supplies business after Precision initially claimed that they had become authorised dealers of Sharp products, but later amended the statement. Ahmed ElAmin reports In the wake of a new company's claims to have taken over a lucrative part of their business, office supplies company Staples Ltd. yesterday threatened possible legal action against the upstart competitor.

The furore in the office supplies market came to the fore when Precision Group announced yesterday that Sharp had switched allegiance to the company from Staples, then later claimed a "misprint'' had occurred.

Referring to a Press release sent earlier in the day Precision later stated that: "The sentence in paragraph 10 which states `Precision takes over as authorised dealer for Sharp products from financially troubled Bermuda company Staples Ltd., which acquired the Sharp dealership when it bought out Chips Ltd. over three years ago' is inaccurate and a misprint on our behalf.'' Staples Ltd. president Michael Johnson had come out swinging when informed of Precision's earlier claim and denied the dealership had been lost. He said Staples was still the Sharp authorised dealership. "We know nothing of this purported arrangement,'' he said, adding that the company had handed the matter over to its attorney Alan Dunch of Mello, Hollis, Jones & Martin.

Mr. Dunch has "instructions to aggressively take action as regards all appropriate parties,'' he said. "Anyone seeking to interfere with Staples' rights or distributorship relationships, will be held accountable.'' In an interview Precision president Tony Duggan claimed that "technically'' Staples had not lost its dealership and was still able to receive parts to maintain its existing Sharp contracts with customers -- but that the company was "cut off'' from receiving new equipment.

The claim comes at a critical time for Staples Holdings Ltd. which is in the midst of negotiations to sell operating subsidiaries Staples and Atlantic Medical Supplies.

Contact was made with a Sharp Ltd. lawyer at its US headquarters in New Jersey and he said he would get a spokesperson to contact The Royal Gazette . The lawyer noted that Sharp does not award exclusive dealerships.

The Precision Group, a office construction and furniture and equipment sales company, set up Office Supplies Ltd. at its warehouse on Addendum Lane and has employed 12 sales and service staff.

Office Supplies is owned by Mr. Duggan, Vivian Redford, Precision's co-owner, and Mike Hooper, who will be the new company's general manager. Precision has been in business for 20 years. Mr. Redford is president of the Total Group a consultancy and marketing company.

The two partners also own the Oasis nightclub on Front Street.

Mr. Duggan claimed the new company would attempt to "return Sharp to its former dominant position'' in Bermuda office supplies market.

"Sharp feels this customer-focused philosophy, and the fact we do not represent a competing line, will make us an excellent partner in selling and servicing their innovative business machines,'' he said.

The company also plans on offering free photocopiers and fax machines to customers who use Precision for commercial office construction projects. It has formed a partnership with Hi-Tech Electric to connect and wire any Sharp business machines it sells.

Mr. Duggan also took time out to accuse other office equipment suppliers in the market of questionable practices. He claimed some companies were putting machines out for rental as if they were new. Others were selling discontinued lines of products. Still others were claiming machines could not be fixed so as to sell new machines as replacements.

"Given Staples' well-publicised financial situation and concern over service and local sales figures for share products as well as questionable practices by some local office product suppliers, Sharp has concluded it would be best served through Precision,'' Mr. Duggan said.

He said companies should not be fooled by claims machines could not be fixed, a statement that's bound to stoke the ire of other competitors.

"We strongly urge (customers) not to be taken in by the competition telling them their machines are not repairable and recommending that they be replaced with one of their own machines,'' he said. "It is our information that this has happened in a number of cases -- and we have discovered that in 100 per cent of the cases their machines were fine and in need of only minor repairs.'' Controversy hits office supplies market Last month preferred shareholders of Staples Holdings were told that they will lose the $5 million they invested in the company in 1995.

Staples Holdings last month informed shareholders that they had basically lost their investment because the company was weighed down by debts owed to the banks.

Staples, which holds the Ricoh product line, acquired the Sharp business with the $7 million purchase of Chips Ltd. in 1995 making the company the largest player in the office supplies market.

At the time Chips was sold, the company had sales of about $5.235 million, and costs of $3.316 million, an indication of the value of the Sharp line.

Staples Holdings chairman Bill Midon has stressed that operating entities Staples Ltd. and Atlantic Medical International Ltd. are in good financial shape and that only the holding company was affected.

Staples has had a 19 percent drop in sales to $2.86 million for the first half of its fiscal year to September 30, 1998. The subsidiaries are being drained of profits to pay off dividends to the preferred shareholders and interest on debts owed mainly to the Bank of Bermuda.

Arthur Bean Business duo: Office Supplies Ltd. manager Mike Hooper (left) and co-owner Tony Duggan.