H.A. Metzger Inc. filed a claim in court using Commercial Arbitration Rule R-6, for fraud, against Fujifilm Graphic Systems USA Inc., formerly known as Enovation Graphic Systems Inc., and Fujifilm Holdings America Corp.
The claim states that Metzger was a distributor of various imaging and graphic arts products with a long-standing relationship with Fuji.
They allege, however, that once the company created the distribution arm Enovation, they set about ensuring the prices for their in-house departments were much more competitive than those Metzger was receiving. And further, that Fuji was and is trying to drive Metzger out of business after a failed discussion for Metzger to become part of the Enovation conglomerate.
Metzger, in its claim, references an internal memo from Enovation’s Dealer Channel Sales manager and addressed to Enovation’s vice president of Field Sales that allegedly backs up its claims.
Highlights from that letter, as seen in the court filings, are:
- “FUJIFILM Graphic Systems direct sales organization has had a significant business model change in that they switched to a net price structure which allows them to structure a deal based on a net factory price instead of an artificially inflated ‘dealer net’ price. In essence this gives Fuji direct sales a distinct advantage over the [independent dealers] because they can deliver product to the customer at a market competitive net price as a result of the new internal structure.
“Therefore, the [independent dealers] function at a disadvantage with Fuji, is not able to be market competitive against Kodak or Agfa, and thus, this situation has become a recipe for failure.”
- “Some dealers have resorted to using third party technical consultants because they feel that they can’t trust Fuji not to solicit business directly.”
- “Over a year ago I asked Fuji management to convert the dealers to a net price structure in the same manner as the branches were switched to. This was necessary to allow the dealers to become market competitive and to comply with a contract provision. This conversion was refused based on the fact that the competitive advantage between Fuji branches and the [independent dealers] would be reduced.”
- “If this price structure continues Fuji will force the [independent dealers] out of business over time.”
When contacted about this case, Fuji representatives stated, “FUJIFILM denies the allegations of H.A. Metzger Inc. in its demand for arbitration, and is prepared to vigorously contest those claims and to pursue its counterclaims against H.A. Metzger Inc.
“FUJIFILM does not comment on pending litigation and is disappointed that H.A. Metzger Inc. chose to publicly comment about a dispute between the parties that is to be resolved in an arbitration proceeding.”