The Australian Competition and Consumer Commission’s (ACCC) recent victory against TPG in the High Court has cemented its resolve to target large companies that breach consumer protection laws.

In ACCC v TPG Internet Pty Ltd [2013] HCA 54 (the TPG Case), the High Court upheld a $2 million fine against TPG in relation to the advertisements for its ‘Unlimited ADSL2+’ service. The case marks the first time a fine of this type has been challenged in the High Court, and the ACCC sees the decision as a firm endorsement of its efforts to establish strong deterrents to discourage companies from infringing consumer laws.

Background: TPG Case

The TPG Case considered whether print advertisements run by TPG promoting its Unlimited ADSL2+ service were misleading or deceptive under section 52 of the Trade Practices Act 1974 (Cth) (now section 18 of the Australian Consumer Law).

The advertisements featured an offer to supply ADSL2+ for $29.99 per month. Below this offer in substantially smaller print was a qualification that the broadband service came bundled with the TPG home telephone service, which would cost consumers an additional $30 per month. The ACCC pursued legal action against TPG, alleging that the advertisements did, or were likely to, mislead or deceive consumers as to the actual cost of the ADSL2+ service.

In its December 2013 decision the High Court affirmed the Federal Court’s finding that the advertisements were misleading and reinstated the $2 million penalty that had been reduced by the Full Federal Court on appeal. The approach endorsed by the High Court focuses on the impression created by the “dominant message” in the relevant advertisement. Specifically, the Court considered whether the TPG ads “were apt to bring [consumers] into negotiation with TPG rather than... its competitors on the basis of an erroneous belief engendered by the general thrust of TPG’s message”.

The High Court emphasised that while a reasonable consumer may know that ADSL2+ services are commonly bundled with telephone services, this was not enough to neutralise the likelihood that the advertisements were misleading.

What this means

In a recent article in the Australian Financial Review, ACCC Chairman Rod Sims was quoted as saying that the TPG Case set a new benchmark for the sort of repercussions a company can expect if it breaches consumer laws. With the High Court win under its belt Sims indicated that the ACCC feels confident in going forward with its efforts to pursue major penalties for large companies that engage in misleading or deceptive conduct: “Our focus is on the larger companies, that is where the biggest detriment is... we want to make sure that they are taking consumer laws very seriously”.

In particular, the ACCC has indicated that it will target misleading representations.  Agencies must be careful when emphasising certain features of goods or services that the dominant message or general thrust of the advertisement does not create a situation where a consumer may be misled.  A disclaimer in fine print will not save an advertisement from being misleading if it only serves to qualify a misleading statement.

In light of these developments advertising agencies should ensure that they fully comply with consumer laws when creating marketing materials and ensure that their client has signed off on the factual claims in marketing materials prior to the public release of the materials.