Introduction To Business Law: Australian Competition And Consumer Commission Essay

Question:

Introduction to Business Law: Australian Competition and Consumer Commission

Answer:

Australian Competition and Consumer Commission v. TPG Internet Pty. Ltd. 2013 HCA 54 (Australian Competition and Consumer Commission v. TPG Internet Pty. Ltd., [2013])

Content of TPG’s Advertisement, which ACCC considered defective

TPG started campaigning for its bundle of ADSL2 (unlimited) and home phone. These initial advertisements were withdrawn after ACCC warned that such advertisements are against the provisions of the Trade Practices Act. The content of the revised advertisement was the subject matter of this case. The headline of the same was as follows; “Unlimited ADSL2 + $29.99”. However, below this it was written in small print that the said services were available when the home phone services for $30 rental and ADLS2 services were bundled together. It was alleged by ACCC that the dominant message of the advertisement was misleading as it was likely to lead the consumers to believe that both the services can be availed at the rate of $29.99, but in reality the total cost of the package was $59.99/ month. The ACCC found this content of the TPG advertisement to be misleading.

Legal provisions which TPG was alleged to have breached, and content of the advertisement, which led to such breach

TPG was alleged to have contravened the provisions of Section 52 and 53C the Trade Practices Act, which is now embodied as Section 18 and 29 of the Australian Consumer Law. Since the advertisements were likely to deceive the public they were considered to have contravened the provisions of these Sections. It was considered to have contravened the provisions of Section 53, as the advertisements did not specify a single price for the total package. Section 52 lays down that a corporation ought not engage into such practices which are likely to deceive or mislead the public. Section 53C of the Act lays down that under certain circumstances, corporations are bound to state single price. They are under the obligation to state the price for the goods or services offered in a single figure. The TPG advertisement was likely to mislead the public, as they did not properly disclose that they are required to purchase ADSL2+ services along with home phone rental of $30 every month. They also did not disclose that the consumers are under the obligation to pay the fees for setting up the service. Moreover the advertisements breached the provisions of Section 53C as a single price for the services were not stated (Australian Consumer Law: A Guide to Provisions, 2010).

Findings of the Primary Judge

In this section of the report, we shall discuss the findings of the Primary Judge under the following heads;

Bundling

  • He was of the view that the target audience of ADSL2+ services was first time users as well. It was found that a consumer of ordinary prudence after reading the advertisement would consider that the entire service can be obtained at the price of $29.99/ month without any additional charges or obligation to avail another service.
  • The judge concluded that the bundling condition was not clear and prominent and was likely to mislead the public.

Set up fee

  • The judge observed that broadband services always require set up fees and the targeted consumers are likely to be aware of the same.
  • However, since the headline indicated to the fact that no such fees is required, the same should have been clearly stated.
  • He observed that none of the advertisements made clear indications regarding the set up fees.

Single Price

  • It was also observed by the primary Judge that the advertisement did not disclose the single price for the services in a clear and unambiguous manner. This led to contravention of the provisions of Section 53C(1)(c) of the Act (Kalbfleisch, 2011).

Difference of Approach between the decision of the Full Court and that of the Primary Judge

  • The Full Court was convinced that the advertisements were not misleading. However it was of the opinion that Section 53C(1) was not applicable in the given scenario. The primary difference of opinion was concerning the fact that the dominant message of the advertisement was crucial in determining whether the advertisement was misleading. In this context the Full Court cited the case of Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. The principle, which evolved from this case, was as follows; when a particular conduct consists of words, it shall not be right to take into consideration a few words and ignore the rest, while arriving at the meaning of the set of words. It was of the opinion that the entire message must be taken into consideration and not just the dominant message.
  • The Full Court also stated that the target consumers may be presumed to have knowledge about the fact that broadband services are sold either as stand alone or as bundled.

Based on the above considerations it was concluded by the Full Court that the said advertisements were not misleading.

Grounds, which led the High Court to conclude that the Full Court’s decision was erroneous

  • The High Court held that the Full Court was wrong is holding the determination of the primary judge that the dominant message was predominant in determining the misleading character of the advertisement was erroneous.
  • The advertisement only chose certain words as being dominant and ignored the rest. It was likely that majority of the consumers would only take into consideration the dominant message and ignore the rest. The advertisement did not intend to bring to the notice of the consumers less attractive provisions of the advertisement.

Under the given circumstances, it was considered by the High Court that the decision of the Full Court was erroneous.

Reasons for which the High Court considered the Puxu case to the inapplicable to TPG facts

The facts of the Puxu case were starkly different from those of the TPG case. This was the primary reason for inapplicability of the case. The purpose of TPG’s advertisement was to draw the attention of the audience towards the alluring parts and not to the balance of the offer. Most people tend to observe the general thrust of advertisement and thus it would lead to deception.

  • The case of Puxu was regarded to be inapplicable to the facts of the case in hand. In contrast to the facts of the Puxu case, in this case, the consumers did not have the privilege of visiting a showroom and then deciding which product to purchase. Here the intention of the advertisement was to draw the attention of the audience. Under the given circumstances, the audiences were not likely to pay attention to the details.
  • The Full Court also failed to recognize the fact that the nature of the advertisement to mislead was required to be determined not by inquiring as to whether the advertisement was likely to make the public enter into contract with TPG but by the fact as to whether the advertisement would bring the public into negotiation with TPG and not any of its competitors based on the wrongful belief entrusted by the dominant message of the advertisement. The said conduct is prohibited under the provisions of Section 52 of the Act.

Based on these facts the court considered that the facts of the Puxu case were not applicable to the facts of the TPG case.

Implications f the Judgment

The judgment of the High Court had far reaching implications for the advertisement industry. If I was employed in the marketing section of a fitness service provider or marketing section of a fitness centre or internet service provider which is about to launch a plan for the consumers consisting of several parts, my advice would be as follows;

In case the company wants to use dominant messages for advertising their product or services, then my advice would be to carefully assess the terms of the same and make efforts to being to the knowledge of the prospective consumers the other relevant sections of the offer. Such practice would prevent the advertisement from being deceptive or misleading. In a nutshell even if dominant messages are used they should not be misleading.

Knowledge of ordinary con summers of reasonable prudence must be taken into consideration. Assumed knowledge should not be the basis of advertisements.

The advertisement should not be such that it is likely to draw the attention of the consumers to the concerned service or product due to some false belief imbibed by any false or misleading element in the concerned advertisement.

All versions of an advertisement must convey the same impression and not different impressions.

I would make it a point to make them understand that false and misleading advertisements may lead to penalty under the provisions of not only under the present Competition and Consumer Act but also under other statutes as well

Reference List

Australian Competition and Consumer Commission v. TPG Internet Pty. Ltd. [2013]HCA p.54.

Australian Consumer Law: A Guide to Provisions. (2010). 1st ed. Sydney: Australian Government.

Kalbfleisch, P. (2011). Aiming for Alliance: Competition Law and Consumer Welfare. Journal of European Competition Law & Practice, 2(2), pp.108-116.

How to cite this essay: