TGP Internet’s Deceptive ADSL2+ Marketing

Question:

The sequence of court hearings

• The Australian Competition and Consumer Commission (ACCC) brought proceedings against internet provider TPG because of an advertising campaign for internet services TPG had been conducting.

• Initially, the proceedings were heard by a single judge, who is referred to in the judgment as “the primary judge”. ACCC was largely successful against TPG in those proceedings.

• TPG, having lost the case before the primary judge, appealed to three judges, referred to in the judgment as the “Full Court”. That court largely disagreed with the conclusions of the primary judge and set aside his decision. In effect, TPG won its appeal to the Full Court.

• This left ACCC as the loser. It appealed to the High Court, which disagreed with the conclusions of the Full Court in favour of TPG and essentially reinstated the decision made by the primary charge in favour of ACCC.

The judgment you are reading, and to which the assignment questions relate, is the judgment of the High Court only. However, to enable the “ratio” of its decision to be understood, the High Court includes in its judgment summaries of the reasons which the primary judge and the Full Court gave in coming to their respective (and contradictory) decisions.

1 Briefly describe the nature of TPG’s advertising which caused ACCC to bring these proceedings

2 What statutory provisions did ACCC allege that TPG’s advertising contravened

3 What were the findings (conclusions) of the primary judge about the following aspects of the advertising

• bundling.

• the set up fee.

 single price.

4 What were the differences in principle between the approach of the Full Court and the approach of the primary judge in evaluating whether the TPG advertising was misleading?

5 The High Court concluded that the approach taken by the Full Court was not correct. For what reason or reasons did the High Court come to this conclusion?

6 The Full Court, in coming to its conclusions, applied as a precedent the ratio in a case called

Parkdale Custom Built Furniture v Puxu (“Puxu”). The High Court said that the Full Court wrongly applied the principle in Puxu. Explain why the High Court thought Puxu was not a proper precedent to apply to the TPG advertising

7 What did the High Court have to say about the “dominant message” approach?

8 What did the High Court say about the assumed level of knowledge in TPG’s target audience?

9 Is an intention to mislead essential for advertising to be misleading? Explain what the High Court thought about this

10 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 format of the advertising, based on your understanding of the High Court’s ruling in ACCC v TPG?

1. It was seen in this case that TPG Internet Pty which was a internet provider as well as telephone line provider issued an advertisement in which it claimed to give a broadband connection by the name of ADSL2+ to its customer at very low rates, the rate which was mentioned in the advertisement was $29.99 every month, but there were several hidden costs in this connection, it came with a bundled effect i.e. it only came with a telephone connection costing an additional $30 every month to the customer and there were other hidden costs like the cost of setup and other telephone setup charges which amounted to $149.95. This was the reason behind the further proceedings which were taken against TPG.

ACCC’s Allegations Against TPG

2. According to ACCC the advertisements which were made by TPG were misleading the customers and it had deception which was fooling the customers, the commented that the service which was being given by TGP had mentioned prominently about just the starting fee and there was and intention to hide the bundled up effect as well as the other hidden costs, they further alleged the company by saying that they had went against the provisions of the Trade Practices Act 1974 as there was no unified figure or single amount of fee which was mentioned in their advertisement which would misguide the customers

3. The findings of the primary judge were as follows

Bundling, it was mentioned by the judge that any such effect should be properly mentioned in the advertisement and in the case of TPG it was not mentioned clearly hence it had a misleading and deceptive effect upon the customers, judge found out that this was not done in any source of advertisement either on television or radio

 Setup fee, the judge mentioned that this fee is normally charged for contracts which have a time period of less than 24 months, thus the customers of this service should have had some idea about such fee, but the dominant message which was given in the advertisements about the one-time fee was more than capable of misguiding the customers as there was no prominent mention of any additional charges (Colley, Andrew 17 March 2010).

Single price, the judge found out that were no mention about the single price i.e. the total price or amount which was required to be spent to get the connection, the amount being $509.89 was not disclosed in the correct manner in the primary or initial advertisements made by TGP, thus not following the provisions of the Trade Practices Act.

4. The main difference in principle between the approaches of the two courts were connected to the dominant message, as the primary judge concluded that the dominant message should be corrected by TGP if they do not want their advertisement to be misleading but the approach of the full court judge was different as he mentioned that the users of the service must be familiar with such connections and should apply proper diligence and care before entering any contract.

5. The high court decided against the judgment of the full court, because of the following reasons

• The full court was wrong about the dominant message
• The statements in relation to puxu used in this case were irrelevant
• The court decided that the intension of misleading can be neutralized but this was not the right treatment in this case

6. The judgment of the full court was based on the findings of the case park dale Custom Built Furniture v Puxu, but the full court wrongly used the provisions of the judgment of this case

• In the above mentioned case the respondent was selling furniture which was similar to that of the appellant, thus the court said that customers should pay attention to the brand and label of the furniture before buying it
• But this principle cannot be used in the present case as the advertisement was made to misguide the customers and it is not possible for the target customers to pay attention to every minute detail of the advertisement

7. The dominant message approach was correct according to the high court as the customers were not going to a showroom with proper purchases in mind it is likely that the customers might not pay attention to every minute detail of the advertisement and rely on the prominent message which is given in the advertisement (Hutchison, James 17 September 2013), thus the court decided that the customers should exercise diligence and care but the company should not issue a misleading advertisement with a dominant message which misguides the customers.

8. It was mentioned by the high court that general customers might have the knowledge that the service is only available in bundle with the telephone line but the dominant message given by TPG can change the mindset of the customer as they might expect that there are no additional charges for this service as it was prominently advertised by TGP (Chester, Rodney 29 February 2000).

9. In case of a misleading advertisement it is not necessary to have an intention to mislead the customers as in this case there was no mention in the court about the intention of TGP being misleading neither did ACCC complain about such an intention, they did not have the intention of misleading they just had the intension of advertising their best feature in the deal.

10. The advice to the company will be to highlight the best feature about the offer but also mention prominently about the different additional costs or other hidden expenses properly so that the advertisement is not misleading and the customer can understand everything about the offer properly and then act according to his will, this would be my advice after going through the High Court’s judgment of the case ACCC v TPG.

References

1. Advertising and the ACL: Fine print couldn’t save TPG Internet in the High Court | Clayton Utz. 2015. Advertising and the ACL: Fine print couldn’t save TPG Internet in the High Court | Clayton Utz. [ONLINE] Available at: https://www.claytonutz.com/publications/edition/19_december_2013/20131219/advertising_and_the_acl_fine_print_couldnt_save_tpg_internet_in_the_high_court.page.[Accessed 04 February 2015].

2. High Court reinstates $2m penalty against TPG | ACCC. 2015. High Court reinstates $2m penalty against TPG | ACCC. [ONLINE] Available at: https://www.accc.gov.au/media-release/high-court-reinstates-2m-penalty-against-tpg-0.[Accessed 04 February 2015].

3. Australian Competition and Consumer Commission v TPG Internet Pty Ltd | Opinions on High. 2015. Australian Competition and Consumer Commission v TPG Internet Pty Ltd | Opinions on High. [ONLINE] Available at: https://blogs.unimelb.edu.au/opinionsonhigh/2013/12/12/tpg-internet-case-page/.[Accessed 04 February 2015].

4. High Court looms for ACCC vs TPG. 2015. High Court looms for ACCC vs TPG. [ONLINE] Available at: https://www.afr.com/p/business/companies/high_court_looms_for_accc_vs_tpg_rOpLZ0UnqAKA3OLrmyy5PP.[Accessed 04 February 2015].

5. Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR ¶42-106 at [37]. See Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [104]-[105].

6. Australian Competition and Consumer Commission. 2015. Australian Competition and Consumer Commission. [ONLINE] Available at: https://www.accc.gov.au/.[Accessed 04 February 2015].

7. Case M98/2013 – High Court of Australia. 2015. Case M98/2013 – High Court of Australia. [ONLINE] Available at: https://www.hcourt.gov.au/cases/case_m98-2013.[Accessed 04 February 2015].

8. TPG Internet Pty Ltd: Private Company Information – Businessweek. 2015. TPG Internet Pty Ltd: Private Company Information – Businessweek. [ONLINE] Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=32755264.[Accessed 04 February 2015].

9. Chester, Rodney (29 February 2000). “Pay TV plan to lift Net result.”. The Courier-Mail. p. 9.