The Australian Competition and Consumer Commission will lock horns with retail giant Harvey Norman in the Federal Court next month over allegations of bait advertising and conduct in breach of the Trade Practices Act.
The ACCC has lodged proceedings against three companies in the Harvey Norman group, as well as action against John Slack-Smith, general manager for computers and communications, and 15 Harvey Norman franchisees.
The ACCC has also brought proceedings against former Harvey Norman employee Paul D'Ambra for his part as national software coordinator with the retailer. D'Ambra recently assumed the role of sales and marketing manager with Quadtel after nine months as the distributor's product marketing manager. Quadtel is in no way associated with the proceedings.
The industry watchdog alleges that before the introduction of the GST in June 2000, a national advertising campaign was conducted for Harvey Norman Computers and Communications stores, which featured a promotion for financial software Quicken Quickbooks. The promotion bundled Quickbooks, which normally retailed at $199, with a bonus software bundle, valued at more than $900.
The ACCC alleges the advertising went ahead despite Harvey Norman being aware that the quantities of the bonus software were insufficient to meet consumer demand. This would contravene sections 52, 55 and 56 of the Trade Practices Act 1974, according to the ACCC.
The ACCC's investigation into Harvey Norman has been ongoing since July 2000 but has been hampered by legal issues. The ACCC originally engaged the services of solicitors Philips Fox, whose clients include Harvey Norman. Last year, Harvey Norman lodged Federal Court proceedings against the ACCC, claiming the organisation could make unauthorised use of confidential information concerning the operation of the retailer. It later dropped the action.
John Slack-Smith told ARN that Harvey Norman would not be taking any further action on that matter.
"We have been in conversations with the ACCC for an extended period of time and we are continuing to review our position," he told ARN. "We are going to work through this with the ACCC."
A directions hearing has been scheduled in the Federal Court before Justice Ryan on December 13.
The proceedings will also deal with allegations that Harvey Norman's catalogue advertising misled consumers in relation to the eligibility for taxation benefits associated with the purchase of Quickbooks software and digital cameras before the introduction of GST.
The ACCC will seek declarations, injunctions, a corrective public notice, findings of fact and an independent audit of the company's trade practices compliance program.