Australian Pharmaceutical Industries has confirmed that a class action has been filed against it
API has issued a statement confirming that a class action has been filed against it in Victoria’s Supreme Court.
The class action, by current and former Priceline franchisees, aims to “add value to the investment made by current franchisees – to obtain a new, fair and compliant franchise agreement [and] to compensate franchisees for any infringing conduct, including loss of profits,” according to a public relations company owned by persons closely associated and related to the senior partner of Levitt Robinson Solicitors.
The franchisees “claim the company had excessive control over their pharmacies and required them to pay fees that are in breach state regulations,” according to the Australian Financial Review.
ClassPR advises on its site that, “The franchise agreements between you and Priceline contain provisions that may breach the current legislative framework which governs pharmacies in various states”.
Examples it lists of Priceline’s control include stocking the merchandise range determined by Priceline; placing orders through the Auto-Replenishment system; only ordering through API; complying with Priceline’s Visual Merchandising systems to ensure compliance with the Brand Alignment Reward Scheme; and pricing items as determined by Priceline.
Earlier this year the AJP covered the allegations of two plaintiffs, who were former Priceline owners.
“As an owner of multiple pharmacies … I was able to see firsthand the difference in the in-store pricing available to me,” said pharmacist Chris Lemon, one of the plaintiffs.
“When I went into Priceline, I expected that the buying at Priceline would significantly better than my independent store, which is with Pharmacy Alliance. But that wasn’t the case at all, in fact the terms were worse.”
In API’s statement on Monday, it said that it “denies the plaintiff’s allegations and will vigorously defend the action”.
API said that it “remains focused on supporting Priceline Pharmacy franchisees through these difficult COVID-19 times, so that they can fully play their role in the distribution of vital medicines and the COVID-19 vaccine and serve their communities during and beyond the pandemic”.
“Given the matters alleged by the plaintiffs are now before a Court, it would be inappropriate for API to comment further.”
The news comes during a tussle over the ownership of API.
Last week, Bunnings, Kmart and Target owner Wesfarmers, which also has a minority interest in Coles, bought 19.3% of API’s shares outstanding in the latest move in the ownership battle.
This followed a takeover bid by Sigma which outstripped two previous Wesfarmers bids, though Wesfarmers says it intends to continue with its plans to acquire the business.
Meanwhile API has also released a trading update in which it advised that it will exceed the profit guidance it provided to the market in July 2021.
API said it anticipates its underlying earnings before interest and tax (EBIT) will be approximately $70 million and reported EBIT approximately $28 million (unaudited) for the full year ending 31 August 2021.
Priceline played a strong part in this, it said on Monday.
“API recorded a stronger trading performance through our suburban and regional Priceline Pharmacies as well as online,” said CEO and managing director Richard Vincent.
“We also experienced elevated volumes through our Pharmacy Distribution business that we were not anticipating.”