Ultra Tune fined $1.5 million following competition watchdog probe

Car servicing giant Ultra Tune, owned by multi-millionaire businessman Sean Buckley, has been fined a record $1.5 million for contempt of court over its failure to provide marketing fund statements to its franchisees on time.

The fine, announced by the Federal Court on Friday, is the highest for a contempt of court proceeding brought by the Australian Competition and Consumer Commission (ACCC).

The Federal Court had previously fined Ultra Tune $2 million in 2019 after finding it was in breach of the franchising code by failing to ensure its marketing fund statements contained sufficient detail about expenditures for more than 260 of its franchisees. Ultra Tune was also required to follow a court-ordered compliance program.

However, Ultra Tune has again been found by the Federal Court to have breached its compliance obligation after it was late in producing and distributing the marketing fund documents. On one occasion, a marketing fund statement was almost eight months late.

Justice Robert Bromwich delivered a scathing assessment of the company’s probity record after finding it to be in contempt of court.

“The evidence shows that the contempts that were charged were not out of character for Ultra Tune, but in fact a reflection of its corporate character, which was insufficiently concerned with, and with effecting, compliance, even when it came to court orders,” Bromwich stated in the judgment.

ACCC Commissioner Liza Carver said the court action had been taken over concerns Ultra Tune continued to flout the franchising code, despite previous penalties.

“It is vital that franchisors prepare marketing fund statements in the timeframe stipulated by the franchising code, so that franchisees receive this important information when it is of most use to them,” Carver said.

In 2022, this masthead revealed Ultra Tune had used money from a marketing budget funded by franchisees to pay for its “rubber girl” brand ambassadors, including former partners of Buckley, to appear on the cover of men’s magazines.

Ultra Tune also spent millions on a series of controversial TV advertisements, including more than $600,000 producing ads depicting Charlie Sheen helping women onto his boat after they crash their car off a pier, and more than $732,000 on production costs for ads starring former Baywatch star Pamela Anderson.

The figures were contained in independently audited financial statements that showed the company spent more than $7 million annually on marketing in the 2019 and 2020 financial years.

The statements formed part of an affidavit lodged in the Federal Court as part of the legal action initiated by the ACCC. The way the marketing funds had been used was not the subject of any legal proceedings by the ACCC, but the consumer watchdog alleged the company had breached the court orders from 2019 by failing to prepare statements about the fund’s expenditure on time.

Emails from 2019 and 2020 obtained by The Age revealed conversations between the Australian publisher of men’s magazine Maxim and Ultra Tune employees, who discussed fees to be paid by the auto company so their “brand ambassadors” would appear in the magazine.

According to the emails, the $120,000 annual deal included advertising and saw several women featured on the covers of Maxim and in the magazine’s annual “Hot 100” list.

One of the brand ambassadors featured on the cover of Maxim was Jennifer Cole, Buckley’s former partner. Other ambassadors who were featured in the magazine and also had relationships with Buckley include Laura Lydall and Giuliana Migliorini.

The company’s use of marketing funds had rankled several former Ultra Tune franchisees, who said customers regularly complained to them that the campaigns featuring the “rubber girls” ambassadors were sexist and inappropriate.

At the time, an Ultra Tune spokesman said the company’s controversial advertising campaign had been highly successful, but had been retired after a change in direction by the business.

Buckley did not respond to requests for comment from this masthead.

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