ACCC V TPG Internet Pty Ltd – A Case Of Misleading Advertising

Nature of TPG's advertising

1. Briefly describe the nature of TPG’s advertising which caused ACCC to bring these proceedings

2. What statutory provisions did ACCC allege that TPG’s advertising contravened

3. What were the findings (conclusions) of the primary judge about the following aspects of the advertising

• bundling.

• the set up fee.

• single price.

4. What were the differences in principle between the approach of the Full Court and the approach of the primary judge in evaluating whether the TPG advertising was misleading?

5. The High Court concluded that the approach taken by the Full Court was not correct. For what reason or reasons did the High Court come to this conclusion?

6. The Full Court, in coming to its conclusions, applied as a precedent the ratio in a case called

Parkdale Custom Built Furniture v Puxu (“Puxu”). The High Court said that the Full Court wrongly applied the principle in Puxu. Explain why the High Court thought Puxu was not a proper precedent to apply to the TPG advertising

7. What did the High Court have to say about the “dominant message” approach?

8. What did the High Court say about the assumed level of knowledge in TPG’s target audience?

9. Is an intention to mislead essential for advertising to be misleading? Explain what the High Court thought about this

10. If you were employed in the marketing section of an internet service provider or a fitness centre which was about to launch an advertising campaign promoting an attractive “plan” for membership in which there were several “parts” (costs and benefits) to be taken into account by potential customers, what advice would you give about the format of the advertising, based on your understanding of the High Court’s ruling in ACCC v TPG?

1: The advertising campaign of TPG Internet Pty Ltd due to which, these proceedings were initiated by the Australian Competition and Consumer Commission was run between 2010 and 2011. In these advertisements, and offer was prominently displayed by the company according to which, unlimited ADSL2+ services were offered to the consumers at $29.99. But there was a requirement also present in the advertisement as a result of which, the service offered by the company was required to be bundled with home telephone service by the consumers and this requirement was displayed in these advertisements much less prominently. The result of this requirement was that ultimately the consumers were required to pay additional $30 per month and this requirement was for a minimum period of six months. At the same time, the company has also imposed a setup fee of $129.95 that the consumers had to pay. Similarly there was another requirement according to which, the consumers were also required to deposit telephone charges worth $20. However, TPG Internet has mentioned all these requirements much less prominently in its advertisements. The result was that the ACCC claimed that the advertisements of the company were misleading and deceptive (ACCC v TPG Internet Pty Ltd [2013]).

2: The Australia Consumer and Competition Commission Claimed that the multimedia advertising campaign of TPG Internet was misleading and deceptive for the consumers. In this regard, it was claimed by the ACCC that along with section 18, Australian Consumer Law, it has also reached the section 24 of this legislation. The reason due to which it was claimed by ACCC that these statutory provisions have been breached by the company was due to the fact that there a disparity was present between the offer prominently displayed in the advertisement and the other terms that qualified the offer which were displayed less prominently by the company. Therefore, ACCC claimed that these advertisements have contravened the statutory provisions because they have not prominently specified the complete price of the package offered by the company as a single amount.

Statutory Provisions Alleged to be Contravened

3: The trial judge accepted the contention of ACCC that the advertising campaign of TPG Internet was misleading and deceptive and in this way it breached the provisions of section 18 and 29 of the ACL. It was also accepted that the total price of the package has not been prominently mentioned as a single figure in the advertisements and therefore it breached section 48, ACL.

Bundling: The court found that first-time users were also included in the target audience of these advertisements. Similarly as a result of the fact that a wide range of Internet options are available in the market, it cannot be expected that the ordinary consumers will have a starting assumption regarding the fact that the offer of TPG was a separate or a bundled service and therefore, it can be expected that the consumers will rely on the advertisement itself to look for the information related with the service.

The Setup Fee: Although it was accepted by the court that setup fee is charged in case of broadband contracts that are for a period of less than 24 months and the target audience of these advertisements can be expected to be aware of respect however the court stated that the dominant message given by these advertisement resulted in the creation of an impression among the consumers that no further charges were there and therefore it was necessary that the advertisements should clearly qualified that message by indicating that there is a requirement of further fee to be paid by the consumers.

Single Price: In this regard, the court stated that the advertisements have not prominently displayed the single price of $509.89 as required by s53C(1)(c) of the Trade Practices Act (TPA) in the advertisements that were initially issued by the company in newspapers, television and Internet.

4: Noteworthy differences were present between the approach that has been adopted by the primary judge and the approach that was adopted by the Full Court. The first difference in this regard was related with the significance that was attached by the two courts to the "dominant message" that has been displayed by the advertisements issued by TPG Internet. In the same way, difference was also present between the approaches adopted by these two courts dealing with the knowledge that was attributed to the target audience of these advertisements issued by the company.

5: The reason behind the decision of the High Court that the Full Court was not based on the reason that the Full Court was not correct when it held that it was wrong for the primary judge to consider the dominant message of the advertisement as crucially significant. Another reason was that the Full Court had not appreciated the advertisement's misleading nature which was not neutralized even if particular knowledge was attributed to the target audience according to which, there were supposed to assume that ADSL2+ services are offered as a bundle. Therefore the High Court stated that as a result of these errors, differences were present in point of principle related with the approach of the primary judge and as a result, the Full Court has committed an error in performing its appellate function.

Findings of the Primary Judge

6: In this context, it was stated by the High Court that the Full Court has committed an error when it arrived at the conclusion that it was wrong for the primary judge to consider that the "dominant message" of the advertisement should be given high significance. Therefore the statement of Gibbs CJ made in Puxu that the Full Court applied in this case cannot be considered as being decisive keeping in view the circumstances of the present case (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd, 1982).

7: Regarding the approach adopted by the court towards the dominant message given by the advertisement, the court stated that the primary judge was correct when it stated that crucial significance needs to be given to the dominant message of the advertisement and at the same time, another has been committed by the Full Court when it stated that the primary judge was wrong in giving crucial significance to the dominant message of the advertisements.

8: The High Court mentioned regarding the level of knowledge that can be resumed in case of target audience that the terms mentioned in the message and also the way it was conveyed to the target audience creating an impression among the audience that TPG Internet body to create an impression that was different from the impression caused by these advertisements if the company would have given same importance to all the elements that are part of this package

9: A number of factors were mentioned by the High Court that have to be considered in order to decide if the advertisement can be treated as misleading and therefore the intention to mislead is not the essential element. Therefore it cannot be expected that close attention will be paid by the target audience to all the terms that have been mentioned in the advertisement and there will be many members of the target audience that will only look at the 'general thrust' of the advertisement. However it is required that a general tendency should be present resulting in leading the consumers into error.

10: When a fitness center is offering an attractive membership plan to its customers, it is important to make sure that the advertisement is not of such a nature that the consumers will only observe the dominant message of the advertisement. Similarly if the membership plan that is being offered to the consumers have several parts, it is important that all these parts have been given the same significance in the advertisement and as a result, the costs and benefits that are being offered in these parts are highlighted with equal importance. Therefore the advertisement issued by the fitness center should be of such a nature that it gives the total cost of membership and it should not happen that only the cost of selective parts are highlighted.

References

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44

Legislation

Competition and Consumer Act 2010 (Cth)

Trade Practices Act 1974 (Cth)