HP awarded £1.95m in reseller grey market fraud case

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Hewlett Packard Enterprise was this week awarded £1.95m after a UK High Court judge ruled against reseller minnow International Computer Purchasing over allegations it abused special bid pricing.

The US giant told us the successful claim against ICP and director Matthew Archer was for “fraud, conspiracy and inducement of breach of contract”.

The case was heard in April and judgement was passed on 26 July.

Specifically, the court case related to “abuse” of HPE’s “partner programme”, with ICP alleged to have bagged more than £1.5m in discounts illegally.

“HPE is satisfied with the verdict,” said Marc Waters, acting UK and Ireland boss. “Grey marketing is a serious problem for the industry in terms of lost sales, margin erosion, poor customer experiences and reputational damage.”

He said HPE has a “grey market avoidance programme” in operation and the “outcome of this case clearly demonstrates that we will not hesitate to take court action to enforce our rights”.

A spokesman for ICP and Archer sent us a statement. “We are extremely disappointed and surprised by the outcome. We strongly deny our wrongdoing and must now consider all options available to us.”

Special bid pricing is a mechanism to provide extra-sharp discounts to resellers in strategic customer accounts, but it is open to misuse. HPE is right to crack down on this but is seemingly doing so after falling profits.

Products that are heavily discounted under special bids are supposed to go to designated customers and HPE is understood to be auditing its books in the UK to identify those flouting the Ts&Cs.

One source told us “HPE is digging hard” to uncover technical abuse. “This is not just brokers but resellers are also finding ways to manipulate the system”. We have heard that many of the top resellers employ someone to maximise rebates and get the most out of special bids. ®