Some in commercial sector don't get the message on bullying

The court heard that between 2004 and 2009, Allphones engaged in bullying, deceit and a calculated campaign against what it called "dickhead" franchisees who pursued their rights under the Trade Practices Act and Franchising Code of Conduct.

http://www.theaustralian.com.au
May 21, 2010

Some in commercial sector don't get the message on bullying
Michael Schaper

IN recent years there has been a significant effort to deal with the problem of bullying across a range of sectors in the Australian community.

Bullying is no longer regarded as an experience that students, workers or sports players should have to endure as some sort of rite of passage or cultural ritual.

Earlier this month the federal government announced it would introduce laws to tackle cyber or online bullying among teenagers.

The message from community leaders, governments and the courts to our schools, sports fields and workplaces is clear: bullying behaviour is intolerable.

Despite this, there appears to be one sector of the community that is slow to get the message: the commercial sector.

Business is, of course, characterised by competitive and robust behaviour, and that's entirely appropriate. Vigorous competition drives economic activity and helps create better outcomes for consumers. There is a problem, however, when this culture is not merely competitive and robust but where it becomes understood by businesses to mean that any behaviour is acceptable in the rough-and-tumble of commerce — in other words, bullying.

An example is a large corporation misusing its power to prevent a small business competing on equal terms with it.

Under the Trade Practices Act, there is a prohibition against unconscionable conduct, described as behaviour which is irreconcilable with what is right or reasonable. The recent Allphones case highlights particularly egregious behaviour, where a franchisor used its position of power to exploit the relationship with its franchisees.

Last month, the Federal Court described behaviour by Allphones — a retail mobile phone franchising company — as unconscionable and ordered that it pay $3 million in damages to 55 of its current and former franchisees.

The court heard that between 2004 and 2009, Allphones engaged in bullying, deceit and a calculated campaign against what it called "dickhead" franchisees who pursued their rights under the Trade Practices Act and Franchising Code of Conduct.

Instead of offering franchisees the promised "true partnership" where profits were shared, Allphones negotiated commissions and bonuses which it then failed to disclose to its franchisees.

There was concealing and withholding of income. Other behaviour included withholding stock, threatening to terminate franchise relationships and stopping incomes of franchisees while insisting they meet their rental and wages payments.

Sadly this kind of behaviour against the small business sector is not new. The Allphones case follows a number of others where the ACCC has taken action against unconscionable conduct.

Melbourne retail landlord Dukemaster proposed rentals to its small business tenants stating they were reasonable and below market value when this was not the case and there was no basis to seek the amount stated.

Dukemaster also imposed a very short timeframe for them to respond without justification or explanation, threatening to evict, and sent letters of demand to certain tenants when it knew the tenants had a limited ability to speak or read English.

The Federal Court found the conduct to be unconscionable and ordered Dukemaster to pay compensation for the loss and damage suffered by the tenants.

The ACCC is currently awaiting judgment in another case, this time against Seal-A-Fridge, which began in 2008. In that case, the ACCC alleged the franchisor unilaterally increased fees regarding a phone hotline contrary to franchise agreements and effectively withheld consent of the transfer of particular franchises by the imposition of more onerous terms in replacement franchise agreements.

The ACCC, enforcing the Trade Practices Act, promotes fair and vigorous competition in the marketplace, guided by the principle that competition is crucial for economic growth and to deliver benefits for consumers. However, where businesses are behaving like thugs, making threats and putting the livelihood of another business at risk, the ACCC will not hesitate to step in and take appropriate enforcement action.

Michael Schaper is Australian Competition & Consumer Commission deputy chairman

http://www.theaustralian.com.au/business/opinion/some-in-commercial-sector-dont-get-the-message-on-bullying/story-e6frg9if-1225869365783


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