ACCC V TPG Advertising Litigation: Court Hearings And Findings

Nature of TPG's Advertising and ACCC's Allegation

The sequence of court hearings

• The Australian Competition and Consumer Commission (ACCC) brought proceedings against internet provider TPG because of an advertising campaign for internet services TPG had been conducting.

• Initially, the proceedings were heard by a single judge, who is referred to in the judgment as "the primary judge". ACCC was largely successful against TPG in those proceedings.

• TPG, having lost the case before the primary judge, appealed to three judges, referred to in the judgment as the “Full Court". That court largely disagreed with the conclusions of the primary judge and set aside his decision. In effect, TPG won its appeal to the Full Court.

• This left ACCC as the loser. It appealed to the High Court, which disagreed with the conclusions of the Full Court in favour of TPG and essentially reinstated the decision made by the primary charge in favour of ACCC.

The judgment you are reading, and to which the assignment questions relate, is the judgment of the High Court only. However, to enable the "ratio" of its decision to be understood, the High Court includes in its judgment summaries of the reasons which the primary judge and the Full Court gave in coming to their respective (and contradictory) decisions.

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 TGP had taken the multimedia advertisement as a tool promotes its broadband service. The main issue raised by ACCC against TGP was the misleading nature of an advertisement. The company had prominently emphasized that it would provide broadband service for $29.99 per month using landline medium. However in with less emphasis the other condition were attached like compulsory using of TGP landline connection with some fees, some set up charges and deposits. ACCC’s was at view that TGP had breached section 53C (1) © by not showing total price of service prominently.

2. ACCC has alleged TPG based on contravention section 52 and some 53c (1) ©, which specifically prohibits any person to engage in any activity that is in deceptive nature and promote the services or goods which is misleading in nature.

3. Findings of Primary Judge

Bundling- The primary judge had found that the advertisement was specifically targeted to new users of broadband. And the prominent words of an advertisement were “Unlimited ADSL2+ for $29.99 per month” which apparently not gives an understanding that any other charges would be there. The primary judge concluded that the way of advertisement leaves an ordinary man with message that the entire costing of the service was $29.99 and nothing more. However it was the case, other set up cost and deposited and fixed charges of $30 were there and hence the advertisement was in false and misleading nature resulting in contravention of Section 53.

The Set up Fee
 
The judge concluded that generally set fee for broadband changed for contract less than 24 month, however the new consumer was not sufficiently provided information for this set up fees. The judge found from investigation that none of the targeted was aware about the set up fees attached with the offer and hence the TPG was unable to disclose the fair and full information to targeted consumer.

Single Price
 
The total cost of the service was more than $29.99 which was disclosed prominently as a single price. The other cost like set up cost of $20, Usage charge of landline service of $ 30 and $20 deposited and others. The total price of $ 509.89 for service was not disclosed clearly as single price.

4. It is to be noted that the difference of an opinion between Full court and the primary court was of difference in approach of interpreting principals. The Full court had taken view that the targeted audience was not mislead because the past data shows people were not more interested in landline service and hence targeted audience were in state of non-interest, Further the full court had held that the “Prominent message “which was one of the criteria to give judgment against AGP, should be construed in the terms of misleading, the term dominate message cannot overrule the fact that the whole advertisement should be read carefully.  The Full court said that the strict provision of this act cannot extend where person is not able to take care reasonably to read the advertisement by applying case of Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd.

5. The High court held  that  full courts  is failed to consider the term “Prominent Message” , as the case of Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd  was opt applicable in existing case because of non existence of decisive factor. Also High court said the fact that the targeted people’s knowledge regarding bundled service in this industry does not affect the misleading nature of the advertisement. The full court had taken the knowledge of targeted consumer regarding offering of bundled service but the high court had declined the content and base of the Full court.

6. Following are the three main reason based on which High court said the applied case of Puxu was not proper in TPG advertisement.

(1) It is to be noted that the position of the targeted audience in both case were different , in case of Puxu the audience visiting the showroom , had substantial mind and intention of purchase of the product . However this was not case in TPG, the targeted audience in same case was in general just to draw the attention of the Customer and making them interested in product. The fact of the both case of was different

(2) Also as per high court explanation the full court had failed to recognize the fact that the main purpose of the advertisement was to drag consumers in negotiation with TGP against the competitor by showing misleading message or advertisement prominently.  However in the case of Puxu , the main intention was to induce customer only to enter into contract only

(3) The fact that the consumer should take reasonable care before entering into contracts cannot be interpreted as protection when the whole intention of the advertisement was to mislead the consumer or showing erroneous message. Here the High court found that in case of Puxu it was not the case. Here the advertisement was taken as medium to draw the attention of the consumer by misleading message which cannot be protected by the fact that they should take care reasonably.

7. The high court had said that the “Dominant message” interpreted by the primary court was reasonable as the Full court had wrongly applied the case of Puxu. It is to be noted that the fact of taking reasonable care by customer cannot be used as protection when the Prominent message apparently misleading the consumers. The full court given the Judgment based on argument that it was responsibility of the customer to check full advertisement carefully and then relying on this, and same had been pronounced by applying Puxu case. But High court had taken a view that the Prominent message  is given by Company was found to attract new customer for bargaining with customer in oppose to customer, which shows clear intention to draw wrong attention of the customer by not disclosing all the information apparently dominantly.
8. The high court had said that the fact that the advertise was misleading could not be ignored with assumption of full court that consumer who was reading the advertisement had knowledge of bundled pricing of the product. The Full court had taken a view that  the targeted audience must ne know to the nature of advertisement prevailing in this industry , like bundle pricing in Internet service provider are common now  and hence it could not be concluded advertisement is misleading. But high court had overruled Full courts view of this Audience Knowledge’s theory application and pronounced Once the advertisement was in nature of misleading, same was said to be contravene the provision of Section 53 of the relevant Act

9. The court thought it said that the way in which advertisement was published by TPG could not be said that it had produce all the element of offer fairly. The court said that though the direct intention of the TGP was not to mislead the consumer but as the intention to emphasize of most favorable offer was there. Suppressing the other facts out of main heading. The company’s headlines strategy reveals the company’s intention to draw attention with incomplete information was misleading.

10. Based on the ACCC vs. TPG case, I advice following thing to my company as marketing guy while marketing the product.

a. Quoting of total Cost as single figure including all other attached cost

b. All other element of offers must be stated fairly with an advertisement in prominent manner.

c. The targeted audience should be determined first and company can also give declaimer for that in advertisement itself to avoid dispute