Ombudsman asked to probe 'flawed' Bakers Delight investigation

Ms de Leeuw once owned three Bakers Delight stores on NSW's south coast, and claimed Bakers Delight and the ANZ Bank colluded to force her out of business, and causing her to lose $2m. Both Bakers Delight and the bank denied the claim but that complaint sparked the original ACCC investigation and ongoing legal proceedings in the NSW Industrial Relations Commission. Liberal MP Joanna Gash produced e-mails in parliament, obtained by Ms de Leeuw during the discovery process, which the MP claimed showed evidence of collusion between Bakers Delight and the ANZ in Ms de Leeuw's business demise.

http://www.smh.com.au
February 22, 2010

Ombudsman asked to probe 'flawed' Bakers Delight investigation
Chalpat Sonti

The Commonwealth Ombudsman has been asked to review an investigation into one of Australia's, and the world's, largest bakery companies.

Two former franchisees of Bakers Delight, including one from WA, claim the Australian Competition and Consumer Commission's investigation into the company was "flawed and lacked procedural fairness".

In a letter of complaint to the Ombudsman, Deanne de Leeuw and Narelle Walter claim the ACCC focused on "legally untested" areas of law and did not interview any third party witnesses while investigating the company.

The ACCC investigated claims by 20 former Bakers Delight franchisees - including eight from WA - in 2007-08 alleging misleading, deceptive and unconscionable conduct leading to the loss of their businesses.

However, in April 2008, the watchdog cleared the company of any wrongdoing, with ACCC chairman Graeme Samuel saying "it should not be assumed that where there is smoke there is always fire".

"The ACCC is experienced in testing matters raised with it and often its investigations lead it to the conclusion that those matters cannot be substantiated or should not be pursued further," he said.

The ACCC refused to comment on the Ombudsman's investigation.

Bakers Delight spokeswoman Kendra Teasdale said "our position remains unchanged in that we were vindicated by the ACCC".

Following calls in federal parliament in October 2008 for an Australian Federal Police investigation, Ms Teasdale said the ACCC findings "were conclusive, the ACCC found that we were in the clear".

The letter of complaint to the Ombudsman claims the ACCC did not address possible breaches of the franchising code of conduct, including Bakers Delight "refusing to mediate with the complainants" and ignoring complainants' notices of dispute sent to the company.

It also claims inconsistencies in the way the ACCC acted against another franchisor for only giving franchisees seven days to rectify a breach, but "took no action against Bakers Delight for doing the same thing".

"(The ACCC) focused their investigation on unconscionable conduct (legally untested) instead of misleading and deceptive conduct," the letter says.

"There is a very real lack of legal precedent in this area and we believe that the ACCC is reticent to make a challenge for fear of losing. While this provision is available under the (Trade Practices Act) the ACCC has never mounted a challenge.

"As the regulator, the ACCC is responsible for regulating the (Act) and launching court proceedings to determine legal precedence."

The Ombudsman has requested more information from the franchisees and the ACCC, and is expected to make a decision on the complaint by the end of next month.

Ms Walter, who claimed Bakers Delight induced a breach of contract on stores she owned in Karrinyup and Belridge at a cost of more than $5 million to her, told WAtoday.com.au that the ex-franchisees questioned the "validity and integrity" of the ACCC investigation.

"The ACCC appears reluctant to recognise the relevance and validity of unconscionable conduct when investigating complaints," she said.

Ms de Leeuw once owned three Bakers Delight stores on NSW's south coast, and claimed Bakers Delight and the ANZ Bank colluded to force her out of business, and causing her to lose $2m.

Both Bakers Delight and the bank denied the claim but that complaint sparked the original ACCC investigation and ongoing legal proceedings in the NSW Industrial Relations Commission.

Liberal MP Joanna Gash produced e-mails in parliament, obtained by Ms de Leeuw during the discovery process, which the MP claimed showed evidence of collusion between Bakers Delight and the ANZ in Ms de Leeuw's business demise.

Ms de Leeuw told the Ombudsman she requested copies of transcripts and documents of the ACCC investigation under Freedom of Information laws.

However, she said she was told the request would cost $150,000 "but was going to be refused regardless of the cost, based on the time it would take to put the request together".

Source: watoday.com.au

http://www.smh.com.au/small-business/franchising/ombudsman-asked-to-probe-flawed-bakers-delight-investigation-20100219-oko9.html


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