HP sues reseller for $8.6m

Wants its discounts back

By John Oates • Get more from this author

Posted in IT Channel, 2nd September 2004 13:11 GMT

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HP is going to court in Tennessee to get back $8.6m in discounts given to a reseller. The filing alleges that Capital City Micro of Tennessee claimed it could sell HP and Compaq kit to P&E Distributing of Kentucky, but only if HP offered substantial discounts.

HP claims the kit was then sold on to other companies "to whom Capital City Micro had no authorization to sell". P&E Distributing, a drinks distributor, and its president David Welker are also named in the suit. HP wants damages for civil conspiracy, common-law fraud and breach of contract.

In 2001 HP discovered Capital City was abusing its discount scheme and ended its reseller agreement. Capital City then signed up as a Compaq reseller, again claiming P&E was its customer. Following the Compaq-HP merger HP again ended the reseller's agreement in May 2002.

Scott Anderson, acting general manager for solutions partner organization at HP, said: "HP is dedicated to monitoring, investigating and taking appropriate steps to prevent HP products entering the market through unauthorized channels." ®