ACCC V TPG Internet Pty Ltd: Findings Of Misleading And Deceptive Advertising

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.

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

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

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

The TPG Internet Pty Ltd is a company that engaged in providing telephone and internet connections to the consumers under the name ADSL2+. The ACCC had initiatd legal proceedings against the company on the grounds of encouraging misleading and deceptive advertisements (Thampapillai et al. 2015). The Company was alleged that the advertisements were misleading and deceptive in nature. This is evident from the facts:

• There was a difference between the prominent headline that was offering TPG’s ADSL2+service and the less prominent terms that qualify the offer made by the company;
• The advertisements violated section 53C (1) (c) of the Trade Practices Act 1974 (Cth)by not specifying the single price of the package of services in a more prominent way and as a single figure;
• The advertisement violated section 53 of the TPAby making false or misleading representation in terms of the price of the services or the products. It made a misleading or false representation regarding the exclusion, existence or effect of any guarantee, right, warranty, condition or remedy. 

The TPG Internet Pty Ltd has been alleged to have contravened sections 52 and 53C (1) (c) of the Trade and Practices Act. According to section 52 of the TPA, a corporation must not exhibit any conduct that amounts to misleading or deceptive conduct or the company must not be engaged in any misleading or deceptive act while carrying out its business activities. According to section 53C (1) (c) of the Trade Practices Act 1974 (Cth) a corporation must not engage in any trade or commerce with respect to the supply of goods and services or promotion of any goods or services by making misleading or false representation in relation to the exclusion, existence , condition, guarantee, warranty, rights or remedy.

The ACCC had alleged that the TPG Company had failed to specify the price of the package of services in a prominent way and as a single figure. The company made the customers pay more than the amount advertised by the company (Pearson 2017). The company advertised about its goods and services but did not mention anything about the additional costs  and in spite of advertising a fixed price, it charged hidden costs from the customers thus misleading them with false statements contravening sections 52 and 53 C (1) (c) of the TPA.   

The primary judge based its judgments on the following reasons:

• His Honor found that the target audience included the consumers who were using ADSL2+ services for the first time. He stated that the target audience did not include those who had limited knowledge about such services or have no knowledge about the broadband internet services. The judge further contended that the although the users of the ADSL2+ include consumers who have more knowledge than those who are potential users of internet services, it does not imply that any reasonable or ordinary consumer has high knowledge about the internet services.
• The primary judge also considered that since the target audience of the ADSL2+ services includes the first time users, it could not be assumed that any ordinary or reasonable consumer would have any knowledge whether TPG’s offering entails bundled or separate services. Hence, it is obvious that the consumers would rely on the information relating to the ADSL2+ services advertised by the company.
• The primary judge further held that the dominant message of the advertisement offered ADSL2+ for $29.99 per month, which would be construed by any reasonable consumer that the entire costs of the service, is $29.99 per month without any additional costs. Whereas TPG intended that to acquire unlimited ADSL2+ for $ 29.99 a consumer must rent a home telephone for an additional cost of $30. Hence, the judge considered the advertisement false and misleading (Corones 2014).
• The primary judge held that it is a known fact for the targeted audience of the campaign that set up fees is charged for less than 24 months in relation to broadband contracts. However, the dominant message of the advertisement should have indicated the requirement of additional costs;
• Lastly, the advertisement did not display the single price of $509.89 that was required under section 53C (1) (c) of the TPA. 

The decision of the Full Court differed from that of the decision of the primary Judge on the following two grounds:

• The Primary judge emphasized on the advertisements containing ‘primary or dominant’ message but did not consider the entire advertisement, however, the primary meaning as misleading when read in fine print (Scardamaglian 2013);
• The primary judge has based its entire approach on ‘dominant message’ and failed to consider characteristics of the hypothetical viewer or reader which implies that these viewers are aware of the bundling method of sale associated with such sale and the fact that it includes set up charges. 

The High Court considered the conclusion of the Full Court as incorrect because of the following two reasons:

• The Full Court wrongly interpreted  the decision of the Primary Judge for considering ‘dominant message’ of the advertisement as an essential element and the referring to the Puxu’s case cannot be regarded as decisive in the context of this case;
• The Full Court did not consider the fact that TPG’s advertisements intended to mislead the knowledge of the target audience that ADSL2+ services may be offered as a bundle and the Full Court did not consider the matter separately (Corones 2014). 

The High Court stated that the Full court should have merely distinguished the Puxu’s case with the TPG’s instead of just applying the case. The High Court has stated the following reasons:

• The Full Court failed to determine whether the intention of the advertisement was to mislead the consumers or the potential users of the ADSL2+ services, instead it determined the whether it was appropriate to induce the potential users or the reasonable consumers to enter into a contract with TPG (Corones 2014). The court should have determined whether it was appropriate to bring the potential users into negotiation with TPG.
• Unlike the Puxu’s case, the issue in this case does not arise due to the tendency of the TPG’s advertisements to mislead the consumers, it arose because the advertisements itself emphasized on some words and created obscurity. The Full Court held that several persons will usually rely on the prominent term for recognizing the efficacy of the information presented by TPG in the form of advertisements. The Full Court did not appreciate the implication of the finding. 

As per the ruling given in ACCC v TPG, in order to launch an advertising campaign for the purpose of promoting an attractive plan including costs and benefits to be considered by the consumers, it is important such advertisements are made in compliance with the TPA 1974. The advertisers must not mislead the consumers and proper and appropriate information should be conveyed to them to ensure that the advertisement does not have a misleading impression on the customers or its targeted audience (Hurley 2014).

The advertisers must comply with section 52 and 53 of the TPA that prohibits a corporation from making any misleading or false representation in relation to the prices, services or in relation to the existence, condition, warranty, right or remedy with respect to the use or supply of services or goods. 

Reference list

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

Corones, S., 2014. Australian Competition and Consumer Commission v. TPG Interney Pty Ltd., Forrest v. Australian Securities and Investments Commission: Misleading Conduct Arising from Public Statements: Establishing the Knowledge Base of the Target Audience. Melb. UL Rev., 38, p.281.

Corones, S., 2016. Misleading premium claims. Australian Business Law Review, 44(3), pp.188-203.

Corones, S.G., 2014. Misleading conduct arising from public statements: establishing the knowledge base of the target audience. Melbourne University Law Review, 38(1), pp.281-315.

Hurley, T., 2014. Case notes: High court and federal court. Law Society Journal: the official journal of the Law Society of New South Wales, 52(2), p.76.

John, R. and Willekes, A., 2014. Consumer law: Deceptive advertising: Is it a question of audience?. Law Society Journal: the official journal of the Law Society of New South Wales, 52(3), p.42.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [34]

Pearson, G., 2017. Further challenges for Australian consumer law. In Consumer Law and Socioeconomic Development (pp. 287-305). Springer, Cham.

Protection, C. and Update, E., 2013. Communications Law. Communications Law Bulletin, 32.

Scardamaglia, A., 2013. Misleading and deceptive conduct and the internet: Lessons and loopholes in Google Inc v Australian Competition and Consumer Commission.

Thampapillai, D., Tan, V., Bozzi, C. and Matthew, A., 2015. Australian Commercial Law. Cambridge University Press.

Trade Practices Act 1974 (Cth)