BERR vs Amway UK
On 9 January 2006 the Secretary of State for Trade and Industry (then known as the DTI - Department of Trade and Industry, later changed to BERR - Department for Business Enterprise and Regulatory Reform) initiated an investigation into the operations of Amway UK, Britt World Wide(BWW), and Network TwentyOne. On 11 April 2007 the Secretary of State presented a petition to the UK Company Court for the winding up of all three companies. After negotiations, BWW elected to cease operations in the UK and the case was dropped. After agreeing to abide by the findings of the investigation into Amway, the case against Network 21 was also dropped.
Upon filing of the petition Amway immediately called a moratorium on all new sponsoring and a ban on the distribution of all non-Amway produced Business Support Materials. Shortly after, Amway introduced a number of fundamental changes to the business model in the United Kingdom and Republic of Ireland.
Hearings into the case against Amway were held 26-30 November 2007 & 3-7 December 2007. BERR's charges against Amway were that Amway was -
- inherently objectionable; and/or
- an unlawful lottery contrary to section 1 of the Lotteries and Amusements Act 1976; and/or
- an unlawful trading scheme contrary to section 120 of Fair Trading Act 1973.
On 14 May 2008, Justice Norris handed down his findings in the case, dismissing all charges against Amway UK, providing Amway agreed to a number of undertakings, namely -
- (a) to maintain the present prohibition on the production sale or promotion of BSM that is not authorised and distributed by Amway;
- (b) not to introduce a registration fee or a renewal fee;
- (c) not to recruit new ABOs until it has published earnings data in accordance with a stated income disclosure policy (which requires annual disclosure for 12 month periods of the average earnings and the highest and lowest earnings of each category of ABO together with the minimum income levels for qualification for higher rewards and the number of persons qualified at each level ).
BERR submitted two appeals in the case alleging procedural irregularities. Justice Norris refused an application by BERR to restrict Amway from resuming sponsorship activity whilst the appeals were pending. Amway UK released statistics on earnings of distributors on July 21, 2008 and sponsoring resumed. On January, 29, 2009 the appeals were dismissed.