The Australian Competition and Consumer Commission has taken legal action against childcare giant ABC Learning Centres, alleging it has failed to comply with rulings made in 2004 regarding the ABC’s acquisition of Peppercorn child care group.
In legal proceedings that began yesterday, the ACCC argues ABC did not divest two of its childcare centres as required by the 2004 acquisition agreements, which required ABC to divest eight other centres and cease management of 13.
ABC says it has been attempting to sell the final two centres since 2004, and has been discussing these matters regularly with the ACCC since that time.
However, the ACCC argues ABC, Australia’s largest childcare company, breached the agreements by interfering in a seller’s role, and failing to assist the agent to sell the centres. It also argues ABC failed to maintain the two centres, located in Geraldton WA, as competitive concerns.
In a statement, the ACCC says it is seeking declarations the ABC breached undertakings, orders for it to comply with agreements and sell the two remaining centres, and pay penalties. A directions hearing will be held in the Federal Court on 8 August 2008.
The legal action comes after ACCC chair Sallyanne Atkinson left the group last month, while shares for the company fell 10% yesterday to a seven year low of 71.5c.
A spokesperson for ABC Learning declined to comment on the matter.
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