The Australian Cartridge Re-manufacturer Association (ACRA) has thrown the full weight of its support behind its US counterpart's decision to initiate legal proceedings against Lexmark International for allegedly deceptive advertising, anti-competitive practice and 'conspiracy'.
The dispute revolves around Lexmark's Prebate scheme for supplying toner cartridges. The Arizona Cartridge Re-manufacturer Association believes that the scheme illegally restricts the availability of recyclable printer cartridges, described as "the lifeblood of the re-manufacturing industry" in a document drafted by the association's legal representatives outlining the complaint.
The scheme, rather than providing a rebate on return of used cartridges, gives customers a discount up-front provided they comply with Lexmark's re-use restrictions.
ACRAs legal representatives described the Prebate discount scheme as a "complete sham" intended only to provide a disincentive for customers to recycle with third-party re-manufacturers.
The Complaint states: "Lexmark's goal in adopting the Prebate program and related product changes is clear. By offering customers the identical product at two substantially different prices, ie a normal price tied to a sham shrink-wrap single use 'license' and a higher price with no re-use restrictions, Lexmark intends to prevent, and has succeeded in preventing, customers from purchasing recyclable cartridges."
The compliant directs criticism at other aspects of the Prebate system, raising further questions about the scheme's credibility. The complaint says that Lexamark has "done little to enforce returns of the discounted cartridges" and "does not properly police its Prebate licence agreements with its customers."
The Prebate system requires customers to return used cartridges to Lexmark by pre-paid courier, according to terms outlined on the company's Web site.
Lexmark Australia claimed it was unable to get permission from its legal advisors to comment on the charges. However, a PR spokesperson for the company said that the Prebate scheme was introduced to provide customers with a streamlined cartridge rebate system and a quality assurance guarantee intended to protect customer warranties. Lexmark printer service warranties are automatically voided if the malfunction can be sourced to products "for which Lexmark is not responsible."
David Gibbons, Executive director of ACRA (Australia) rejects this argument.
"HP retracted similar terms and conditions in their manuals," he said. The industry was originally established to combat the high cost of consumables nine years ago and it's developed a high technical proficiency since then. It's not the 'drill and fill' industry you had before."
He said he also finds it hard to understand how Lexmark is maintaining an ethical position.
"It's funny because Lexmark themselves are in the toner re-manufacturing industry. They re-manufactured HP toner cartridges," he said.
The Australian branch of ACRA brought its own legal suit against Lexmark 1997 over the Prebate scheme. Gibbons says that the group abandoned the legal case they had prepared after spending AU$50,000 because, at the time, the Prebate scheme only applied to the Optra S toner cartridges which only represented 1 percent of the cartridge market.
Gibbons main concern observing the legal case, is whether Lexmark will extend the scheme to a broader range of cartridge types.
ACRA and its international affiliates will have a chance to mull these issues over at close range as the case coincides with the cartridge re-manufacturing fraternity's annual meeting in Las Vegas this week.
