A company chaired by a member of the Federal Government’s FTTN Expert Panel has been accused by the Australian Competition and Consumer Commission of misleading, deceptive and unconscionable conduct against its franchisees.
The ACCC has commenced a federal court case against Allphones, providing several examples of the conduct which it says has violated the 1974 Trade Practices Act, including allegations that Allphones has been “forcing franchisees to acquiesce to Allphones’ will,” “implementing policies targeting classes of franchisees,” and “failing to disclose or pay certain income to franchisees.”
It is seeking a number of court orders, including restraining injunctions against similar conduct and the implementation of a trade practices training or compliance program by the retailer. The chairman and former CEO of Allphones, Tony Mitchell, was recently appointed by Communications Minister Stephen Conroy to the expert panel advising the government on its proposed FTTN tender. In addition to bringing the company itself to court, the ACCC has taken proceedings against Allphones’ director and chief executive officer Matthew Donnellan; director and chief operating officer Tony Baker; and former national franchising manager Ian Harkin “for allegedly being knowingly concerned in or party to the contravening conduct.” A directions hearing is scheduled for 11 April 2008 in the federal court.
COMPETITION ASSESSMENT: The court case is potentially embarrassing for the expert panel, which has the responsibility of assessing a report from the ACCC on pricing and competition issues – set to have a defined role in a Request for Proposals for the $4.7 billion fibre-to-the-node network. Communications minister Stephen Conroy chose members to replace a panel established by the former government, saying he wanted a group “that knows something about telecoms.”
In announcing the panel, Conroy had said “the panel will bring a fine blend of technical, regulatory, business, investment and policy skills and experience to the process.” In the case against Allphones, the ACCC has alleged that, along with failing pay certain income to franchisees, Allphones “misrepresented how it shares profits with franchisees, bargains with third parties on behalf of its franchisees and operates its franchise system.” Senator Conroy yesterday defended Mitchell’s presence on the panel. “Mr Mitchell is the non-executive Chairman of Allphones and has not been named as part of the ACCC action,” he said.
“I understand that the proceedings will be defended by Allphones and those executives named in the action. Mr Mitchell brings 40 years of experience in telecommunications to the panel, which will be important to assessing the bids for the National Broadband Network.” Shadow communications minister Bruce Billson was quick to blame Conroy for playing politics with the new panel.
“This is embarrassing for Senator Conroy, who in opposition was scathing in criticism of the expert panel the previous government appointed, which he then disbanded in a purely political gesture. These developments add to the curiosity and head scratching surrounding the composition of his own panel,” he said. Billson said Conroy should “add a suitably qualified consumer advocate and instead of sidelining the ACCC and Productivity Commission make them front and centre.”
Luke Coleman and Petroc Wilton