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Requirement
1. Briefly, describe the content of TPG's advertising which ACCC considered to be defective.
Answer:
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The company TPG i.e. TPG Internet Pvt. Ltd. was indulged in the campaign of multimedia advertising. In this, they had a primary activity of offering to the customers an attractive price for the service of ADSL2+. This service was related to the use of the consumer’s home telephones so that they can be given the service of broadband without any limit on the download of data. It was very prominently mentioned in the ad that the company will give the internet ADSL2+ service for $29.99 per month.
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The ad had ambiguity, and it was not stated clearly that they will give the offer when the customers are willing to bundle it with the home telephone given by TPG for $30.00 per month.
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A setup fee was required to be paid by the consumers of $129.95, and they were also required to deposit $20.00 for telephone charges.
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The Australian Competition and Consumer Commission considered these ads as misleading and deceptive.
2. Which two statutory provisions did ACCC allege that TPG’s advertising contravened and what was it about the advertisements which contravened those provisions?
Answer: It was observed that there were many statutory provisions that were contravened by TPG. But two of them were-
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Trade Practices Act 1974, Section 2 that stated that in the activities of trade and commerce, no company should get engaged in any conduct that is deceptive and misleading.
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The other one was Trade Practices Act 1974, section 53 that stated that it is not permitted to any corporation for making false or misleading representation related to the goods prices or the exclusion or impact of any warranty, condition, any right or guarantee.
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These provisions were contravened in the ad as it was very prominently mentioned in the ad that the company will give the internet ADSL2+ service for $29.99 per month. The ad had ambiguity, and it was not stated clearly that they will give the offer when the customers are willing to bundle it with the home telephone given by TPG for $30.00 per month. A setup fee was required to be paid by the consumers of $129.95, and they were also required to deposit $20.00 for telephone charges.
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Place Your Order3. What were the findings (conclusions) of the primary judge about the following aspects of the advertising- bundling, the set-up fee, single price
Answer: The Primary Judge found out the following things:
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For the condition of bundling, the judge stated that more clarity was needed on the condition, and it needs to be more prominent so that the misleading impression that the message has created gets cleared out. Then he also said that the audience to whom the message was sent was using it for the first time so it was very likely that the people would trust the message that is dominant. Due to this, the wrong impression got created.
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For the set-up fees, the judge said that it was not clearly specified in the ads that additional fees were required for the service of broadband.
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For a single price, the judge said that as per the section 53C (1) (c) of the TPA, the ad did not specify the single price of $509.89.
4. In what two ways did the Full Court take a different approach from that of the primary judge in deciding whether the TPG advertising was misleading?Answer: The full court took a different approach from the primary judge to decide that the TPG ad was misleading or not as:
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The views were different regarding the dominant message that was given in the ad. It was held by the court that the messages in the ad assisted in determining that had they to be considered as misleading or not.
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There are many words for which the complaint was made, but the court said that if the company selects some words and ignores the rest then it would not be right as the words that are ignored give meaning to other words.
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Then the full court also said that the ads did not mislead because just by viewing perfunctorily, the bundling condition can’t be missed. The court also stated that any man who is ordinary and reasonable can make an idea by himself that offered services would come as a bundle.
5. The High Court concluded that the approach taken by the Full Court was not correct. For what two reasons did the High Court come to this conclusion?
Answer: The reasons due to which the High Court came to this conclusion were:
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High court felt that the judgment of full-court about holding primary judge wrong was not correct. The dominant message that was mentioned in the ad is crucial.
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Also, the High court said that the statements of another court about CJ Gibbs in Puxu’s case were indecisive and inappropriately applicable as per the case’s circumstances.
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It was further stated by the High Court that Full court erred because it did not appreciate the fact that the tendency of the ad of the company got neutralized when the knowledge of the court was attributed to the target people regarding the offering of services of ADSL2+ as a bundle.
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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 and gave three reasons for this. Briefly, explain any two of the reasons the High Court thought the Puxu case was different from the TPG advertising and so should not have been used by the Full Court as a precedent.
Answer:
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In Puxu’s case, the misleading conduct was claimed on the sale of goods by the person who appealed that was identical virtually to those that were sold by the respondent. Since the target people were not the potential buyers, so the high court rejected this precedent as proper. The focus was on the subject matter of purchase.
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Further, the High court opinioned that the Full court did not identify that the tendency of an ad was to mislead people by asking whether they were appropriate to bring into negotiation with TPG rather than with one of the competitors based on the belief on the general thrust of the message.
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Then lastly the High court said that it was not about whether the ad was misleading or not because the target audience followed the advertisement wordings closely which was not right.
7. If you were employed in the marketing section of an internet service provider or a fitness center 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 to the form the advertising should take, based on your understanding of the High Court's ruling in ACCC v TPG?
Answer: The statement of the high court for the dominant message was that it said that the primary issue is not related to the print of ad that dismissed the dominant message printed in the headline, but the issue was related to the consumers either ordinary or possible consumers who used internet services. The question was whether the consumers who are looking at the entire ad with an open mind would probably form an impression of content that was being advertised for a separate price of $29.99 per month. The opinion of the high court and the primary judge was similar for the target audience's assumed level of knowledge. The high court said that the company’s intention to mislead people cannot be regarded as a base for contravention and the company cannot be charged for that as there is no proof of the wrong intention too. The argument that the company intentionally misleads people for attracting them to the offer was also rejected by the high court.
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So the advice that can be given on the basis of understanding of the High Court ruling is: when the companies prepare any ad, it should make all the necessary clauses prominent and clear about the services, goods, etc. Equal weight should be given to all the offers and information for payment so that no deception happens.
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