Major CE Distributor Accused Of Restrictive Practises

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EXCLUSIVE: A Sydney-based retailer has asked the Australian Competition & Consumer Commission to investigate claims of “restrictive trading practises” by Amber Technology, who are a share-listed company and one of Australia’s largest consumer technology distributors.

Paul Godfrey, a director at Digital Cinema has accused Amber Technology of engaging in practises which are primarily designed to harm his business. They include failing to supply warranty on products that Amber have sold in Australia and have been purchased via Digital Cinema and of threatening suppliers in Australia who have sold his company Onkyo and Optima stock.
He claims to have evidence that senior Amber Technology executives have visited his store on two occasions to buy stock in an effort to trace his suppliers. They have then forced these suppliers to stop doing business with Digital Cinema.
He also claims that Amber Technology employed the services of Eastwood Hi Fi to purchase Onkyo stock on their behalf in an effort to trace the source of stock being sold by the retailer.

Godfrey, who admits to buying Onkyo and Optima products from overseas suppliers in the past, has also been buying stock from both JB Hi Fi and Harvey Norman. Under the arrangement with JB Hi Fi he got a 50 per cent discount on the recommended retail price of the goods he purchased from the mass retailer.

He claims that both JB Hi Fi and Amber Technology benefited from this arrangement. In some cases he was buying between 10 and 15 products at a time. 

Godfrey claims that Amber Technology is refusing to honour the warranties on the stock purchased via the mass retailers, despite the stock being sold to JB Hi Fi and Harvey Norman by Amber Technology who are the sole distributor in Australia of Onkyo and Optima products.
Brian Lee, the marketing director of Amber Technology, admitted to SmartHouse that his company is refusing warranty on the basis that the stock is “second hand” when it is purchased by Digital Cinema.
He also admits that Amber is “stretching a fine line” in doing this and that the issue of whether the products can be classified as second hand have not been tested in a court of law.
Digital Cinema claims that the stock is “definitely not second hand”.
“They come in new boxes, are unopened, and are brand new and should be given the same warranty considerations as customer who purchase the products from a mass retailer”. 

 
Eastwood Hi Fi director, Steve Neil, said that he was approached four months ago by Amber Technology executives to buy an Onkyo receiver from Digital Cinema in an effort to trace the source. 
The Onkyo X SR807 receiver, being sold by Digital Cinema, had at the time not been launched by Amber Technology in Australia.
Digital Cinema also claims that they have the credit card details of Scott McKenzie, an Amber Technology executive, who visited their store to purchase goods in an effort to trace the source.
Brian Lee, in a frank admission to SmartHouse, admitted that after Amber Technology identified the source of the goods they wrote to JB Hi Fi in an effort to stop supply to Digital Cinema.
Lee claims that as part of the contract of supply between both Harvey Norman and JB Hi Fi  is a clause that prevents the mass retailers from selling on stock to other Hi Fi or consumer electronics retailers.
He also said that Digital Cinema staff were not “trained to sell” Onkyo or Optima products and that Amber was “protecting the interests of consumers” by stopping supply to Digital Cinema.
Lee said: “12 months ago when we found out that JB Hi Fi was supplying Digital Cinema, I wrote to them. Shortly afterwards they instructed all their store managers to stop selling products to Digital Cinema”.
Digital Cinema executives claim that they are qualified to sell the Optima and Onkyo products. “We are an authorised dealer for Denon, Sharp and Epsom projectors as well as other leading CE brands.  We are well qualified to sell Optima and Onkyo products. We offer full warranty on the products we sell and when Amber Technology refuses warranty support we take responsibility for the warranty. We also pay for C Tick certification. We also use the same service centres as Amber Technology to repair goods when the situation arrives which is not very often”.

 
“What Amber Technology is doing is engaging in restrictive trading practises. They are acting harsh, and restrictive. We have been told by other distributors, that we have to play within their rules or they will discredit us within the industry. They said that Amber will limit the supply of products through the channel and that they will intimidate other distributors to not supply us”.
Ken Dwyer the Managing Director of Audio Products Australia said of Digital Cinema: “Until recently, we had a major issue with this organisation unofficially selling Denon.  The business did not have a retail presence and as such, we seriously questioned their ability to support customers who purchased sophisticated Denon AVRs.  Also we had concerns regarding the source of origin, C-Tick, warranty and other important issues with quality electronics”.
“Recently Digital Cinema opened a store in West Ryde. Given this significant change in business model, APG has elected to support this shop.  The store sits geographically well in our retail network.  We obviously met with the owner and explained the important issues relating to the Denon brand prior to agreeing to an “account” as we would with any prospective Denon Dealer. After serious consideration, we felt that the retail store met our requirements for a Denon Dealer.  Consequently, the store was appointed about a month ago”.
Smarthouse is still waiting for a response from the ACCC.
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