High Court reinstates $2m penalty against TPG

12 December 2013

The High Court of Australia has allowed an appeal by the Australian Competition and Consumer Commission in relation to TPG’s Unlimited ADSL2+ advertisements.

The High Court overturned the Full Court’s findings that the advertisements which TPG had revised after ACCC intervention, as well as TPG’s initial online, print and radio advertisements, were not misleading.  In the High Court’s view, 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 considered that there was no appellable error in the trial judge’s approach to finding that these advertisements were misleading.

The High Court also overturned the Full Court’s order that TPG pay total penalties of $50,000 in respect of its misleading initial television advertisements and its failure to prominently display the single price in its initial advertisements. The High Court considered that the $2M 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,”
Mr 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.”

Background

On 4 November 2011 the trial judge, Justice Murphy, found that TPG’s initial and amended Unlimited ADSL2+ advertisements, which ran between September 2010 and November 2011, were misleading because they conveyed the impression that TPG’s Unlimited ADSL2+ broadband 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.   It was also found that the initial advertisements which ran for 12 days in September and October 2010 did not prominently specify the minimum charge for the advertised service and were misleading for not disclosing additional up front charges. http://www.accc.gov.au/media-release/court-finds-tpg-broadband-advertisements-false-and-misleading   

Justice Murphy subsequently ordered TPG to pay pecuniary penalties in the amount of $2 million as well as a range of other relief. http://www.accc.gov.au/media-release/full-federal-court-hands-down-penalty-and-other-orders-in-tpg-appeal   

TPG appealed to the Full Court from Justice Murphy’s decision on liability and relief.

On 20 December 2012, the Full Court allowed the appeal in part. The Full Court upheld Justice Murphy’s finding that the initial television advertisements for TPG’s Unlimited ADSL2+ offer were misleading. The Full Court also upheld Justice Murphy’s finding that the initial advertisements did not prominently specify the single price for the advertised service.  However, the Full Court held that the other TPG advertisements, including those which TPG had revised after ACCC intervention, were not misleading because the bundling requirement and set up charges were adequately disclosed, and that an ordinary or reasonable consumer would have known that these services are commonly bundled and that set-up charges are often applied. http://www.accc.gov.au/media-release/full-federal-court-decision-to-allow-tpg-appeal  

On 4 April 2013, the Full Court ordered that TPG pay total penalties of $50,000 in respect of TPG’s initial misleading television advertisements and its failure to prominently display in its initial advertisements the single price for the advertised service. http://www.accc.gov.au/media-release/full-federal-court-hands-down-penalty-and-other-orders-in-tpg-appeal   

On 16 August 2013, the High Court of Australia granted Special Leave to the ACCC to appeal the decision of the Full Court. The High Court hearing was on 1 November 2013. http://www.accc.gov.au/media-release/high-court-grants-accc-leave-to-appeal-tpg-decision

Release number: 
MR 296/13
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