You win some, you lose some. The same week TPG scored a major coup in acquiring AAPT, it lost its long-running court battle with the Australian Competition and Consumer Commission (ACCC) over a series of misleading ads it ran in 2010 and 2011.
TPG will now have to pay the $2 million penalty initially ordered by the ACCC, which had been reduced to $50,000 on appeal. The High Court overturned an earlier ruling by the Full Court’s that the advertisements which TPG had revised after ACCC intervention, as well as TPG’s initial online, print and radio advertisements, were not misleading.
The initial ruling, in November 2011, found that TPG’s Unlimited ADSL2+ advertisements were misleading because they conveyed the impression that the Internet service could be acquired at a cost of $29.99 per month, when in fact this service could only be acquired with a bundled home telephone line, for an additional $30 per month plus start up costs.
TPG successfully appealed that ruling, but the High Court has now found against the company. “The Full Court erred in finding that the home telephone bundling requirement and set up charges were adequately disclosed and consumers would have known that internet services were commonly bundled with telephony services.”
The High Court also overturned the Full Court’s order that TPG pay total penalties of $50,000 over its misleading initial television advertisements and its failure to prominently display the single price in its initial advertisements. (CommsWire, 5 April 2013) The High Court considered that the $2 million penalty ordered by the trial judge was within the appropriate range and should be reinstated.
“This case is of great significance to the ACCC because it is important that penalties imposed for breaches of the Australian Consumer Law are set at a level that deters future breaches,” ACCC Chairman Rod Sims said.
“In particular, the High Court recognised that penalties must be fixed with a view to ensuring that the penalty is not such as to be regarded by businesses as an acceptable cost of doing business. We were also seeking the court’s guidance on the practice of headline advertising and the extent to which advertisers can rely on the knowledge of consumers about possible offers,” Sims said.
In its judgment, the High Court said: “The tendency of TPG's advertisements to lead consumers into error arose because the advertisements themselves selected some words for emphasis and relegated the balance to relative obscurity.”