ACCC V TPG Internet Pty Ltd.: Analysis Of Misleading Advertising Case

There were three problems with TPG’s advertising which the ACCC considered to be misleading;  state briefly what those three were 

Question 2

The ACCC alleged that TPG’s advertising contravened two STATUTORY provisions; what were those statutory provisions (ie, which sections of which Act) and what did the ACCC say about the advertisements which contravened each of those provisions [4  marks – 1 each  for identifying each of the two statutory provisions and 1 each for stating how the advertisements contravened that provision]

Question 3

What were the findings (conclusions) of the primary judge about each of the following aspects of the advertising?  In your answer, consider the matters suggested in italics [3 marks total 1 for each of the following]

• bundling (who did the judge believe would be the “target audience” and what was it about the advertising which could mislead that audience?)  

• the set-up fee (in what way was the advertising capable of misleading consumers about this?) 

• single price (in what way was this aspect in breach of the statute?)  

Question 4

The Full Court came to two important different conclusions from those of the primary judge when deciding whether the TPG advertising was misleading? What were those two different conclusions 

Question 5

The High Court decided that the conclusions of the Full Court were not correct. For what two reasons did the High Court differ from the Full Court’s reasoning? 

Question 6

The Full Court, in coming to its conclusions, applied as a precedent the ratio from an earlier case called Parkdale Custom Built Furniture v Puxu (“Puxu”).  The High Court said that the Full Court should not have applied (ie, the Full Court should have “distinguished”) the principle in Puxu and it gave three reasons for this.  Briefly explain any two of the reasons the High Court said made the Puxu case different from the TPG advertising. 

Question 7

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 form the advertising should take, based on your understanding of the High Court’s ruling in ACCC v TPG? 

Breached Statutory Provisions

In this case, a multimedia advertising campaign was initiated by TPG Internet Pty Ltd. That took place between 2010 and 2011 (ACCC v TPG Internet Pty Ltd., 2013). The main feature of these advertisements was an offer related with unlimited ADSL+ service, which was being offered to the consumers that the price of $29.99 per month. But it was also mentioned in these advertisements much less prominently that the consumers were required to bundle the service along with home telephone service being offered by the company (Cusk, 2005).

For this service, the company had to be paid additional $30 per month for minimum six months. At the same time, the company was also charging a setup fee of $129.95 from the consumers. Similarly, it was also required that the consumers should pay a deposit of $20 for telephone charges. Under these circumstances, the Australian Competition and Consumer Commission (ACCC) claimed that these advertisements of the company should be considered as misleading and deceptive.

Q 2

Answer: the ACCC claimed that the advertisements of TPG Internet Pty Ltd. need to be considered as misleading and deceptive. Regarding the statutory provisions that were breached by these advertisements, it was claimed by the commission that section 52 of the TPA and also s18 of the Australian consumer law has been breached by these advertisements. The reason was the disparity that existed among the offer that was prominently made in the advertisements and the less prominent terms qualifying the offer. It was also claimed by the commission that some of the advertisements of the company resulted in breaching the provisions of section 53C(1)(c). The reason was that these advertisements fail to prominently mentioned the price of the package as a single figure.

Q 3.

Answer: while deciding the case, the trial judge agreed with the claim of the Commission that the advertisements issued by the company need to be treated as misleading and deceptive and these advertisements have breached section 18 and 29 of the Australian Consumer Law. These advertisements fail to prominently display the complete price of the package as a single figure. This resulted in the breach of provisions mentioned in section 48, ACL.

In this way, the trial judge was in favor of the claim made by the commission that the advertisements of TPG Internet were in fact misleading and deceptive. These advertisements are considered to be in breach of section 18 and 29 of the Australian consumer law.

Primary Judge's Conclusions

Bundling: it was a finding of the court that the first-time users were also a part of the target audience of these advertisements. In the same way, due to the fact that a large number of Internet options are available these days in the market, it is not possible for the ordinary consumers to make a starting assumption concerning the fact that the offer made by TPG Internet was a separate offer or a bundled service (Heydon, 1989). Therefore, under the circumstances it can be expected that the consumers are going to rely on the matter prominently issued in the advertisements for the purpose of seeking the information concerned with the service offered by the company.

The Setup Fee: Even if it was accepted by the court that in case of Rod Ben contracts that are for a period of less than 24 months, a setup fee is generally charged. Similarly, it can be expected that the target audience of the advertisements would be aware in this regard; however the court further mentioned that the dominant message that came out from these advertisements caused an impression among the consumers that the company was not going to charge any further charges (Campbell v Backoffice Investments Pty Ltd., 2009). As a result, it was necessary that the advertisements issued by the company should have clearly qualified the message by indicating that the consumers are required to pay a further fee for availing the service offered by the company.

Single price: in case of this issue, it was mentioned by the court that the advertisements issued by the company failed to prominently mentioned a single price of $509.89, which was necessary in view of the provisions of section 53C(1)(c), Trade Practices Act in the advertisements that were issued by the company in the beginning in different media like, television, newspapers and the Internet.

Q 4.

Answer: a considerable difference existed between the approach that has been taken by the primary judge and the approach adopted by the Full Court. The first difference was related with the significance of the "dominant message" that was a part of these advertisements. The other difference was related with the approach adopted by these two courts regarding the attribution of knowledge to the members of target audience.

Q 5

Answer: The High Court had reached at its conclusion, when it stated that the approach that has been adopted by the Full Court cannot be described as correct due to certain reasons. First of all the Full Court had made an error in doing away with the conclusions of the primary judge regarding the fact that the "dominant message" of the advertisements was critically significant. The second reason in this regard was that the Full Court had failed to appreciate the misleading nature of these advertisements that were issued by TPG Internet Pty Ltd, which was not utilized by educating knowledge to the members of target audience according to which ADSL2+ services can be provided as a bundle. Hence, it was stated by the majority that in view of the above-mentioned issues, differences were present in principle with the approach that was adopted by the primary judge and due to which there was an error made by the Full Court in its appellate function (Trade Practices Commission v Optus Communications Pty Ltd., 1996).

Full Court's Conclusions

Q 6

Answer: It was held by the High Court that an error has been made by the Full Court when the court arrived at the conclusion that the primary judge did a mistake in considering that critical significance should be given to the dominant message that lies these advertisements. The full court applied the statement made by Gibbs CJ in Puxu that had been applied by the Full Court cannot be treated as decisive in view of the circumstances of this case (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd., 1982).

q7

Answer: For the purpose of offering an effective plan of membership to the consumers coming to a fitness center, there are a number of things that have to be kept in mind. Therefore, it needs to be considered if the consumers of the fitness center. Have any knowledge concerning the bundling practices that are commonly present in fitness industry. It is also required that such knowledge on part of the consumers should be sufficient to defuse the tendency present in the advertisements to mislead the consumers.

Similarly, it is also required that the fitness center should issue the advertisements that are not of the nature where only the dominant message or the general thrust of the advertisements is observed by the consumers. This type of thing should not take place due to the selective attention paid by the consumers but on account of the advertising strategy.

For example, if the fitness center is offering an attractive membership plan in several parts, equal importance needs to be given to all the parts of the membership plan. The costs and benefits offered by these different parts of the plant should be highlighted equally. Another important thing in this regard is related with the overall impression given by the advertisements of fitness center should provide information regarding the company cost of membership plan and not the cost of certain parts of the plan only. In this way, it is required in this case that the advertisements issued by the fitness center should be. Concerning the total cost that had to be paid by the consumers in case they decide to purchase the membership plan.

References

Heydon, J. D. (1989), Trade Practices Law: restrictive trade practices, deceptive conduct and consumer protection (December 2009 ed.), Sydney: Thomson LBC

Cusk K. (2005) “Case note: To Bundle or Not to Bundle” 13 TPLJ 226

Case Law

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

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25

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

Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326

Legislation

Competition and Consumer Act 2010 (Cth)

Trade Practices Act 1974 (Cth)