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Gateway pays $9m for not overcharging US Govt.

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Gateway today agreed to stump up $9 million to settle an overcharging spat with the US government.

The deal settles allegations that the US PC maker failed to pass on price cuts for federal orders between 1994 and 1997.

Gateway had a contract with the General Services Administration, the federal agency that supplies IT kit and services to the government. As part of the agreement, the government was supposed to get any price reductions between the time of ordering and shipping.

Gateway has "admitted no wrongdoing, and the federal government continues to be one of our most valuable customers."

So, the company reckons it was cheaper to pay the $9 million than to battle it out in the courts. Or to lose a big customer.

Earlier this month Gateway was hit by a class action lawsuit which claimed it misled customers. It is alleged that some users got landed with surprise long-distance phone charges for Gateway's "free" Internet access service, while the company happily issued credit cards with a 27 per cent interest rate. ®

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