On 12 December 2013 the High Court handed down judgment in Australian Competition and Consumer Commission v TPG Internet Pty Ltd. The High Court considered whether TPG's advertisements breached Australian Consumer Law and the Trade Practices Act, and if so, what should be taken into account in determining the penalty.
From September 2010 to November 2011, multi-media advertisements for TPG prominently displayed that its ADSL2+ broadband internet service could be obtained for $29.99 per month. In actual fact in order to acquire this, customers also needed to obtain a $30 per month TPG home phone service for at least 6 months. There was also an additional $129.95 setup fee and $20 deposit for phone charges. In the advertisements, terms that qualified the offer were displayed much less prominently. The ACCC believed that the advertisements were misleading and deceptive, and brought proceedings against TPG.
The High Court held that the advertisements' "dominant message" was of crucial importance. Where the dominant message of an advertisement doesn't fairly represent the offer, it will be deemed misleading. The Court found that even where consumers do not enter into a contract under the influence of a misleading advertisement, a breach of the law may occur at the point where members of the target audience are lured into the "marketing web" because of their incorrect belief that was formed because of the advertisement. This was held to be the case, even where the customer came to understand the true nature of the offer when the contract was entered into.
The High Court said that TPG advertisements tended to be misleading. The majority did not accept that this could be remedied or excused by the possibility that members of the target audience know that ADSL2+ services may be offered as a bundle.
In considering the size of the penalty, the High Court outlined three points that justified the seemingly hefty $2 million fine:
- the number of contraventions – 9 in total, taking into account the different forms of media
- TPG's undertaking – in 2009 TPG made an undertaking under section 87B of the Trade Practices Act to the ACCC to not engage in misleading or deceptive conduct in general
- general and specific deterrence – the majority quoted a Federal Court judgment to highlight the role of deterrence considerations in assessing the appropriate penalty: "penalties must be fixed with a view to ensuring that the penalty is not such as to be regarded... as an acceptable cost of doing business".
TPG is not the only telecommunications company to be fined for misleading or deceptive advertising – Optus was fined $178,200 in 2011 and $3.61 million in 2012.
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