Allphones fined for further misbehaviour

Allphones has breached undertakings it gave the Federal Court in 2008, which has led to the court slapping a $45,000 fine on the company.

Allphones has breached undertakings it gave the Federal Court in 2008, which has led to the court slapping a $45,000 fine on the company.

The Australian Competition and Consumer Commission (ACCC) had brought action against the company three years ago, alleging that Allphones was engaging in misleading or deceptive conduct towards its franchisees, breaching the Trade Practices Act.

Allphones then made various undertakings to the court, two of which it has now broken.

The company had said that it wouldn't force franchisees to sign a deed releasing Allphones from liability in order to be assigned a franchise. Allphones also said that it would give the ACCC seven days notice if it intended to prevent a franchisee from selling their franchise to another franchisee unless the new franchisee entered into a new agreement with the company.

The court found that the company's breaches of these promises were both "serious" and "deliberate", because a number of senior personnel were a part of the breaches.

Allphones admitted that it was in the wrong and apologised.

The fine is the latest episode in the Allphones saga, which saw Judge Lindsay Graeme Foster of the Federal Court find last year that Allphones had engaged in unconscionable dealings with franchisees and ordered it to pay $3 million in damages to 55 franchisees.

The behaviour had started in 2004 when Allphones commenced a national expansion plan at the direction of its board and newly appointed CEO Matthew Donnellan.

Allphones structured its franchise system to give it control over both the stock and income of franchisees. The retailer assured franchisees it would use this bargaining power to their benefit.

However, Allphones did not disclose commissions and bonuses that it had negotiated with suppliers. It also altered documents from carriers, disguising charges.

The court ordered by consent that in both instances, withholding this income was unconscionable.

Donnellan was sacked earlier this year.

Mahesh Sharma contributed to this article.

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