Compaq Accuses Packard Bell of Using Secondhand Parts

You’ve heard of sleazy mechanics who repair cars with used parts and then charge their unwitting owners for new ones. Now a similar allegation has surfaced in the fiercely competitive personal computer business.

In a lawsuit filed Monday, Compaq Computer Corp. charges that archrival Packard Bell sells PCs with used components and fails to disclose that fact to customers. Compaq alleges that Packard Bell takes apart returned computers, salvages the parts and uses those parts to build new machines.

Packard Bell denies the charges and calls the lawsuit gamesmanship on the part of Compaq.

“Compaq has evidently developed a public relations strategy to divert our efforts and slow our growth,” Packard Bell Chief Executive Beny Alagem said in a statement. “The world now recognizes that Packard Bell is the consumer’s choice, and Compaq is feeling the heat.”

The lawsuit, filed in U.S. District Court in Wilmington, Del., offers little evidence to support the allegations. A Compaq spokeswoman refused to comment on the suit.

Jim Helpin, chief executive of CompUSA, the largest chain of computer superstores with 83 stores in 26 states, says consumers have nothing to fear.

“CompUSA stands by every machine it sells,” Helpin said.

The chain sold more than $2 billion worth of computer gear last year.

One of its best-sellers is Packard Bell. CompUSA sells “tens of thousands” of Packard Bell PCs each month, Helpin said.

“We’ve had no complaints from customers,” he said. “When we install software, we open the machines up and we haven’t noticed anything wrong. This is not an issue.”

CompUSA also sells many Compaq PCs.

Compaq was the No. 1-ranked supplier of personal computers last year with 10% of the worldwide market, according to International Data Corp., a Framingham, Mass., market research firm. But Packard Bell, in fourth place with 4.7%, is the choice of many consumers buying PCs for the home--the fastest-growing segment of the PC market--and the company has a strong position in mass-market retail channels.

Analysts say Packard Bell poses a big challenge to Compaq because it is one of the few firms that has consistently been able to undercut Compaq’s prices.

Compaq has not been hesitant to sue competitors in the past. Several years ago, it sued Dell Computer, then a fast-growing upstart that was hurting Compaq, charging that snappy ads aimed directly at the company were unfair. The suit was eventually settled.