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Published 13 December 2013 12:14, Updated 04 February 2014 00:15
Reclusive telco billionaire David Teoh: his TPG has had a $2 million fine reimposed.
TPG has had its $2 million fine for misleading and deceptive conduct reinstated by the High Court after losing a three-year battle against the Australian Competition and Consumer Commission.
The ACCC took TPG to the High Court over a multimedia advertising campaign in 2010 and 2011 that it argued was misleading and deceptive.
The advertisements displayed a prominent offer of unlimited ADSL2+ service for $29.99 per month.
But a judgment by the High Court found the ads displayed much less prominently a requirement for consumers to bundle the service with a home phone service for an additional $30 per month for a minimum of six months.
There was also further setup fee of $129.95 and a $20 deposit for telephone charges.
A ruling by a primary judge in the Federal Court upheld the ACCC’s claims and issued TPG a $2 million penalty but the company was successful on an appeal to the Full Court of the Federal Court, which set aside all but three of the primary judge’s findings and reduced the fine to $50,000.
The ACCC appealed to the High Court arguing the Full Court had not properly exercised its appellate function by determining that the advertisements were not misleading, and a $2 million penalty should be restored because it reflected “important considerations of general and specific deterrence”.
A majority in the High Court ruled that the Full Court had erred in overturning the primary judge ruling.
The “dominant message” of the advertisements was critically important, the High Court said.
“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’,” the judgment 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,” the High Court said.
ACCC chairman Rod Sims said the case was of great significance.
“[I]t is important that penalties imposed for breaches of the Australian Consumer Law are set at a level that deters future breaches,” he 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.”
The ACCC was seeking the court’s guidance on the practice of headline advertising and the extent to which advertisers could rely on the knowledge of consumers about possible offers, he said.
TPG general counsel Tony Moffatt said the decision was disappointing.
“We believed that our advertising was not misleading and we think it is instructive to note, as did one of the High Court judges, that there was a dearth of any evidence of consumers having been misled despite the advertisements having been run nationally for 13 months,” Mr Moffatt said.
The majority of the High Court noted there was no suggestion in the ACCC’s case that TPG intended to mislead or deceive, he said.