ACCC v TPG Internet Pty Ltd [2013] HCA 54
Friday 13 December 2013 @ 1.15 p.m. | Trade & Commerce
Yesterday (12 December 2013), a majority of the High Court allowed an appeal from a decision of the Full Court of the Federal Court of Australia, holding that TPG Internet Pty Ltd (TPG) engaged in misleading and deceptive conduct under the Trade Practices Act 1974 (Cth) (TPA) and the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL).
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.
Justice Murphy subsequently ordered TPG to pay pecuniary penalties in the amount of $2 million as well as a range of other relief.
Appeal to the Full Federal Court
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.
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.
The High Court Appeal
On 16 August 2013, the High Court of Australia granted Special Leave to the ACCC to appeal the decision of the Full Court.
In the High Court, the ACCC argued that it was not open to the Full Court, in the proper exercise of its appellate function, to hold that the advertisements were not misleading. Further, the ACCC contended that the penalty imposed by the primary judge should be restored, given the circumstances of TPG's offending and the need for the penalty to reflect the important considerations of general and specific deterrence.
A majority of the High Court held that the Full Court erred, first, in holding that the primary judge was wrong to regard the "dominant message" of the advertisements as critically important; and secondly, in failing to appreciate that the tendency of TPG's advertisements to mislead was not neutralised by the Full Court's attribution to members of the target audience of knowledge that ADSL2+ services may be offered as a "bundle". A majority held that these errors, reflecting differences in point of principle with the approach taken by the primary judge, led the Full Court into error in the performance of its appellate function. The pecuniary penalty of $2 million imposed by the primary judge was reinstated.
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