October 21, 2008 / 5:54 PM / 11 years ago

Dealers sue BCE for breach of contract

TORONTO (Reuters) - BCE Inc, Canada’s biggest phone company, was slapped with a C$200 million ($164 million) lawsuit from its independent dealers in Quebec and Ontario on Tuesday, with the dealers claiming BCE engaged in “abusive, arbitrary” tactics and broke contract agreements.

Identical lawsuits, launched in Ontario and Quebec, claim that the country’s biggest telephone company breached a March 2008 contract in which it agreed to leave dealers’ fees and commissions untouched until June 2009.

The suit also claims that BCE’s operating unit, Bell Canada, continues to develop better relationships and more lucrative customer incentives with nonexclusive retailers and that its direct marketing plan offers better incentives, cutting into the dealers’ ability to compete.

The dealers are calling on the company to honor the current contract and also to allow them to offer products in their stores from competitors such as Telus Corp and Rogers Communications.

“We are disappointed. We didn’t want to go this way,” said Rick Umbrio, Ontario vice-president for the Independent Communications Dealer Association of Canada.

“We tried everything but they just ignored the outcome. They want to do it their way.”

The association represents more than 80 percent of Bell’s independent stores.

Umbrio, who owns three Toronto area stores, said Bell also has eliminated the payment of commissions for customers that replace handsets and renew contracts before December, and that commissions for new product sales have been cut by between 10 percent and 20 percent.

This Umbrio said these commissions were a significant revenue generator for the stores.

BCE representatives were not immediately available for comment.

The two sides clashed previously in court in 2006 when the retailers claimed that the company was preventing them from transferring their stores into an income trust.

($1=$1.22 Canadian)

Reporting by Scott Anderson; editing by Peter Galloway

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