Telstra takes Optus to Court Alleging Misleading Advertising

Thursday 6 March 2014 @ 8.59 a.m. | Trade & Commerce

Telstra has launched legal action against its main competitor SingTel Optus, alleging the telco misled consumers in regards to claims about its network coverage. The case is said to revolve around the updated version of a series of ads which began airing in November 2013.

Telstra filed an injunction on 7 February 2014, which led to an urgent hearing, with Optus agreeing to take down the ad from its website, and to stop making new versions of the ad until the trial was held on 12 February 2014. 

The advertisement compares Optus and Telstra’s network coverage, but Telstra is alleging the ads make misleading representations, including stating there “isn’t much difference between us and Telstra”.

Telstra v Optus Coverage

Telstra alleges the ads make customers believe Optus and Telstra’s networks cover 98.5 percent and 99.3 percent of Australian land mass respectively. But Telstra said its network actually covers 2.3 million square kilometres, or 28 percent of Australian land mass, while Optus’ network is only one million square kilometres.

Telstra said in a statement:

“The difference between the geographic coverage of the Telstra Mobile Network and that of the Optus Mobile Network is material and substantial.”

In response Optus has released a statement saying there is “no dispute” the difference between it and Telstra’s network is less than 1 percent based on the population reach of Optus compared to Telstra.

Optus said:

“That hasn’t been challenged. We have been consistent and transparent in how we communicate the less than 1 percent difference in the population reach of the Optus mobile network compared to Telstra’s and we will defend this position.”

Hall and Wilcox partner Sally Scott said that businesses often think they’re protected from a misleading conduct claim if what they say or write in an ad is technically correct.

She further commented ...

“However, the Australian Consumer Law goes beyond express statements and considers the overall impression of the ad. An express statement in an ad might be technically correct but if the overall impression of the ad is misleading, then a business can find itself falling foul of the Australian Consumer Law.

In this case, Optus is arguing that its ad specifically states that the percentages in the ad relate to population and that they are correct. Telstra is not disputing this but is arguing that the overall impression of the ad is something quite different, being that the percentage relates to the geographical area.”

Scott says businesses need to consider the overall impression of the ad and that the court will consider more than just the words used in the ad to determine its overall impression.

“If the ad is held to be misleading, the second issue will be whether Telstra has suffered any loss. Telstra has claimed that it has suffered loss as a result of losing customers to Optus because of alleged misleading representation in the ad. This could be difficult for Telstra to prove.”

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