Australian Competition & Consumer Commission v TPG Internet Pty Ltd  HCA 54
The High Court’s decision against TPG reinforces that businesses must take great care when using a “dominant message” advertising strategy, or risk being subject to significant penalties.
In particular, businesses must ensure that advertisements adequately disclose the full meaning of the advertiser’s message, ensuring that important and complex details associated with the advertised product are not buried away in fine print qualifiers.
Businesses also cannot make assumptions about, or rely on, the levels of assumed knowledge its customers should have about products it advertises, nor rely on customers later appreciating the true state of affairs, to neutralise misleading headline claims.
On 12 December 2013, French CJ, Crennan, Bell, and Keane JJ of the High Court (with Gageler J in dissent) overturned the Full Federal Court’s decision and reinstated the trial judge’s $2 million penalty against TPG for publishing online, print and radio advertisements that were misleading.
The trial judge found that TPG had engaged in nine separate contraventions of the Trade Practices Act (TPA) (for conduct TPG engaged in prior to 1 January 2011) and the Australian Consumer Law (ACL) (for conduct TPG engaged from 1 January 2011) by publishing two sets of misleading advertisements on a number of media platforms offering to provide customers with “unlimited” ADSL 2+ for $29.99 a month, when the service could only be acquired as part of a “bundled service” with other additional costs.
Specifically, Murphy J found that:
As a result, Murphy J made orders for declarations, injunctions, corrective advertising and pecuniary penalties totalling $2 million.
TPG appealed the orders made by Murphy J, with the exception of the order relating to TPG’s breach of the single price provision under s 53C of the TPA in relation to its initial television advertisements.
The Full Court upheld the trial judge’s decision that the initial television advertisements were misleading. However, in relation to the other advertisements, the Full Court held that Murphy J had erred by:
The Full Court, therefore, accepted TPG’s submissions that TPG had engaged in only three contraventions, being breaches of sections 52, 53(e) and 53(g) of the TPA in relation to its initial television advertisements and s 53C of the TPA in relation to its initial television, print and online advertisements.
In considering the appropriate penalty and other relief, the Full Court also found that the trial judge had erred in holding that an undertaking that TPG provided to the ACCC pursuant to s 87B of the TPA in 2009 was of relevance to the pecuniary penalties and injunction, and finding that it had been breached.
Following the receipt of submissions on relief from the parties, the Full Court ordered TPG to pay a penalty of $50,000, ordered the ACCC to pay 75% of TPG’s legal costs, and set aside the remainder of the trial judge’s orders for relief.
In overturning the Full Court’s decision the High Court found that TPG’s advertisements across each of the media platforms were, or were likely to be, misleading, as the “dominant message” conveyed in its headline claim did not adequately disclose the bundling requirements and other charges that applied.
The High Court found that the Full Court erred in deciding that the “dominant message” of advertisements was not of crucial importance as:
Further, the Full Court was found to have erred in failing to appreciate the fact that the “dominant message” in TPG’s advertisements was not neutralised by the level of the audience’s assumed knowledge of how ADSL 2+ services are typically offered. This finding reiterates a similar finding by the Full Court in its recent decision concerning Zamel’s as to the level of knowledge Zamel’s target audience could be expected to have.
Lastly, in determining that the appropriate penalty should be reinstated to $2 million, the High Court found that the Full Court failed to appreciate the relevance of TPG’s 2009 undertaking not to engage in misleading or deceptive conduct generally, and the need for the penalty to be a deterrent.
Although additional orders were made in the trial decision, the ACCC accepted that, with the passage of time and TPG’s refraining from engaging in further contraventions, it was no longer necessary to reinstate the injunctions, corrective advertising and compliance programs ordered by the trial judge.
Prior to the publication and distribution of advertising, particularly headline advertising, businesses need to carefully consider how they present their services, ensuring they do not use a strategy that:
This decision reinforces how tough the law is on misleading or deceptive conduct. Consequently, this may encourage the ACCC to launch further prosecutions, particularly in areas where a “dominant message” can disguise important and complex details, such as bundling requirements and set up costs.
Businesses can mitigate these risks by implementing a process by which any promotions that utilise a “dominant message” strategy are systematically reviewed and approved to ensure that they legitimately represent the full meaning of the advertisement to consumers, and, unlike TPG, do not contravene the ACL.
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