BUS101 Introduction To Business Law 4 Essay

Question:

The Case For Study Is Australian Competition And Consumer Commission [Appellant] v Tpg Internet Pty Ltd [Respondent] (Decided In December 2013)

Required to read a decision of the High Court of Australia and then write a report on the “ratio” for that decision in response to specific questions

Answering the questions

Question 1

There were three problems with TPG’s advertising which the ACCC considered to be misleading; state briefly what those three were

Question 2

The ACCC alleged that TPG’s advertising contravened two STATUTORY provisions; what were those statutory provisions (ie, which sections of which Act) and what did the ACCC say about the advertisements which contravened each of those provisions for identifying each of the two statutory provisions and 1 each for stating how the advertisements contravened that provision]

Question 3

What were the findings (conclusions) of the primary judge about each of the following aspects of the advertising? In your answer, consider the matters suggested in italics

  • bundling (who did the judge believe would be the “target audience” and what was it about the advertising which could mislead that audience?)
  • the set-up fee(in what way was the advertising capable of misleading consumers about this?)
  • single price(in what way was this aspect in breach of the statute?)

Question 4

The Full Court came to two important different conclusions from those of the primary judge when deciding whether the TPG advertising was misleading? What were those two different conclusions

Question 5

The High Court decided that the conclusions of the Full Court were not correct. For what two reasons did the High Court differ from the Full Court’s reasoning?

Question 6

The Full Court, in coming to its conclusions, applied as a precedent the ratio from an earlier case called Parkdale Custom Built Furniture v Puxu (“Puxu”). The High Court said that the Full Court should not have applied (ie, the Full Court should have “distinguished”) the principle in Puxu and it gave three reasons for this. Briefly explain any two of the reasons the High Court said made the Puxu case different from the TPG advertising.

Question 7

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 form the advertising should take, based on your understanding of the High Court’s ruling in ACCC v TPG?

Answer:

1. When assessing the legal compliance of an advert, one must determine whether the advert has a dominant message, secondly, one must assess whether there are terms and conditions, which affect the dominant message; if this is the case, are they sufficiently and clearly stated. The problems with TPG advertisement based on ACCC were (Australian Competition and Consumer Commission v TPG internet PTY ltd);

  1. The Australian Competition and Consumer Commission argued that the advertisement was misleading and deceptive for the stated ADSL2+ at $29.99 failed to disclose other additional charges such as setup fee and the monthly rental charges
  2. They also argued that ACCC failed to prominently specify the most minimal charge in relation to a national advertisement campaign
  3. Was in breach of the PTA

2. The Australian Consumer Law (ACL) developed by the Australia’s consumer protection agencies was meant to aid businesses understand their responsibilities towards their consumers. Furthermore, ACL attempted to show businesses what was acceptable in marketing messages in order for them to avoid what would be considered as unfair business practices. Across Australia, consumers are awarded similar protections whereas businesses are tasked with similar responsibilities and obligations (The Australian Consumer law).

Section 18 of the ACL:

Advertisement is the most common way through which suppliers and manufacturers promote their wares. There are instances where the message in the advertisement is too good to be true and under such circumstances, the message found in the advertisement may be construed as misleading under the provision of the Australian Consumer Law. The main message in the advertisement claimed that the clients would pay for $29.99 for the bundle, which if it were true was the most competitive offer when compared to competitors (Australian Competition and Consumer Commission v TPG internet PTY ltd).

Under this section, people and businesses are forbidden from engaging in conduct that would be construed as misleading or deceptive. Actions that are likely to be interpreted as misleading include direct or express statements or representation, behaving in a certain given manner, implied representation, remaining quiet regardless of a requirement to disclose a certain relevant issue, or by omission which involves failing to act in a certain manner. Misleading conduct lead to civil and criminal liability (Competition and Consumer Act 2010 (the Act)).

The conduct of the business teams who are in contact with other businesses, business stakeholders for example suppliers or creditors, or consumers’ risks contravening with the specification of section 18 of the ACL (The Australian Consumer Law). The actions must not necessarily be intentional as there are instances where the conduct was found as misleading despite not being intentional (Competition and Consumer Act 2010 (the Act)).


Section 29

Covers false or misleading representations about the supply or the possible of goods or services in regards to promotion (The Australian Consumer Law). The false and misleading representation include the quality or standard of the goods, claims that the goods are new, that a particular person has agreed to purchase the goods or services, information purporting to be a testimonial by a given person, sponsorship, approval, affiliation, the price of the goods, after sale services, place of origin, among others. The price stated in the advertisement of $29.99 monthly was misleading as it failed to capture the extra $30 for rental. Furthermore, initial installation charges were not captured (Competition and Consumer Act 2010 (the Act)).

3. Findings of the primary judge were (Australian Competition and Consumer Commission v TPG internet PTY ltd)

  1. The target audience were the consumers who included the first time users of ADSl2+. In both the initial and the revised advertisements, TPG failed to clearly state that besides the ADSL2+ product quoted as $29.99 monthly did not include the rental home phone line which required an additional fee of $30.00 monthly which Judge Murphy found to be misleading.
  2. The consumers were misled by the advertisement as it failed to mention the initial installation fee required. The dominant message gave the impression that there would be no other charges.
  3. The advertisement was in breach of section 53C of the TPA by failing to state prominently the single price of the product in all advertisement channels.

4. The full federal court in its ruling was of the view that;

  1. The only aspect that was misleading was the fact that the advertisement failed to adequately disclose the fact that besides the $29.99 monthly there were other involved costs such as $30.00 for the home phone line rental and the set up fees for the initial advertisement (Australian Competition and Consumer Commissionv TPG internet PTY ltd).
  2. The revised advertisements were not in any way misleading or deceptive in breach of the TPA for the bundling condition would not be missed for any reasonable person was aware of the fact that the services normally are offered as a bundle and that the initial installation fee is required (Australian Competition and Consumer Commissionv TPG internet PTY ltd).

5. The majority of the high court in the ruling agreed that

  1. The full court was erroneous in stating that besides the dominant message other parts of the advertisement held same significance. Just like the primary judge, the high court was of the view that assessing the advertisement should be based on the dominant message (Australian Competition and Consumer Commissionv TPG internet PTY ltd).
  2. The full court was wrong in failing to appreciate that the tendency of TPGs’ advertisement to mislead was not in any way reduced by the fact that under normal circumstances the target audience assumed that ADSL2+ services would be offered as a bundle (Australian Competition and Consumer Commissionv TPG internet PTY ltd).

6. The case Parkdale Custom Built Furniture v Puxu was in direct contrast with the TPGs case.

  1. The aim of an advertisement is capturing the attention of the potential consumer(Consumers Affairs 2018). In as much as the attention of the target audience was captured in the $29.99 monthly offer, the consumers cannot be expected to pay close attention to the advertisement similar to that paid by the judges who were scrutinizing the advertisement. Here the target audience were not potential consumers who were focused on the particular purchase in a showroom. The attention given to the advertisement by the target audience was limited to the dominant message, which was the most important aspect when making a purchase decision (Parkdale Custom Built Furniture v Puxu).
  2. The message captured in the advertisement was designed in such a manner that would be erroneous if pursued by the consumer. The full court failed to consider the tendency of the advertisement to be misleading not by having people actually enter into a contract with TPG but it induced them to pursue or engage TPG into a negotiation rather than the competitors. The failure to disclose all the relevant information made the target audience base their decision to engage them rather than the competitor, which in itself was wrong (Parkdale Custom Built Furniture v Puxu).

7. When making the advertisement, the campaign should assess whether the wording has what would be considered as the dominant message (Australian Competition and Consumer Commission 2018). If there is indeed a dominant message are other conditions, which affect the dominant message, articulated clearly and prominently in the campaign (Australian Competition and Consumer Commission v TPG internet PTY ltd). Rod Sims, chairman to ACCC, in his analysis of the case ruling stated, " It was held to be a failure to disclose because, whether it wasn't there or it was just in the fine print, the court found that this was not the appropriate way to be doing advertising and informing consumers." Where there is an internet based advertisement, the assumption that the consumer will click on the advertisement to be redirected to the site for further information is not sufficient grounds for putting an advertisement with only the dominant message without the associated conditions. The campaign should capture all the relevant information in terms of costs and benefits associated with each part of membership (Australia Competion and Consumer Commission 2018).

Bibliography

Australia Competion and Consumer Commission 2018, Advertising and selling guide, viewed 23 September 2018

Australian Competition and Consumer Commission 2018, False or misleading claims, Viewed 23 September 2018

Australian Competition and Consumer Commission v TPG internet PTY ltd (2013] HCA 54

Competition and Consumer Act 2010 (ACT)

Consumers Affairs 2018, Consumers Affairs, Viewed 23 September 2018

Parkdale Custom Built Furniture v Puxu [1982] HCA 44

The Australian Consumer Law (Cth)

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