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Business news, business advice and information for Australian SMEs | SmartCompany

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    Australia’s two major supermarket chains have both agreed to sign a voluntary code of conduct to guide their relationships with suppliers.

    The code, hammered out over the weekend with the Australian Food and Grocery Council, is the result of over a year of negotiations, and follows stern warnings from the new government over the issue.

    Over the past few years, Coles and Woolworths have come under fire for using their market power to extract favourable conditions from their suppliers. One sore point of contention has been the rise of private labels, which offer lower returns for suppliers.

    The code does not address or diminish the growth of private label brands. But it does cement some important rights for suppliers.

    It prevents the supermarkets from changing contracts retrospectively without consultation with their suppliers, and from using the intellectual property of their suppliers to develop private-label products.

    Coles and Woolworths will also no longer charge suppliers for goods stolen from their stores,

    Another of the clauses is to cover how disputes to the code are handled. Both supermarkets will appoint an internal compliance officer, to report every six months on compliance to the code.

    The code also introduces a formal disputes resolution mechanism, and requires both supermarkets to deal in writing with their suppliers. 

    Competition lawyer Alexandra Merrett, formerly with the ACCC and now with the University of Melbourne, says this strikes her as the most significant development.

    “It’s creating a framework for complaints to be handled. For small suppliers, that’s the biggest problem. A lot are reluctant to spend thousands taking their biggest customer to court.”

    Apart from being cheaper than a court appearance, a complaints process also creates a valuable paper-trial. “A lot of small suppliers are concerned about retaliation if they complain,” Merrett says.

    “But if you have a concern and lodge a complaint through the process, you’re in a relatively protected position. It would look terrible for major retailers to cut your line.

    “It also creates a norm of how to deal with concerns. It’s a much more transparent process. At the moment, it’s very ad-hoc.”

    The supermarkets have been under pressure to agree to a voluntary code, with a mandatory code hanging over them if they do not.

    The code will be submitted to the Australian Competition and Consumer Commission, and if it passes muster there, will be incorporated into Competition and Consumer Act. This will give the ACCC the power to investigate breaches of the code.

    Merrett says in this sense, the code is compulsory for the two major supermarkets. However, suppliers are under no obligation to abide by it.

    She says this government buy-in at the very end of the process means it’s likely to be more workable than a compulsory code.

    She points to the mandatory 2006 horticulture industry code as showing government does not always produce the most workable industry legislation. Victorian Farmers Federation spokesman Peter Hunt called the horticulture code “a complete failure” in August.

    But independent senator Nick Xenophon fears the supermarket code “doesn’t have any teeth”.

    “It needs some effective sanctions in there,” he tells SmartCompany. “Let’s wait and see how effective it is.

    “Obviously I welcome it, but it needs to be closely monitored. I hope this isn’t window-dressing, but a sign of a changing culture.”

    Ultimately, Xenophon says, the market power of the supermarket duopoly makes it impossible for small businesses to compete whether or not they deal fairly with suppliers.

    “Unless you get rid of things like your fuel shop-a-dockets, playing fair on food won’t make any difference to small businesses that are just haemorrhaging because of unfair practices,” he says, calling fuel discounts vouchers “predatory discounting”. 

     Australia is not the only country to grapple with the market power of its supermarkets – it’s had a voluntary code of conduct for more than 10 years. Under its current iteration, suppliers lodge complaints with an ombudsman, who has the power to investigate and levy fines on supermarkets acting unfairly.

    In the UK, the ‘big four’ of Tesco, Sainsbury’s, Asda and Morrisons together account for 65% of grocery sales. Coles and Woolworths account for 80% of Australian grocery sales.

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    As we face an ageing tsunami, Treasurer Joe Hockey has sacked the Advisory Panel on Positive Ageing (and me as its chairman), declaring it to be irrelevant without stating why this is so. Shortly before that, Prime Minister Tony Abbott decided not to have a minister for ageing, downgrading the importance of millions of seniors in the life of the nation.

    The sole reason for the dismissal of the panel, as conveyed to me privately by Coalition MPs, is that it was established by former treasurer Wayne Swan and it has been decided that every vestige of Swan’s term as treasurer must be obliterated. Such is the waste that politics represents in our national life.

    Be this as it may, the facts of life are that by 2040 there will be 55,000 Australians who are over 100, and 5000 of them will be 110. The largest segment of our population will be those between 85 and 100. More immediately, the number of 65-year-olds will  double within the next decade.

    The panel had published a report on the economic potential of senior Australians, showing that ageing can be turned into an economic and social asset if some visionary policies are progressively implemented. Swan accepted our recommendations and asked us to prepare a blueprint on ageing fleshing out the policy details of what must be done and present it to Treasury by 2014. We had a draft prepared ready for consultation with community leaders across the nation. It will now be put through the shredder.

    The major issues contained in the blueprint covered such vital matters as mature age employment and training, retirement incomes, age-friendly housing, preventative health, technology for seniors, lifelong learning, recreation, volunteering, philanthropy, insurance etc. It is a pity that we have been banished and can’t finish a job that will lead to the saving of billions in budget costs and the creation of new taxable revenue.

    A equal tragedy is that five vital items we spent many months negotiating for inclusion in the 2013 budget have also been cancelled. They covered important matters such as the pension assets test, housing design, technology training, wound management and the establishment of the Andrew Fisher Policy Institute. It all represents an act of irresponsible vandalism.

    The tragedy is that Hockey thinks that ageing is all about nursing homes and has no appreciation of the fact that the ageing tsunami will hit the world with greater economic force than the GFC of 2008. Australia will be unprepared for it.

    May I conclude by saying that the seniors of Australia stand ready to make a growing and positive contribution to the future of Australia. We want age discrimination to disappear so we can show that we are loyal and reliable workers with lots of wisdom and experience who can make a significant enhancement to the productivity of the nation. I want also to take this opportunity to thank the very able members of my panel who made an enormous contribution and do not deserve the humiliation that has been heaped upon them: Brian Howe, Susan Ryan, Gill Lewin and Neville Roach.

    *Everald Compton  was a founding director of National Seniors Australia in 1976 and was its chairman from 1986 to 2011. Over the past four years, he has been chairman of three federal government panels on ageing and was dismissed last week by Treasurer Joe Hockey from his role as chairman of the Advisory Panel on Positive Ageing. Compton is 82. 

    This article was originally published at Property Observer.

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    A licensed post office in Wollongong was the centre of an attempted security audit today after its licensee spoke out about Australia Post at a Senate estimates hearing yesterday.

    “I have absolutely no doubt it’s designed to intimidate me,” said licensee Angela Cramp. “It’s just classic bullying and harassment.”

    The Licensed Post Office Group’s spokeswoman said she stopped Australia Post auditors from entering her shop because it was at a busy time. “We don’t need to do that,” she said. “They can come back during the day when there’s somebody that can answer their questions.”

    However, Australia Post has refuted the bullying claim.

    Australia Post spokeswoman Michelle Skehan says six outlets in the area were scheduled for a security survey today, including Angela Cramp’s Warilla LPO, and every Australia Post outlet nationally is surveyed on a two-year cycle.

    Skehan says the survey is conducted to protect Australia Post's workforce and customers against security risks factors, primarily around armed robbery and burglary.

    “The security survey plan is developed two years in advance and Australia Post refutes any claims of a link between yesterday’s Senate estimates hearing and the routine survey occurring today,” she says.

    She says Warilla LPO was last surveyed two years ago in August 2011. 

    The licensed post offices say they are in financial strife and have been successful in petitioning for a Senate inquiry into Australia Post and its “challenges”.

    A Senate inquiry into the immediate and long-term “challenges” for Australia Post has begun to accept submissions before releasing its findings, due on December 11. The Senate Standing Committee on Environment and Communications will conduct the inquiry.

    Submissions will be open for 11 days, closing November 25.

    The terms of reference for the inquiry call for investigation into the “operations of Australia Post in relation to Licensed Post Offices” and “the licensing and trading conditions applicable to LPOs, including the Community Service Obligations, and any effects these may have on operating an LPO business”, among other things.

    An Australia Post spokeswoman Michelle Skehan told SmartCompany, “We welcome the opportunity to discuss the importance of our LPO partners and the critical role that Australia Post plays in delivering services to the community at the upcoming senate enquiry.”

    Cramp said the inquiry had short dates because LPOs were in danger of going under. “I can’t wait for them to talk about this for six months, I need some immediate action,” she says.

    Senate inquiries can run for months or more depending on how they are set up.

    LPO Group has threatened to sue Australia Post over its reimbursements for parcel handling, which the group says does not cover costs.

    Australia Post has increased the reimbursement for parcel deliveries.

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    The competition watchdog has launched proceedings against Mitsubishi Electric Australia for allegedly engaging in resale price maintenance.

    The Australian Competition and Consumer Commission alleges on three occasions between 2009 and 2011 Mitsubishi Electric’s senior managers attempted to induce Mannix Electrical not to sell its Mitsubishi air conditioning products below a set price.

    Resale price maintenance occurs when a supplier attempts to get another business not to resell or advertise its goods or services below a minimum price.

    When Mannix decided not to follow Mitsubishi Electric’s request, the ACCC alleges it terminated Mannix’s ‘dealer’ status and reclassified it as a ‘contractor’.

    Mannix stores operate in South Australia, Queensland and Victoria as Mannix Airconditioning and Airconditioning Warehouse Sales.

    In a statement about the proceedings, Mitsubishi Electric said it had received notice of the legal action and has so far co-operated fully with the ACCC in its investigation.

    “As the matter is now before the Federal Court, it is not appropriate for Mitsubishi Electric Australia to comment any further,” it said.

    “Mitsubishi Electric Australia is committed to ethics as one of our company’s guiding principles and we take matters of compliance very seriously. We have reviewed our compliance program at length and are implementing additional measures to prevent this type of issue arising again.”

    The ACCC alleges Mitsubishi Electric’s conduct was partly motivated by complaints from its dealers who were Mannix’s competitors.

    “Resale price maintenance can inhibit traders from competing for customers because they are unable to discount the price of products they sell,” ACCC chairman Rod Sims said in a statement.

    “Such conduct is a concern to the ACCC, particularly where traders put pressure on their supplier to stop their competitors from discounting.”

    Hall and Wilcox partner Sally Scott told SmartCompany the maximum penalty for resale price maintenance can be more than $10 million if 10% of the benefit obtained is more than $10 million, or if 10% of the company’s annual turnover for the relevant period is greater than $10 million.

    “This allows the ACCC and the Court to ensure that the penalty sufficiently hurts the company that has done the wrong thing and sufficiently deters others from doing the same thing,” she says.

    “Otherwise, there would be a risk that businesses would treat the potential for a penalty as just a cost of business.”

    Scott says businesses can ‘recommend’ a minimum resale price, but nothing more.

    “Businesses can’t threaten to stop supply if a reseller sells below a minimum price,” she says.

    “Generally, businesses can set a maximum price, as this would usually be in the interests of consumers.”

    Scott says this is a common issue and it can be damaging for a business’s reputation.

    “Many businesses come to me wanting to set minimum prices and stop their resellers or dealers from selling below that minimum price,” she says.

    “Often the issue arises when one dealer is regularly discounting below a recommended minimum price and other dealers lose business as a result. The other dealers will go to the supplier, complain and ask the supplier to ensure dealers don’t sell below the recommended minimum price. There is an inclination for suppliers to accede to this. Often businesses won’t know that it is unlawful.”

    Resale price maintenance has in the past been an area of focus for the competition watchdog, with a number of these cases occurring in 2012.

    In October last year, Penny Rider, the sole director of Eternal Beauty Products, was fined a total of $100,000 for pressuring online retailers into selling her cosmetics products at higher prices, and then suggesting they could lose business if they didn’t.

    Queensland-based homebrew supplier Edwards Essences also accepted a court-enforceable undertaking after it admitted it engaged in resale price maintenance.

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    Rumours have been flying since late last week about the circumstances of Kit Willow Podgornik’s departure from her fashion label, with the designer telling media she was sacked.

    The designer is said to have hired a team of lawyers to take on fashion conglomerate Apparel Group, which in 2011 acquired her label Willow, becoming the majority owner, according to The Sydney Morning Herald.

    Podgornik told Fairfax Media she was “heartbroken” and “shocked” by Apparel Group, which also owns the Saba, Sportscraft and JAG brands, when it decided to cease her employment.

    “While I have now left Willow, it was certainly not under my own volition,” Podgornik said as quoted by Fairfax.

    “My employment was terminated without my consent. I was not a consultant for the label; I was a shareholder, director and a creative director.”

    Podgornik says she has retained legal firm Arnold Block Leibler and is trying to resolve the issues with Apparel Group directly.

    Failing a resolution, she intends to go through the courts.

    “It is unthinkable to me not to be associated in any way with the label which bears my name,” she said.

    The fashion designer has garnered support over social media since the story broke last week, with Twitter users expressing their sadness at the news.

    When Willow was acquired by Apparel Group in September 2011, she said at the time the business was still “her baby”.

    SmartCompany contacted Apparel Group, but no comment was available prior to publication.

    Apparel Group also operates the manufacturing and wholesale distribution for the Bettina Liano label. Bettina Liano’s business, including her retail stores, went into administration in October, with reports it is now in liquidation.

    While further details regarding Willow’s dismissal are not yet known, it raises questions regarding how a business owner can ensure their job is secure should their company be acquired.

    Pitcher Partners partner Michael Sonego told SmartCompany the job requirements and specifics need to be carefully decided and put into the acquisition contract.

    “It comes down to both parties agreeing on what the person’s role will be. If you have money owing to you still, you definitely want to ensure that you’re still present in the company and it’s stipulated how the business will operate so that you’re protected,” he says.

    “You need to make sure the buying party doesn’t go and change how things work when they take over. If the business owner transitions with the business it also often helps with stability of the business as well.”

    Sonego says a business owner transitioning with the company can help it feel like “business as usual” to the staff and to suppliers.

    “You need to make sure that the customers and suppliers are fully informed the whole way through of any changes and what those changes will be. When you’re buying a business, you’re buying relationships,” he says.

    “You can plan how certain things will respond, but people are an unknown and you have to invest really heavily in HR. Among the staff there is often an immediate assumption that there will be redundancies when this is often not the case, but if you’re not communicating, people get concerned.”

    Sonego says hostile takeovers can occur in public markets, but generally acquisitions work best when there is mutual respect and understanding.

    “It makes it easier and if the parties are going to stay involved, then it’s especially important,” he says.

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    An investigation by consumer group Choice has revealed 85% of sales staff at major electronics retailers were uncompliant with aspects of Australian Consumer Law.

    Two Choice staff visited 80 Harvey Norman, The Good Guys and JB Hi-Fi stores across every Australian state and territory, posing as customers, and found sales staff either had limited or no understanding of their consumer law obligations.

    The Choice employees asked the salespeople at each of the stores if they had any responsibility should a $2500 TV cease to function after the manufacturer’s one-year warranty.

    The response by the vast majority of the salespeople was that the broken TV was out of the store’s hands, when in reality it was the store’s obligation to repair or refund the consumer.

    TressCox Lawyers partner Alistair Little told SmartCompany the response of the sales staff would have been acceptable under the old consumer laws, but in 2011 the legislation changed.

    “In 2011 a major change occurred in regard to warranties which meant that when a major failure of a good occurs, the consumer gets the choice of ending the contract with the supplier and seeking a replacement, repair or a refund,” he says.

    “This concept of a major failure is still new and it’s causing confusion. It’s been defined as a failure where a reasonable consumer wouldn’t have purchased the goods had they been aware of the failure, or it was significantly different to the demonstration model they saw.”

    Choice spokesperson Tom Godfrey said in a statement consumers need to be wary of warranty advice given in stores.

    “The fact that 85% of sales staff got it wrong and 100% offered an extended warranty is very concerning,” he says.

    “Consumers should not be fooled into purchasing extended warranties they don’t need and we’d like to see the ACCC and fair trading bodies investigate these breaches.”

    After approaching the sales staff at the retailers, the Choice employees contacted the head offices of Harvey Norman and JB Hi-Fi and found both companies understood their obligations, despite their sales staff’s lack of awareness.

    Little says the fact sales staff were unaware of their consumer law obligations was “not in the least surprising”.

    “It’s very common, whether it be a case of wilful blindness or just a lack of knowledge of the current state of the law,” he says.

    “What the act has done with the new provisions is to say if there is a major failure, consumer law, then the consumer is king and gets the right to determine what it is that they want. This can be contradictory to some of the terms of warranties.”

    Little says sales staff would have been educated as to the terms of the warranties, but not what constitutes a major failure.

    “This is something retailers are still coming to grips with… most are still not familiar with this concept,” he says.

    “People have been working in the consumer sales industry for an extended period of time would have been compliant under the old act, so there needs to be training  of staff on the new legislation and people need to be aware of these rights because it is a day-to-day issue.”

    Little says there are yet to be an Australian Competition and Consumer Commission cases pursuing this issue, but it’s only a matter of time.

    “The day will come when the ACCC will start taking action against people.”

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    One of the harsh realities of business is that businesses sometimes get sued by a client or customer. Faulty products, negligent advice, or failure to fulfil the terms of a contract can all give rise to litigation.

    And if your business is sued, chances are you are going to need a lawyer. And whilst this can be a lengthy, drawn-out process, there are ways you can better manage the legal fees and your stress levels.

    Here are five tips on how you can best assist your lawyer defend a claim. You need to give clear instructions, make the necessary documents available and listen carefully to his or her advice. Most importantly you need to be brief, helpful, cooperative and communicative.

    1. Be clear about what happened

    Start by telling your lawyer all of the circumstances that resulted in your business being sued in the first place, as best you can remember them.

    It may also be necessary for your lawyer to meet with staff members who can shed light on the relevant circumstances which enable your lawyer to be on top of all of the facts earlier, and therefore be better placed to help you assess the strength of the other party’s claim against you.

    2. Make available all documents

    To get a clear picture of what has happened and whether your business faces any concerns regarding liability, your lawyer will need copies of all documents you have that relate to exactly what happened. The best policy is to give your lawyer more information, not less.

    And you should also endeavour to copy whatever documents you make available to your lawyer. This will assist you and mean that you do not need to keep coming back to your lawyer’s office to look at the documents if he or she has any further questions about them.

    3. Don’t be afraid to ask questions

    Lawyers don’t bite, so if you have questions about what will happen now that your business is being sued, don’t be afraid to ask. These could include: What is involved in preparing a defence? What sort of time commitment you and your employees will be required to make? Will there be a court hearing that you or others in the business will need to attend to give evidence? Or will there be mediation? If so, how long will it run for? What is the procedure at mediation?

    Your lawyer should be able to provide some answers to your questions and explain what your role in the process will be.

    4. Be prepared and flexible

    Unfortunately, litigation is costly. There are lawyers' fees to pay – unless, for example, you have an insurance policy under which the insurance company may pay your legal bills – as well as the cost to the business of making your own staff and resources available to your lawyer when required. This may include making employees available to your lawyer to take their witness statements, or making yourself available to attend a mediation session.

    Litigation is also time consuming, in that you or your employees may be required to attend a mediation with your lawyer, help your lawyer prepare a defence, or provide further instructions, so it pays to be prepared and flexible.

    In addition, you may have to wait for the other side to make a move before you can respond.

    5. Be helpful and cooperative

    Litigation can be uncertain and stressful, so it makes sense to do whatever you can to minimise that stress and uncertainty. One thing you can do is be helpful and cooperative. Your lawyer is paid to do his or her best to assist you in the defence of the claim and is best placed to assess the merits of the claim and advise you accordingly, so listen carefully to that advice. After all, you paid for it!

    Chris Jones is a solicitor at legal firm Colin Biggers & Paisley

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    The Federal Court has ordered by consent that Australian Power and Gas pay a fine of $1.1 million for illegal door-to-door sales practices.

    The penalty comes after action earlier this year by the Australian Competition and Consumer Commission, after it was revealed some sales representatives from APG made false and misleading representations to consumers.

    The court found APG salespeople had told consumers that APG had approval from or was affiliated with the consumer’s existing energy retailer, was affiliated with the government or said the consumer could receive a certain discount off their energy bill by signing with APG.

    The court also found one of APG’s salespeople had engaged in unconscionable conduct by targeting a foreign person with limited English reading and writing skills.

    ACCC chairman Rod Sims said in a statement this is another significant result for the watchdog.

    “Door-to-door sellers who use unfair sales tactics and mislead consumers into entering into agreements will face serious consequences. This is particularly the case where sellers target vulnerable or disadvantaged consumers,” Sims says.

    “This outcome reinforces the message that businesses who use door-to-door marketing must ensure their practices meet the requirements of the Australian Consumer Law.”

    APG is the fourth energy company to be taken to court over its door-to-door sales practices.

    Earlier this year AGL Energy was order to pay $1.55 million for false and misleading representations made by its sales representatives.

    The court also found APG had breached consumer laws by failing to advise consumers that their purpose was to sign up the consumer with APG.

    The sales representatives also didn’t tell consumers they were obliged to leave the premises immediately on request and failed to provide information regarding their identity.

    TressCox Lawyers partner Alistair Little previously told SmartCompany the strict door-knocking laws were introduced in early 2011.

    “This is the ACCC flexing its muscle. It was an area subject to a lot of complaints and the ACCC had made it an area to focus on,” he says.

    In the 2011-12 financial year the energy ombudsman and the ACCC received more than 3000 complaints about door-knockers.

    Little says door-to-door sellers must abide by a number of regulations including only knocking between 9am and 6pm on Monday to Friday, between 9am and 5pm on Saturdays and not at all on Sundays or public holidays.

    “When a person does call at someone’s house they have to say what the purpose of the call is and provide info about who they are and what company they work for, and they are obliged to tell consumers that, if requested they leave, they must leave immediately,” he says.

    Salespeople must also not return to a residence for 30 days and inform customers of a mandatory cooling off period of 10 days where the consumer can change their mind.

    The court has also ordered APG publish a corrective notice on its website and contribute to the ACCC’s costs.

    While the court proceedings took place, APG was acquired by AGL Energy.

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    More than a third (36%) of convenience store turnover consists of tobacco sales.

    So it’s no wonder the industry took a keen interest in the plain packaging reforms that required all cigarettes be sold in ugly olive-green packages, in a bid to make them less attractive to young smokers.

    A year on, the chief executive of the Australasian Association of Convenience Stores (AACS), Jeff Rogut, says it’s been a huge challenge for the industry.

    However, the claims are contested by a university professor, who says shopkeepers just memorise where the common brands are kept on the shelf, and so are able to find them without looking at the packaging. 

    The AACS has represented the organised convenience store sector (franchise 7/11, BP and Caltex stores, as well as some of the larger independents) since 1990 and counts 6000 such outlets among its membership, who together made $6 billion in sales last year.

    Some of the large wholesalers to such stores, including big tobacco, are also among its membership. However, Rogut says he’s heard complaints from all sectors of his industry.

    “Tobacco is a destination category for our stores. People don’t buy it on impulse – it’s a planned purchase. But when they’re in there, they buy chewing gum, confectionery and drinks. It’s an important contributor to our profitability.

    “Obviously cigarettes damage people’s health. But what we’ve seen is that since the plain packaging came in, sales have remained stable.”

    Rogut cites figures from Roy Morgan research, sponsored by tobacco company Philip Morris, to support this. SmartCompany looked, but could find no independent research on the subject, with most public health experts saying it is too early to tell. Major tobacco companies deny a drop in tobacco sales.

    Rogut says the new laws have created headaches for convenience store owners, who are forced to invest more time and training into selling cigarettes, with a lot of unintended consequences as well.

    “Before, it was very easy for store operators to see where the product was displayed. Now everything looks the same. And stores have to battle to find ways of displaying the tobacco that make it easy for staff to recognise.

    The convenience store industry has very high turnover, with generally one in three staff members leaving a role in the industry every year as they get better jobs, or graduate (many staff members are students). “So what that means is that this training has to be done over and over again. And it’s a real challenge,” Rogut says.

    Stock management has also become more difficult. “When stock is delivered, you could have thousands of dollars’ worth of goods coming in. You have to verify you’re getting what you paid for. And now, everything looks the same. It takes double the time to check.”

    The profitability of tobacco is beginning to be affected too, Rogut says.

    “The product mix is changing. Whereas people used to be wedded to their brands, more and more, people are asking, ‘what’s the cheapest smokes’. Many are down-trading. And the margins on those cheaper packets are slimmer.”

    But many of Rogut's claims are disputed by Curtin University's Dr Owen Carter, at the Centre for Behavioural Research in Cancer Control. 

    He's been studying the effect of plain packaging on retailers, and says it takes them no extra time to find the right packet. 

    Before the laws were enacted, he conducted an experiment where 52 participants were faced with a wall of 50 plain packs of cigarettes. He measured the time it took them to find the package, and found the plain package wall was easier to navigate after a while than the branded package control group, as the plain package group had to memorise the location.

    “Rather than plain packaging requiring an additional 45 seconds per transaction, our results suggest that it will, if anything, modestly decrease transaction times and selection errors,” the study concluded.

    And in another more recent study, conducted both before and after the introduction of plain packets, he timed the speeds of convenience store workers at finding cigarette packets with or without coloured packaging. 

    "There was clearly no difference whatsoever," he tells SmartCompany.

    "A retailer might be selling 100 packs of cigarettes a day. By the 4th or 5th time, you've memorised where that packet is.

    "And if you're now organising them alphabetically, as many have, you don't even need to have sold a pack before to know where to look."

    Rogut disagrees, saying that the Roy Morgan research, which surveyed 450 convenience store owners in its first wave and 150 in its second, found that it had become more difficult to sell tobacco. "They're not academics or theorists - they live with it every day. To dispute their day-to-day experiences based on one study isn't credible."

    Carter says there's a political reason retailers and politicians focus on the difficulty of selling plain packaging. "To admit plain packaging was actually hurting their sales would mean plain packaging is working," he says.  

    "So they have to come up with another, socially acceptable reason to object to plain packaging."

    "The average smoker smokes 15 cigarettes a day. That's slightly less than a back a day. And so they have to keep going back and buying. It's a great business model really. And is extremely profitable because of that."

    Owens says he's spoken to many retailers who genuinely believed plain packaging would make things more difficult for them.

    "But when you go back and speak to their employees, they say it hasn't made any difference. They just memorise where the packs are."

    Plain packaging looks like it’ll spread to other countries. Australia’s pioneering position could soon be adopted in New Zealand and the United Kingdom.

    Rogut says the increasing regulation of the sector doesn’t come as a surprise.

    “We’ve known for 20 years that it’s not a sustainable category in the long term.”

    Recently, Rogut and 43 convenience store owners went on a study tour to America. Rogut says he and his group were inspired by how American convenience stores had managed to diversify their offering away from tobacco.

    “Tobacco’s not as highly regulated over there. But they’ve totally changed their model towards more of a serviced-food focus.

    “You can go in and get quality meals – whether it’s breakfast, lunch, or something quick after work.

    “That’s the future for our industry – we’ll continue to sell tobacco while we can, but we’re also looking at other opportunities that address our customer’s needs.”

    Regardless, Rogut says he’s disillusioned with the government’s handling of the tobacco issue. He says illicit brands are growing, to the extent that stores have customers coming in and asking for illegal brands. A recent Deloitte study found the government lost out on $1 billion in excise a year from the growth of such brands.

    “Governments around the world generally haven’t done a great job on the war on drugs. They’ve spent countless millions combating it, and dare I say drugs are just as available.

    “So what’s the next stage? Ban tobacco, put it underground, and make it more desirable? We know all young people have some sort of rebellious streak – they’ll seek out these sorts of things. That’s why the focus always should be on more education. Instead, the government put retailers, who sell a legal product, at the forefront of implementing this flawed policy.”

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    Former South Australian-based mobile phone company Excite Mobile has been penalised more than $450,000 for constructing a fake debt collector to pressure customers for payment.

    The company was fined a total of $455,000 for engaging in false, misleading and unconscionable conduct and for using undue coercion in relation to the selling and obtaining payment for mobile phone services.

    The company’s directors, Obie Brown and David Samuel, were also ordered to pay penalties of $55,000 and $45,000 respectively, and a staff member involved was ordered to pay $3500.

    The court found Excite Mobile guilty of a number of breaches of Australian Consumer law, including falsely representing to customers that coverage was available at their home address, creating a pretend independent complaints handling organisation and creating a fictional debt collector to chase up customers.

    Excite Mobile sent letters to at least 1074 customers, falsely representing that the letters were from an independent debt collector called Jerry Hastings.

    The letters included a telephone number for the fake debt collector and were supposedly signed by Hastings or one of his representatives.

    If a customer called Hastings about the debt, the phone was answered by Excite Mobile employee Fiona Smart who then transferred the called to Brown who pretended to be from Hastings’ office.

    Brown and Smart then attempted to induce the customer to pay the alleged debt to Excite Mobile.

    Within the letters, the court found a number of false representations were made about the rights and remedies available to Excite Mobile should legal proceedings be commenced against the customer.

    Excite Mobile alleged a court would make customers pay an extra 20% on top of the customer’s debt for not paying on time and it would repossess all valuable assets such as children’s toys.

    Letters the Australian Competition and Consumer Commission filed with the court when the case commenced in 2011 included a number of threatening, poorly-written phrases.

    “You know things like your stereo, tvs, cars, and games systems. Anything of value to you will become ours,” one letter said according to The Australian.

    “Believe me there is no way you would want to meet my lawyer in court. While she seems like a nice lady she is a killer in front of the judge… she can make your life extremely uncomfortable.”

    The letters went on to urge the customers to pay varying sums, as a “small price to pay to stop people coming into your house (and) ripping the TV out”.

    Some customers affected included those living in indigenous communities in remote areas of Queensland, Western Australia and throughout the Northern Territory and Cape York Peninsula.

    The court also found Excite Mobile’s “day cap” for customers unconscionable. The clause meant customers making more than one two-minute call a day would be charged excess fees.

    ACCC chairman Rod Sims said earlier this year Excite Mobile’s conduct was “outrageous” and “unjustifiable”.

    The court has also disqualified Brown and Samuel from managing a corporation for three years and two-and-a-half years respectively, while Brown, Samuel and Smart have all been ordered not to engage in similar conduct for seven years.

    Hall and Wilcox partner Sally Scott told SmartCompany this case is significant because it shows the ACCC’s willingness to pursue not only companies, but also directors and employees.

    “It is a reminder for individuals that they can face liability if their company has breached the Australian Consumer Law. Individuals can face liability either because they are primarily responsible for the contravention, or if they assist or are involved in the contravention,” she says.

    “Individuals who are being asked to be involved in a company’s contravention of the Australian Consumer Law need to speak up and ensure they don’t take part, otherwise they too could be caught.”

    Individuals can be fined up to $220,000 per offence and companies can be fined up to $1.1 million.

    Scott says this isn’t the first time a company has been penalised for coercion and unconscionable conduct concerning debt collection.

    “Businesses need to realise that they can’t lie, exaggerate or mislead in order to collect a debt, or indeed in relation to any other aspect of business,” she says.

    “It is a fundamental principle of the Australian Consumer Law that you can’t mislead in business. Both companies and individuals need to remember this, or they could end up being penalised.”

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    A suburban Melbourne Café co-owner didn’t know what to make of an email from Heston Blumenthal’s Sydney-based lawyers when they demanded her business change its name within seven days.

    The Oakleigh South-based café was called The Fat Duck, the same name as the celebrity chef’s three-Michelin-star restaurant in London.  

    Co-owner of the Oakleigh South venue Katie Norris told SmartCompany that her first reaction to the October 21 email was to “laugh” in surprise.

    “I got a little star struck for a moment,” she says. “It was a long letter with a lot of name dropping in it.”

    Norris explains the “name dropping” was an extensive list of Blumenthal’s credentials, including his TV appearances, cook books and restaurants.

    She says the email said her business needed to change its name within seven days, as the name The Fat Duck was trademarked by Blumenthal.

    Norris and her business partner sent the letter to their lawyer, who decided there was no point in fighting the case. Their lawyer felt that the cost of fighting for the name would have been beyond what the small business could invest.

    However, Norris’s lawyer did push back to a degree, and told Blumenthal’s lawyers the business would need more time to facilitate the change, including finding a new name, re-doing its signage and replacing all marketing collateral.

    She was not sure of the exact price of the change over, but says it is adding up to thousands of dollars “by a few”.

    Norris says when she originally researched the name before launching the 40-seat café around two years ago, The Fat Duck was available in Australia, and she was not aware that she should have also searched international trademarks.

    “I know people trademark big names like Coca Cola…but I didn’t realise people register a single establishment.

    “How many searches do you have to do?” she says.

    SmartCompany contacted The Fat Duck’s publicity representative seeking comment from Blumenthal, but no response was issued prior to publication.

    Blumenthal told the Herald Sun yesterday that the naming issue stems from the fact The Fat Duck “is now a global name, an international name, it's potentially a difficult thing”.

    “Somebody could operate under the name The Fat Duck and do whatever, whether it's coffee, tea, ice cream, and if something goes wrong, then you don't have any control over it,” he told the newspaper.

    Norris’s attitude is positive despite the disappointment, which she puts down to the fact her business could afford to pay for the changeover without “scraping the pennies”.

    She says if a small business was in a more financially challenged position, a name change could ruin them.

    “I don’t want to tell people not to fight, but you have to know what you are capable of as a business.

    “Your pride can get in the way, and you will throw away money.”

    Her biggest concern was ensuring her local clientele come back in, as she is worried they will think it is under new ownership.

    The café will now be called The Loose Goose.

    It is not the first time Blumenthal’s lawyers have fought for the name in Australia. In 2011 they approached a Sydney restaurant that opened with the name The Fat Duck, which later changed to The Naked Duck.

    Patent attorney John Carroll of Callinans recently told SmartCompany that when establishing a new business, the owner should check the trademark registrations and applications for trademarks.

    “Check ASIC for records of companies and business names…but remember that the existence of a name does not create the right to own it, it is about how it is used,” he said.

    Carroll said that if an international company comes into your jurisdiction with the same name, “you will need at least some reputation (to fight it)”.

    He advised that if a company does come into your area, and wants you to change your name, you can seek compensation for the act of goodwill in changing it.

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    Regulators think it’s “extraordinarily difficult” to police, but ‘astroturfing’, the practice of giving an enterprise good reviews online while sledging the competition, is in the gun.

    Sparked by continuous complaints from the public and business community, the Australian Competition and Consumer Commission yesterday released guidelines on how businesses should manage online reviews, giving three commandments:

    • Be transparent about commercial relationships
    • Do not post misleading reviews
    • The omission or editing of reviews may be misleading

    But given the global nature of the internet, the task of moderating truth in these reviews could prove tricky.

    Freelance jobs website Odesk was advertising this morning for a native English speaker to “write and post their own brand-new review” for an unmentioned website for $2-3 each,  the reviews will be vetted by the employer and each review “should be two to five sentences”.

    There’s nothing in the ad to suggest the reviews should be favourable to one organisation or harm another, but the practice violates consumer laws in some countries like Australia which means the advertiser is likely to be nondescript. It’s unlikely for $3 it will be a full account of the customer experience.

    The scale of the issue is huge; the ACCC reported that up to one-in-five reviews “might not be a true representation of a consumer’s actual experience with a product or service”.

    “It’s extraordinarily difficult to police,” ACCC deputy chair Dr Michael Schaper told SmartCompany.

    “Ultimately we rely on consumers or affected businesses coming to us and raising it with us, sometimes we get whistle-blowers within businesses who’s consciences says: ‘I’m not comfortable with this and management is not doing anything about it’.”

    Schaper has appealed to those breaking the guidelines to shape up their practices.

    “If you are using paid-for reviews or fake reviews ... you need to absolutely make that clear. If you have a commercial relationship with the platform provider, that needs to be made transparent as well,” he says.

    Regulators have punished businesses in the past for astroturfing, the ACCC handed out a $6600 fine to removalists Citymove for posting testimonials about itself purporting to be genuine consumers in 2011, the guidelines document stated.

    In the US,Time magazine reports that negative reviews are protected as free speech. A reviewer in the US state of Virginia was sued for defamation, it was reported in January this year, for publishing a review on popular site Yelp, advising others not to “put yourself through this nightmare of a contractor”. The reviewer, Jane Perez, was ordered to rewrite the reviews but that decision was later reversed, as a Supreme Court judge ruled reviews should not be censored.

    An Accor Hotels communications manager was stood down in May for posting 106 reviews toTripAdvisor without disclosing his relationship with Accor. Some reviews praised his own organisation’s hotels and others criticised Accor’s competition.

    And last month CHOICE revealed the results of a survey of 381 hoteliers, which showed half of those surveyed considered TripAdvisor inaccurate and more than half said they had customers threaten them with negative reviews. Tourism and Transport Forum spokesman Rowan Baker said reviews were difficult to have taken down.

    This story has been edited since publication.

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    A director and sales manager of a telemarketing company that sold ink cartridges have copped $100,000 in fines for knowingly breaking Australian Consumer Law.

    Tuan Nguyen, the sole director of Artorios Ink, and sales manager Thuan Nguyen have each been ordered by the Federal Court to pay a penalty of $50,000 each.

    The pair admitted to acting deliberately to mislead and deceive small businesses to generate ink cartridge sales.

    Artorios Ink was a telemarketing company that sold printer cartridges to businesses from 2008 to 2012. It went into voluntary liquidation in February after the ACCC began proceedings against it in September 2012.

    The Federal Court found that between 2011 and 2012, the company engaged in false and misleading representations to five small businesses.

    The misrepresentations included telling businesses that they had agreed to purchase printer cartridges from the company, when there had been no agreement. They also told the small businesses that they were already an approved or regular supplier of the business when in fact they were not.

    Artorios Ink also told businesses they instituted proceedings in the Magistrates’ Court of Victoria against the business to obtain payment for printer cartridges, when they had not instituted any such proceedings.

    The court also found that the company asserted a right to payment for unsolicited goods, by sending demands for payments for ink cartridges to businesses, which had never been purchased.

    Justice Mortimer stated that the conduct involved “deceit” of businesses for financial benefit.

    Justice Mortimer also inferred “there was a deliberate and calculated plan constructed to misrepresent to small businesses (through calls to unsuspecting employees or shop managers) some kind of existing supply relationship, then to take advantage of the misrepresentation to supply goods and then demand payment”.

    The judge found that the most serious aspect of this was its “premeditated character”.

    In addition to the fines, the Court accepted undertakings from the pair that they would not manage or be a director of a corporation for five years.

    ACCC deputy chair Michael Schaper said in a statement that the court’s ruling was a lesson for people involved in misleading practices.

    “These penalties send a warning to traders that dishonest business practices can result in substantial penalties being imposed against the individuals responsible,” he said.

    Schaper said small business should watch out for companies targeting them with misleading claims, perhaps via inexperienced junior staff members who may not know the company’s history.

    Hall & Wilcox partner, competition and consumer law, Ben Hamilton told SmartCompany that the conduct of the pair was at the more “extreme” end of misleading actions he had seen.

    He said the fine towards the two individuals appeared fair, and commented that when companies are fined for misleading conduct the amount can be far greater.

    “The court considers a lot of factors in determining a fine … the judge appears to have been guided by the premeditated character of the offences, which influences the penalty,” he says.

    Hamilton advises business owners that to avoid misleading customers, they should ensure their teams are compliant with competition and consumer law.

    “Often risks can arise when salespeople [who don’t know the law] are representative of the business,” he says.

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    Flight Centre chief Graham Turner remains defiant after his company lost a case brought against it by the ACCC on Friday.

    The Brisbane Federal Court found Flight Centre guilty of six counts of attempting to induce competitors to enter into price-fixing arrangements with it.

    The competition regulator argued that on six occasions between 2005 and 2009, Flight Centre attempted to induce Singapore Airlines, Malaysian Airlines and Emirates to agree to stop offering prices cheaper than those offered by Flight Centre (all three airlines rejected the advances).

    As part of its case, the ACCC argued that as Flight Centre's prices include both its commission and the cost of the flight, discouraging airlines from selling below this price has the effect of preventing competition between Flight Centre and the airline's internal sales divisions.

    Speaking to SmartCompany when the case was first brought against the travel company last year, Turner was adamant he wouldn't seek a settlement.

    "We‘ll fight this to the end. There’s no way we’d contemplate a settlement. We need to look after our customers and ensure they have the best fares. We make no apology for that,” he said.

    Turner was overseas when the judgement was delivered and so unable to speak to SmartCompany this time around. But in a written statement, Turner again signalled his intention to continue fighting the case.

    “Having access to all offers is a logical and natural business request for an agent to make to ensure the customers it serves are not disadvantaged,” he said.

    “[The] ruling is likely to have implications for the travel industry and for many retailers and agents in other sectors.”

    In a statement to the Australian Securities Exchange, Flight Centre indicated it would appeal the Federal Court ruling.

    “Based on a preliminary analysis of the judge’s findings, the company believes there are errors of law that will form the basis of its appeal.

    “The company does not expect the test case ruling to affect its operations or its business model, as the focus was on a narrow area of activity between 2005 and 2009.”

    The case was largely decided on internal and external Flight Centre emails, many of them written by Turner, which Justice Logan said showed Flight Centre and the airlines were in clear competition with each other, and thus an attempt to reach an agreement on pricing was price-fixing.

    One email, sent to Singapore airlines, made reference to instances where the airline had “undercut” Flight Centre's prices.

    “These reduced margins this year have made it difficult at times for us... [and] recognition of this issue will help us to achieve our collective goals,” it said.

    Flight Centre's lawyers argued it was not in direct competition with the airlines. But based on the emails, Justice Logan disagreed.

    Michael Terceiro, a legal consultant and former ACCC lawyer who worked on the ACCC's case against Flight Centre, says Turner appears to have “shot himself in the foot” with the emails.

    “Justice Logan made quite a big deal of internal Flight Centre documents, which he said showed a competitive mindset.”

    By basing his judgement on such documents, Justice Logan has made it difficult for Flight Centre to appeal, Terceiro added.

    In an appeal, Flight Centre wouldn't be able to have the evidence re-evaluated, but would instead have to base its argument on a point of law. If the ruling, however, was largely based on witness evidence, it narrows the scope of an appeal.

    Penalties for price-fixing behaviour can be hefty. At a penalty hearing, Justice Logan will decide between a penalty of $10 million, 10% of Flight Centre's yearly revenue, or three times the financial gain from the price-fixing.

    Flight Centre was not successful in its price-fixing attempts, which leaves the first two potential penalties. It is quite likely the ACCC will push for Flight Centre to be fined 10% of its revenue, Terceiro says.

    “Flight Centre didn't succeed, so that suggests a low penalty. But a couple of factors hurt Flight Centre. One of them is that Graham Turner himself was involved in the conduct, and there'll be no discounts for cooperation or contrition.

    “Once the penalty is decided on, Flight Centre can appeal. But they might decide not to.”

    The case bears remarkable similarities to one recently brought by the ACCC against ANZ, which it lost last November, Terceiro adds.

    In that case, the ACCC alleged that ANZ had engaged in price-fixing behaviour when threatened to remove Mortgage Refunds' accreditation to sell its mortgages unless the broker capped its refunds at $600, allowing ANZ to match the price.

    That case was also decided on whether or not ANZ and Mortgage Refunds were competitors. After six years, the Federal Court ultimately decided they were not.

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    Retail giant Harvey Norman’s franchises in Victoria and Tasmania have been fined a total of $116,000 for misleading customers on their consumer rights.

    The fines come after consumer group CHOICE concluded 85% of the salespeople they surveyed in a secret shopper investigation misunderstood their Australian Consumer Law obligations.

    The Federal Court ordered three franchises, located in Sale and Hoppers Crossing in Victoria and Moonah in Tasmania, to pay fines of $28,000 each, and a fourth franchise in Launceston to pay $32,000.

    Following an investigation by the Australian Competition and Consumer Commission, it was revealed that staff at the franchise stores had told consumers they had no obligation to provide remedy for damaged goods unless notified within a short period of time, such as 14 days.

    They also led customers to believe they had no obligation to provide an exchange or refund for faulty goods and that they had no legal requirement to provide a remedy independent of the relevant product manufacturer.

    The Launceston store went a step further and stated on customer receipts that “no claims will be honoured on damaged goods unless notified within 24 hours of delivery or pick-up”.

    Consumer law specialist and partner at law firm Hall & Wilcox, Ben Hamilton, told SmartCompany goods and services were protected under the ACL.

    While the legislation doesn’t explicitly state terms for refunds or warranty, Hamilton said companies must be aware of their obligations “that the goods are of acceptable quality, and business can’t contract out of that”.

    He says the supply of goods or services up to $40,000 worth are protected by consumer law, and that “regardless of value, any goods and services ordinarily acquired of a personal or domestic or household use” are protected.

    Hamilton says businesses violating these obligations are doing so “at their own peril”.

    An additional obligation retailers must now be aware of is their responsibility to offer consumers a refund or repair of all faulty big ticket purchases, regardless of the warranty conditions.

    In 2011 the legislation changed which saw retailers responsible for major failures to big ticket purchases.

    In these situations, the consumer gets the option to end the contract with the supplier and seek a replacement, repair of refund.

    For a refresher on the obligations in the ACL, see the ACCC’s guidelines on guarantees.

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    The Coalition’s review of competition policy is set to focus on boosting productivity and tightening regulations to crack down on the misuse of market power, pleasing the small business community.

    In the draft terms of reference obtained by SmartCompany, it’s expected the review will look particularly at the grocery, petrol and electricity industries.

    The terms of reference include suggestions of new mechanisms for small employers to “enforce their rights” and the possibility of strengthening the powers of the Australian Competition and Consumer Commission.

    The document asks people to consider “the extent to which new enforcement powers, remedies or enhanced penalties might be necessary and appropriate to prohibit anti-competitive conduct.”

    It also says to consider competition in relation to emerging markets and across new technologies, “particularly e-commerce environments, to promote entrepreneurship and innovation”.

    The last comprehensive review of competition policy, the Hilmer Review, took place in 1993.

    Prime Minister Tony Abbott said in a statement last week the review was necessary because “much has changed in Australia’s economy” since the last review.

    “This review is long overdue and will help identify microeconomic reforms and long-term improvements to build strong foundations for a more productive and competitive 21st century Australian economy,” he says.

    When the last competition review took place, it added 2.5% to national growth, and business experts are hoping this latest review will also boost national productivity.

    The terms of reference says the review will look at “alternative means of addressing anti-competitive market structure, composition and behaviour”, which is currently outside the scope of legislation.

    It will also review legislative frameworks and whether or not they adequately address the behaviour of markets with “natural monopoly characteristics”.

    Council of Small Business of Australia executive director Peter Strong told SmartCompany the terms of reference for the review were comprehensive.

    “It’s excellent and has a good focus on productivity which is what we wanted to see,” he says.

    “The competition review isn’t about big and small business, it’s about productivity. If we don’t get it right, the economy will go backwards.”

    Strong says the next issue is to ensure the voice of small business is heard in the review.

    “We’re really quite pleased, but the next issue is that traditionally the big end of town will send in highly paid, skilled lobbyists and we need to make sure whoever is involved in the review is strong-willed and will see through the rubbish presented by the big end of town and focus on productivity,” he says.

    Speaking to SmartCompany when Abbott’s Business Advisory Council was announced, Strong says he was concerned the review panel would be dominated by big business.

    “You obviously can’t get the local newsagent to head it, although they’d do a better job, but you need someone who will understand the difference between big and small business and aren’t stuck in the policies from the 1990s,” he says.

    Australian Chamber of Commerce and Industry chief executive Peter Anderson said in a statement the review is a “once in a generation” chance to “build economic strength by tapping into the competitive instincts of private enterprise, especially small and medium sized businesses”.

    “The terms of reference are very welcome because they encourage high ambition within the private sector and in markets where competition has diminished as the Australian economy transitions from the financial crisis and the high dollar,” Anderson says.

    “At the heart of the review is the need to enhance the competitive position of small and medium business, especially in supply chains where competition has extended beyond the fierce into the realm of the unconscionable, and where small and medium business is as vulnerable as consumers to monopolistic or near monopolistic behaviour.”

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    The Australian Competition and Consumer Commission has lodged civil proceedings against three of Australia’s biggest companies in relation to an alleged cartel regarding the price and supply of laundry detergent concentrates.

    The consumer watchdog has alleged that Colgate-Palmolive and PZ Cussons Australia “made and gave effect to cartel and other anti-competitive arrangements”.

    It alleges Unilever Australia was involved, but has granted it immunity under its Immunity Policy for Cartel Conduct, after Unilever came forward with information about the alleged conduct.

    The ACCC alleges that in the first quarter of 2009, Colgate, Cussons and Unilever entered into arrangements to cease the supply of standard concentrate laundry detergents to consumers in favour of only supplying ultra concentrates.

    The ACCC also alleges that they arranged to simultaneously transition their laundry detergents to ultra concentrates which met certain requirements. It also alleges that they sold ultra concentrates for the same price per wash as the equivalent standard concentrated products.

    It alleges that they did not pass on the cost savings to consumers.

    The ACCC also alleges that these arrangements applied across the range of popular brand laundry products including Cold Power, Radiant and Omo.

    Woolworths is also caught up in the matter, with the ACCC alleging that the retail giant was “knowingly concerned in the alleged arrangements”, as well as a former Colgate sales director Paul Ansell.

    ACCC chairman Rod Sims said that ultra-concentrate detergents are cheaper to produce, store and transport.

    He said the ACCC alleges that this “offered significant cost savings which, by agreement, were not passed onto consumers”.

    “These alleged arrangements also standardised the ultra-concentrate products offered, denying consumers a variety of choices on pricing, package volumes and the strength of the concentrate product,” he said.

    “By way of contrast, when similar products were launched in New Zealand, there was significant discounting, such as offering a larger pack for the price of a smaller pack. The ACCC alleges that the benefits of these competitive actions were denied to Australian consumers”.

    Woolworths said it will “vigorously defend” the action brought against it.

    “We take the ACCC’s allegations seriously and will, of course, cooperate with the Commission. We are committed to high standards of compliance with competition law and regulation.

    However, Woolworths said it has “serious concerns” about the way the ACCC has engaged with it.

    “We are particularly concerned that good process has been compromised by the need to meet arbitrary deadlines set by the Commission.”

    It reiterated that the ACCC has “not alleged that Woolworths was party to any cartel”.

    “Our preliminary analysis indicates that Woolworths’ retail price of about half the relevant products decreased in the year or so following the transition.”

    Cussons said it “takes seriously obligations and responsibilities to consumers under Australian competition law”.

    “As a company with a proud track record in this regard, we are disappointed by the allegations. PZ Cussons has always competed vigorously in a fiercely competitive market to ensure its products are innovative, high performance and competitive for consumers.”

    In a statement to SmartCompany, Colgate-Palmolive said it will give a full review of the allegations and the evidence relied on by the proceedings, then “respond appropriately”.

    “Colgate-Palmolive believes that its policies and processes are compliant with competition laws and further considers, based on the information available to it, that its transition to Ultra concentrated laundry detergents complied with competition law and had positive impacts for the environment and consumers,” the company said.

    The proceedings were filed yesterday with the Sydney registry of the Federal Court of Australia.

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    Victorians are being urged to be wary of a telephone scam where callers claim the property owner is owed a refund for Fire Services Levy overpayments.

    Telephone scams have become prominent again in the past five years and, according to Australian Competition and Consumer Commission figures, in 2012 they accounted for 56% of all reported scams.

    Consumer Affairs Victoria has been alerted to a scam where people are receiving phone calls from people claiming they’re from a government department or agency handling the Fire Services Levy.

    The scammers tell the consumer they’re entitled to a $248 refund for overpayment to the Fire Services Levy and asked for personal details and bank account numbers to transfer the money.

    Despite what the scammers claim, the Fire Services Levy Monitor does not make monetary transactions and never asks for personal details.

    As of July 1 this year, the levy started being collected through local councils, while in the past it was the responsibility of insurance companies.

    ACCC figures reveal so far in 2013, SCAMwatch has received 7400 complaints about reclaim scams such as this one.

    Of the 7400 complaints, only 2% of people reported losing money, equating to 148 scam victims.

    Unfortunately for these 148 people, more than $370,000 has already been lost this year to reclaim scams, meaning each person lost around $2500 on average.

    ACCC deputy chair Michael Schaper told SmartCompany scammers take advantage of everything.

    “It’s not uncommon to see charity related scams and for small business we’re seeing a number of fake government grant schemes. This particular scam is like a merger of the two,” he says.

    “It touches on a natural disaster, but focuses on the refund. If you deal with government regularly, you realise they very rarely ask for bank account or personal details over the phone.”

    But Schaper says for individuals who haven’t had much contact with government agencies, it’s easy to be tricked.

    “Bank account details are an obvious one for scammers to ask about, but there is also a lot of currency in personal details,” he says.

    Scammers seek access to a person’s bank account details and personal details to gain access to their money unlawfully, and there is also a growing illegal market for selling personal details to other scammers.

    Schaper says warning bells should sound if a person starts asking for bank account details.

    “The first warning sign is unsolicited approaches, especially to email or home. The first thing you want to ask is where they come from and how they have the contact details,” he says.

    “The second is the pitch for money or information. They’ll often say you can validate them independently by going to a URL they provide, but you should do your own searches.”

    Schaper suggests looking for their business in the phone book and searching for their business online, not just using the details supplied by the person on the phone or over email.

    “If it is a scam, then just hang up,” he says.

    In 2012, the total amount lost to scams was just over $93 million in total. However, this number is expected to be higher in reality given Australian Institute of Criminology research suggests less than 10% of scams are reported.

    Schaper says telephone scams have gone in and out of fashion, with email the most prominent form for a number of years, but phone calls offer scammers more chances to dupe the consumer.

    “The thing about a phone call is there is a chance to make a personal contact. While you might delete an email from an anonymous stranger, if they sound okay and like a nice person, you might be okay with giving them your details,” he says.

    Earlier this year small businesses were hit by another Yellow Pages scam, where a fake business named “Yellow Page” sent a fax seeking confirmation of a business’s contact details. However in the fine print it was revealed it was signing up to an online directory service costing $99 a month for a minimum of two years.

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    Iconic Victorian discount retailer Dimmeys is close to administration, as yesterday it copped a $3 million penalty for breaching product safety laws.

    Dimmeys and distribution company Starite Distributors were penalised $3 million and $600,000 respectively for breaching product safety laws on girls’ padded swimwear, baby bath toys, cosmetic sets and basketball rings.

    The Federal Court also ruled the director of both companies, Douglas Zappelli, be fined $120,000 and banned from managing corporations for six years.

    Zappelli took over the running of the 160-year-old company in 1996 and within that time Dimmeys has been involved in four cases of selling hazardous products or items which were incorrectly labelled.

    Both Dimmeys and Starite have also been banned for six years from selling items with high safety standards or which require warnings.

    TressCox Lawyers partner Alistair Little told SmartCompany this decision demonstrated the power of the courts to influence all aspects of a business when justified.

    It (the court) realised it wasn’t enough to just impose a fine,” he says.

    “They had no belief that Dimmeys would be able to sell these products within the law.”

    Following the court decision, Dimmeys legal compliance officer Ken Hampson was quoted in The Ageas saying the store intended to appoint an administrator within days.

    “We propose to put the company into voluntary administration and have taken steps toward that,” Hampson says.

    “We believe that will enable Dimmeys to continue to trade as a viable company and we are in talks with other parties about this.”

    If Dimmeys is placed in administration, it puts the jobs of 500 employees at risk.

    However, Hampson says the intention is to keep the business trading as normal and enter an arrangement which would allow it to pay the fine as an isolated debt and trade the business under another entity.

    SmartCompany contacted Hampson for comment, but received no response prior to publication.

    Little says if the business is placed in administration, debt won’t necessarily be the motivating factor.

    “It could also be the fact that the managing director has been banned for six years. He can’t act as a shadow director, he can’t have any role in the actual administration of the business,” he says.

    “He could have a job there, but he can’t have any role in determining the company’s course. If you lose your managing director, it can make things very difficult.”

    Dimmeys has also been ordered to pay for the destruction of the unsafe goods.

    The products had been sold between January 2011 and March 2012. The duck and turtle bath toys were deemed a choking hazard, the basketball rings failed to meet safety standards, the skincare packs were incorrectly labelled and the girls’ swimwear did not have appropriate safety tags. 

    While the penalties for the case were only handed down yesterday, in June this year Dimmeys was forced to publicly recall the unsafe items.

    In 2001, Dimmeys was fined $160,000 for selling children’s pyjamas which didn’t meet fire safety standards, while in 2011 it was slammed with a $400,000 penalty for selling unsafe children’s dressing gowns.

    The latest action was brought by Consumer Affairs Victoria, the first case the watchdog has taken to the Federal Court, after an investigation revealed 14,000 unsafe items were being sold by the retailer.

    Little says the maximum penalty per offence is $1.1 million.

    “The judge appeared to take account of the fact that Dimmeys financial position isn’t particularly strong,” he says.

    “There’s no point imposing a larger penalty if the company can’t pay it, it just results in the business going into liquidation.”

    Little says if Dimmeys breaches the court imposed ban on selling high safety standard products for the next six years, the court would be able to wind up the company.

    “It’s treated as contempt of court. Usually a fine is handed down, but if it’s particularly bad, it’s possible the individual involved could be imprisoned,” he says.

    “It could also issue an order for the winding up of the company.”

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    Online group buying site Scoopon has been hit with a $1 million penalty for making false and misleading representations to businesses and consumers.

    The Federal Court ruled Scoopon had contravened Australian Consumer Law when it misled consumers as to the price of goods advertised in its deals and their refund rights.

    Scoopon also misled businesses by saying there was no cost or risk involved with running a deal with Scoopon and it told one company that 30% of vouchers sold would not be redeemed.

    The court has also ordered Scoopon to pay a portion of the Australian Competition and Consumer Commission’s legal costs, to further develop its existing compliance program and ordered an injunction restraining Scoopon from making similar misleading representations for a two year period.

    In response to the findings, Scoopon executive general manager Jon Beros told SmartCompany in a statement Scoopon upholds “the highest standards in the industry”.

    “As a pioneer of the Australian group buying sector and founding member of the Australian Group Buying Code of Conduct, our leading position has meant Scoopon is expected to uphold the highest standards in the industry,” he says.

    “Following discussions with the ACCC, Scoopon has voluntarily accepted orders which include additional measures to improve compliance. Building on measures we've already introduced, Scoopon is re-training our team members, has introduced additional compliance roles and offered to work further with the group buying industry to implement stricter compliance standards.”

    Scoopon has been given a community service order to hold an educational seminar on ACL issues for other group buying businesses and members of the Association for Data-driven Marketing and Advertising.

    Telsyte senior research manager Sam Yip told SmartCompany because the industry is still developing, the sector has been constantly reforming its processes.

    “The industry is still quite young, so many of these things which occurred in the past, aren’t necessarily a reflection of what’s happening today,” he says.

    Speaking to SmartCompany when the ACCC launched court action against Scoopon in July, Yip said running deals through group buying sites shouldn’t be seen as a simple marketing solution for businesses.

    “There are explicit costs around margins that need to be considered and implicit costs about what it means for a brand and for staff and customers,” he says.

    “Often it is a lot more complex than advertised.”

    The ACCC launched action against Scoopon after receiving “a significant number of complaints” about the group buying industry since it emerged in Australia in 2010.

    ACCC chairman Rod Sims said in a statement it acknowledged Scoopon’s cooperation in the investigations which “enabled a more timely outcome to be reached”.

    “The ACCC understands that Scoopon has worked to improve its systems and processes which gave rise to this conduct to meet its obligations under the ACL. However this penalty serves as a warning to other businesses in the industry to improve practices or face action from the ACCC,” he says.

    “Online traders must understand their obligations are the same as traditional retailers’ and must not mislead customers or other businesses.”

    Sims says the ACCC will take further action in this sector to improve compliance and protect small businesses and consumers.

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