CSG loses appeal in Fuji Xerox case

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CSG loses appeal in Fuji Xerox case

Print services supplier and IT integrator CSG has failed in its bid to overturn a decision which saw it lose up to $3 million in lucrative servicing contracts with Fuji Xerox Australia last year.

The company told shareholders today that the appeal, launched last year in the NSW Supreme Court, upheld Justice Robert McDougall's November 2010 decision that Fuji Xerox had legally terminated two contracts with CSG in Brisbane and Maroochydoore.

CSG said there were no specific damages or costs incurred as a result of the appeal and that it could not estimate the total damages or aggregated costs payable to Fuji Xerox as a result of the decision.

However, the termination of the A3 printer servicing contracts, in place since 2007, was last year estimated to be worth about $3 million to CSG.

Fuji Xerox had issued CSG with an initial notice of termination of contract in June 2010, alleging the print services supplier had established a conflict of interest by signing contracts with Canon in Queensland.

Fuji Xerox also contended CSG had failed to meet its target quota for 2009 - set at a combined $10.8 million for the two specified regions.

Justice McDougall's decision required CSG to provide Fuji Xerox with signed deeds of novation which the vendor could forward to CSG customers in Brisbane and Maroochydore, allowing customers to move their contract with CSG to a new agreement with Fuji Xerox.

CSG recently told the market that it had received a number of offers to sell the company, with speculation that Canon may be one of the suitors attracted to its sucessful print services business which made over 222 million during the financial year to June 30 2011.

It is unlikely that the $3 million in lost annual revenue for the print division confirmed by today's court ruling would serve to dampen the enthusiasm of any of the suitors. 

However, the announcement saw unusually heavy trading in CSG shares which slipped almost 1 percent to $1.08 by the late afternoon.

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