HP Reaches Settlement in Gray Market Case with P & E Distributing

HP today announced it has settled with P & E Distributing and its president, David Welker, two defendants in gray market litigation that HP filed in August 2004 in a Tennessee federal court.

HP sought to recover more than $8.6 million in pricing discounts for computer equipment that a former Tennessee reseller, Capital City Micro, Inc., purchased based on misrepresentations that the equipment would be resold to P & E Distributing of Kentucky. HP continues to pursue its claims against Capital City Micro and its president, Martin Meeks.

Capital City Micro was an authorized reseller of HP and Compaq products and made unauthorized sales in 2001 and 2002. HP discovered the abuse and terminated its relationship with Capital City Micro. Shortly thereafter, Capital City Micro became a reseller with Compaq Computer Corp. and continued to make unauthorized sales of Compaq products. After HP and Compaq merged in May 2002, HP stopped all dealings with Capital City Micro.

“HP is committed to supporting our authorized business partners and protecting our mutual customers,” said John Thompson, vice president and general manager, Solution Partners Organization - Americas, HP. “And we’re committed to prosecuting those parties selling HP product through unauthorized channels.”

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