A recent majority decision of the High Court in ACCC v TPG Internet Pty Ltd [2013] HCA 54 confirms that courts should focus on the "dominant message" in determining whether an advertisement is misleading or deceptive and that the conduct need not actually mislead or cause loss to consumers in order to attract pecuniary penalties.
From September 2010 until November 2011, TPG Internet Pty Ltd (TPG) ran an advertising campaign across a variety of media outlets promoting an ADSL2+ service with unlimited downloads. The campaign advertised the services for the price of $29.99 per month. Much less prominently, the campaign explained that this offer was only available in conjunction with a home phone service at the cost of $30.00 per month. A set up fee and telephone charges were also payable.
The Australian Competition and Consumer Commission (ACCC) brought proceedings in the Federal Court against TPG for misleading and deceptive conduct. The primary judge agreed that the advertising campaign was misleading as it failed to prominently specify the single price for the package of services offered by TPG. A number of orders were made against TPG including a monetary penalty of $2 million.
On appeal, the Full Bench of the Federal Court overturned all but 3 of the primary judge's findings that TPG had engaged in misleading and deceptive conduct and reduced the penalty to $50,000. The Full Federal Court found that the primary judge had erred in focusing on whether the "dominant message" of the advertisements was misleading, without having regard to the attributes of the hypothetical viewer and the full context of the advertisement.
The Full Federal Court accepted that many viewers would absorb only the general thrust of the advertisement, but it found that an ordinary and reasonable viewer would be aware that broadband services are sometimes offered as a "bundle" with telephone services. The Full Federal Court found that the advertisements were not misleading because the bundling condition could only be missed by a perfunctory viewing (except in the case of 3 advertisements).
A majority of the High Court overturned the Full Federal Court's decision and reinstated the penalty imposed by the primary judge.
The majority judgment stated that the primary judge was correct to focus on the "dominant message" of the advertisement and that the hypothetical reader's knowledge of "bundling" was not sufficient to neutralise the misleading nature of the advertisements. The High Court found that the correct test was not whether the advertisements induced potential customers to enter into an agreement with TPG but whether a potential customer would engage in negotiations with TPG rather than a competitor on the basis of the misleading advertisement.
The fact that there was little evidence that any consumers had actually been mislead by the advertisements was irrelevant. The relevant consideration was not whether a consumer had suffered loss or actually been mislead but whether the advertisement, viewed as a whole, has a tendency to lead a consumer into error.
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