Australian Competition And Consumer Commission V TPG Internet Pty Ltd

Questions: 1. Briefly describe the nature of TPGs advertising which caused ACCC to bring these proceedings?2. What statutory provisions did ACCC allege that TPGs advertising contravened?3. What were the findings (conclusions) of the primary judge about the following aspects of the advertising? bundling. the set up fee. single price.4. What were the differences in principle between the approach of the Full Court and the approach of the primary judge in evaluating whether the TPG advertising was misleading? 5. The High Court concluded that the approach taken by the Full Court was not correct. For what reason or reasons did the High Court come to this conclusion? 6. The Full Court, in coming to its conclusions, applied as a precedent the ratio in a case called Parkdale Custom Built Furniture v Puxu (Puxu). The High Court said that the Full Court wrongly applied the principle in Puxu. Explain why the High Court thought Puxu was not a proper precedent to apply to the TPG advertising? 7. What did the High Court have to say about the dominant message approach? 8. What did the High Court say about the assumed level of knowledge in TPGs target audience? 9. Is an intention to mislead essential for advertising to be misleading? Explain what the High Court thought about this?10. If you were employed in the marketing section of an internet service provider or a fitness centre which was about to launch an advertising campaign promoting an attractive plan for membership in which there were several parts (costs and benefits) to be taken into account by potential customers, what advice would you give about the format of the advertising, based on your understanding of the High Courts ruling in ACCC v TPG? Answers: 1. TPG Internet Pty is a company which provided internet and telephone connections to the consumers. The company gave its internet and phone connections under the name ADSL2+. The careless nature of TPG Internet Pty provoked ACCC to bring these proceedings. The company didnt accomplish its promises and in return, made customers pay more than the amount advertised. TPG Internet Pty advertised about its services in newspapers and online and didnt mention about any set-up cost and related additional cost. In the advertisement, it was mentioned that the exact cost of taking internet service from TPG Internet Pty was $29.99. But most shocking part about the companys nature was that in spite of advertising a fixed amount for internet services, they charged some hidden costs. The hidden charges included set-up fee and telephone charges. The consumer had to pay a total of $149.95 instead of $29.99, as advertised by the company. The costing of $149.95 included telephone charges of $30 and oth er hidden charges (Taylor, 2009). Hence, the company didnt meet its promises as advertised and made consumer pay hefty sum for internet connections. This was the reason that ACCC took action against TPG Internet Pty. 2. By definition, statutory provisions are defined as the details about a law passed by the government. As TPG Internet Pty charged consumers extra and made them pay hefty sum for internet connections, strict actions were taken against the company. As per ACCC, TPG Internet Pty had been misleading consumers by advertising wrong amount for their internet services. The amount mentioned in the advertisement for the services was different than what was charged from consumers. The company, predominantly asked the consumers to pay certain hidden charges such as setting-up internet connection, phone set-up charges etc which increased the bill to $149.95. This was against the Trade Practices Act 1974. Under this Act, consumers are protected against unfair trade practices led by companies. Many times, companies exploit their consumers and charge them extra than what was being agreed (Taylor, 2009). Hence, this act intends to protect consumers. In this case, TPG Internet Pty exploited consumer s by charging them extra than what was promised. Hence, their practices were against Trade Practices Act 1974 as they didnt give any single amount to consumers and misled them. 3. There are three perspectives on which primary judge gave his opinion. These included Bundling, The set up free and Single Price. Bundling: Primary judge stated that any such effect should be advertised by the company clearly. The company should declare a unified figure for its services without misleading consumers and making them pay extra afterwards. However, in case of TPG Internet Pty, company didnt give any unified figure in the advertisement and also didnt make clear that what all would be included in the hidden costs. They misled consumers by advertising fake amount and hence charged extra (Jeffrey, 1994). Set Up Free: Judge stated that set-up fee is usually charged from the consumers whose connection is less than 2 years. Hence, customers must be given an idea about its cost by the company. However, in this case, the company didnt mention anything about set up fee and hence, it was assumed that the set-up might be free. Moreover, the advertisement mentioned one-line fee about the internet connection which misled consumers about set-up charges. Single Price: Judge stated that consumers must be given a single price which would cost them after including all costs. In this case, TPG Internet Pty didnt mention any clear figure instead misled them by including a low amount and then adding many additional charges. Hence, the final amount that consumers had to pay was $509.89. It was against the Trade Practices Act 1974. 4. There was a considerable difference between the judgements given by primary judge and full court regarding whether the advertisement posted by TPG Internet Pty was misleading or not. Primary judge stated that it was the fault of the company that it misled consumers by adding up bundling charges, set-up fee and didnt mentioning about one price. TPG Internet Pty advertised that cost of an internet connection was $29.99. However, there were numerous additional charges which were hidden and didnt make clear in the advertisement. Hence, the total cost of service amounted to be $149.95. Hence, he advised that TPG Internet Pty should correct their advertisement if they didnt want their ad to be misled by consumers (Dennis, 1996). Alternatively, full court had a different approach. He stated that consumers were at fault in the case of TPG Internet Pty. Consumers should go through the advertisements carefully before taking up any such service from a company. Consumers were expected to be d iligent and careful in this case. If they would have acted carefully, they might not face such trouble. 5. The high court stated that full court didnt adopt correct approach in this case. As per full court, consumers were at fault since they should have read advertisement properly. The court argued that consumers were at fault in the case of TPG Internet Pty. Consumers should have gone through the advertisements carefully before taking up any such service from a company. Consumers were expected to be diligent and careful in this case. If they would have acted carefully, they might have not faced such trouble. Secondly, the statements that full court used were wrong and appeared weird. Thirdly, the court decided that misleading can be neutralized and this was not the right method to do so. Fourthly, the high court found out that the full court didnt apply the principles of Puxu case correctly to the case of TPG Internet Pty. Hence, high court found out that full court didnt adopt correct method. 6. As per High court, Full court wrongly applied the principles of Puxu case due to many reasons. In case of Parkdale Custom Built Furniture v Puxu, the company was selling furniture and misled consumers due to which the court had argued that consumers must check the furniture carefully before buying it. However, in the case of TPG Internet Pty, the company didnt sell any kind of furniture but internet connection. Hence, the principles applied to Puxu case couldnt be applied to TPG Internet Pty case. In this case, the company was at fault. It misled consumers by adding up bundling charges, set-up fee and didnt mentioning about one price (Bradbrook, 1989). Due to this reason, the high court argued that full court wrongly applied the principles of Puxu. 7. The Dominant Message approach was adopted by high court. The High Court liked the dominant message approach as consumers didnt go to showrooms with a fixed mindset about their purchase. In case, when consumers are required to go to showrooms to buy the product, they have fixed conditions about their purchase. But in this case, consumers just had an advertisement to rely upon. Moreover, consumers dont go through advertisements carefully. Hence, they relied mostly on prominent messages (Kercher, 1985). The court stated that consumers must be careful. Alternatively, company should not advertise such messages with dominant messages that mislead consumers. 8. Generally, consumers have some knowledge about a commodity or service before buying. However, the information if incomplete can lead to trouble. In case of TPG Internet Pty, the court assumed that customers might have some general knowledge about the connection. In other words, customers might assume that connection comes with a bundling package with telephone line. But the message advertised by TPG Internet Pty stated something different. As per the advertisement, it was assumed that there were no additional costs associated with the connection. However, the same was proved wrong by the company later on. 9. In advertising, it is not essential to mislead consumers in order to allure consumers. However, in this case of TPG Internet Pty, the company didnt have any intensions to mislead consumers. The primary objective of TPG Internet Pty was to attract consumers and present the services in the best way possible (Kercher, 1985). ACCC also didnt mention anything about the wrong intensions of the company instead stated that TPG Internet Pty had the intension of presenting their best features in the advertisement. 10. If I have been employed in the marketing team of an internet service provider company, the advice I would have given to the company was to provide customers with clear information about the service and its features. The one of the most crucial things I will focus on is providing correct information to customers and never misleading them. I would have advised that presenting features in best possible way isnt wrong but misleading consumers is wrong and unfair as per Trade Practices Act 1974. Hence, the best way to present features of a service is to clearly mention the amount, the additional charges and a unified figure which will be charged from consumers. References Taylor, P. (2009). Street v Queensland Bar Association., 168 CLR 461. Jeffrey, B. (1994). "Statutory Interpretation, Law Reform and Sampford's Theory of the Disorder of Law" Part One (1994) 22 Federal Law Review 116; Part Two, (1995) 23 Federal Law Review 77. Dennis, C. (1996). Statutory Interpretation in Australia., (4th edition, Butterworths: Sydney, 1996), p. 3. Bradbrook, M. (1989). The Emergence of Australian Law., (Butterworths: Sydney, 1989) at 70. Kercher, B. (1985). An Unruly Child: A History of Law in Australia., (Allen Unwin, Sydney, 1995) at 157. Australian Competition and Consumer Commission v TPG Internet Pty Ltd Questions: The sequence of court hearings The Australian Competition and Consumer Commission (ACCC) brought proceedings against internet provider TPG because of an advertising campaign for internet services TPG had been conducting. Initially, the proceedings were heard by a single judge, who is referred to in the judgment as "the primary judge". ACCC was largely successful against TPG in those proceedings. TPG, having lost the case before the primary judge, appealed to three judges, referred to in the judgment as the Full Court". That court largely disagreed with the conclusions of the primary judge and set aside his decision. In effect, TPG won its appeal to the Full Court. This left ACCC as the loser. It appealed to the High Court, which disagreed with the conclusions of the Full Court in favour of TPG and essentially reinstated the decision made by the primary charge in favour of ACCC.The judgment you are reading, and to which the assignment questions relate, is the judgment of the High Cour t only. However, to enable the "ratio" of its decision to be understood, the High Court includes in its judgment summaries of the reasons which the primary judge and the Full Court gave in coming to their respective (and contradictory) decisions. 1. Briefly describe the nature of TPGs advertising which caused ACCC to bring these proceedings 2. What statutory provisions did ACCC allege that TPGs advertising contravened 3. What were the findings (conclusions) of the primary judge about the following aspects of the advertising bundling. the set up fee. single price.4. What were the differences in principle between the approach of the Full Court and the approach of the primary judge in evaluating whether the TPG advertising was misleading? 5. The High Court concluded that the approach taken by the Full Court was not correct. For what reason or reasons did the High Court come to this conclusion? 6. The Full Court, in coming to its conclusions, applied as a precedent the ratio in a case calledParkdale Custom Built Furniture v Puxu (Puxu). The High Court said that the Full Court wrongly applied the principle in Puxu. Explain why the High Court thought Puxu was not a proper precedent to apply to the TPG advertising 7. What did the H igh Court have to say about the dominant message approach? 8. What did the High Court say about the assumed level of knowledge in TPGs target audience? 9. Is an intention to mislead essential for advertising to be misleading? Explain what the High Court thought about this 10. If you were employed in the marketing section of an internet service provider or a fitness centre which was about to launch an advertising campaign promoting an attractive plan for membership in which there were several parts (costs and benefits) to be taken into account by potential customers, what advice would you give about the format of the advertising, based on your understanding of the High Courts ruling in ACCC v TPG? Answers: 1. TPG Internet Pty was a company engaged in providing internet connections to consumers. The name under which the company decided to give away its internet and phone connections was ADSL2+. Although the price mentioned for services in the advertisement of the company was $29.99 but there were hidden costs. The cost which a consumer had to pay after all the additional costs amounted to be $149.95 (ACCC, 2015). Hence, this was the reason for further proceedings which were taken against TPG. 2. TPG had been misleading consumers by providing internet and phone connections at higher amount than normal. The advertisements were misleading and the company went against the provisions of the Trade Practices Act 1974. The price mentioned for services in the advertisement of the company was $29.99 but there were hidden costs. The cost which a consumer had to pay after all the additional costs amounted to be $149.95. Hence, this was the reason for further proceedings which were taken against TPG (Dennis, 1996). 3. Bundling: It was found out by judge in the case that advertisement misled consumers and there were nothing declared about the additional costs either on TV or radio. Setup fee: Judge realised that set-up charges should be normal and in case of TPG, nothing was made clear by the company. In fact the company didnt mention anything about the additional set up charges rather it was mentioned that consumer just have to pay one-time for setting up connection. Single price: IN the case, judge found out that there was no one price declared by the company to consumer. The prices kept fluctuating (boosted in every case) which was unfair as per Trade Practices Act 1974. 4. Primary judge and full-court judge had differences in their opinion. Primary judge held company wrong for misleading consumers whereas full-court judge stated that consumers must be careful about every cost when applying for internet and phone connections (Jeffrey, 1994). 5. There were three key reasons as per which high court decided against full court. One, the opinion of the full court about dominant message was wrong. Second, statements used in regard to puxu used in this case were irrelevant. Third, misleading is one of the wrong practices undertaken by TPG. 6. In this case, the opinion of the full court was dependant on the results of the case park dale Custom Built Furniture v Puxu, but the provisions were wrongly misinterpreted. Park dale Custom Built Furniture v Puxu was about a furniture company so court said that consumers must consider brand before buying it. In this case, it cant be applied as advertisement was misleading and consumers cant pay attention to minute details. 7. Although high court stated that company is doing wrong since it cant issue a misleading advertisement but the court also added that consumers must pay diligence to such advertisements. However, high court do realizes that consumers dont pay much attention to advertisement and dont go through details minutely (Ellinghaus, 2000). 8. High court also stated that consumers might have an idea about the availability of in bundle with the telephone. But the advertisement of TPG can misled consumers since they might think that there are no extra costs for connection. The price mentioned for services in the advertisement of the company was $29.99 but there were hidden costs. The cost which a consumer had to pay after all the additional costs amounted to be $149.95. Hence, this was the reason for further proceedings which were taken against TPG. 9. The high court said that it is not important that companies post misleading advertisements intentionally (Kercher, 2010). However, the primary aim of the company to post such advertisement is to attract clients and present the services in best way possible. TGP case is similar to this as the company tried to present the services in best way but it misled consumers and they had to pay additional costs. 10. After going through High Courts judgment of the case ACCC v TPG, I would advise the company to withdraw their advertisements and highlight the best features about their services but also mentioning about the additional costs in the services. By this, consumers wont be misled and would benefit from the services a lot (Patrick, 2001). In this case, the price mentioned for services in the advertisement of the company was $29.99 but there were hidden costs. The cost which a consumer had to pay after all the additional costs amounted to be $149.95. Hence, this was the reason for further proceedings which were taken against TPG. References ACCC. (2015). Australian Competition and Consumer Commission v TPG Internet Pty Ltd | Opinions on High. 2015. Australian Competition and Consumer Commission v TPG Internet Pty Ltd | Opinions on High. [ONLINE] Available at: https://blogs.unimelb.edu.au/opinionsonhigh/2013/12/12/tpg-internet-case-page/.[Accessed 07 February 2015]. Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd (2006) ATPR 42-106 at [37]. See Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [104]-[105]. Dennis, C. (1996), ACCC TPG Case. Journal of Law, pp. 890. Patrick, P. (2001). Tradition and Change in Australian Law., Interpretation Act (Western Australia), s 43. Kercher, R. (2010). An Unruly Child: A History of Law in Australia., Legal Journal, pp. 526 Ellinghaus, A. (2000). The Emergence of Australian Law., Statute Law Revision Act, pp. 890 Jeffrey, W. (1994). "Statutory Interpretation, Law Reform and Sampford's Theory of the Disorder of Law." , Federal Law Review. Pp 77 High Court looms for ACCC vs TPG. 2015. High Court looms for ACCC vs TPG. [ONLINE] Available at: https://www.afr.com/p/business/companies/high_court_looms_for_accc_vs_tpg_rOpLZ0UnqAKA3OLrmyy5PP.[Accessed 04 February 2015].