initial assumption was that HP’s reseller reward program was similar to the Qantas frequent flyer and Woolworths Everyday Rewards programs in that it did not require taxing.
“We decided to err on the side of caution and withdraw that statement,” he said. “We didn’t notify our customers that it’s taxable because we’re still not sure if it is.
“We’re not going to send out a statement on assumptions or possibilities. We’ve withdrawn the statement, which we felt was more than sufficient.”
On the final point as to whether or not the ads for products sold by Tonnex could lead customers to think they were Australian made, Kozman agreed it could be the case. He said he was against the idea when he found out about the claim and chose not to allow it onto the company’s website.
“The Australian flag and reference to Australian jobs smelt like Australian made to me and when I saw it I told the sales manager I didn’t like it and it had to be changed,” Kozman told the court. “He then said ‘too late, it’s already gone out.’
“Within a matter of a week Dynamic’s solicitor sent us a letter, which was no surprise, and we made the apology and the correction.”
Kozman acknowledged the corrective email to Tonnex resellers was sparked by the letter from Dynamic Supplies. But he maintained the products were made for Australian users, as stated on packaging.
A decision on the case is not expected for a number of months.