The Federal Court has imposed a $2.25 million penalty on Apple and ordered it to pay $300,000 in legal costs in relation to advertising which was found to breach the Australian Consumer Law.

In March, the ACCC was successful in establishing that Apple had engaged in misleading conduct by advertising its new iPad (which could connect to 4G in the US but could only connect to the 3G network in Australia) as an "iPad with WiFi + 4G".  See our earlier post on that decision here

Our previous post stated that the case was a reminder of the importance of adapting packaging and marketing to local jurisdictions.  Justice Bromberg seems to agree.  In a decision handed down yesterday, his Honour imposed a $2.25 million pecuniary penalty on Apple, stating:

"Multi-national corporations who (through their subsidiaries or otherwise) operate in and profit from the Australian market, must respect that market and the laws which serve to regulate it and protect its participants. Those who design global campaigns, and those in Australia who adopt them, need to be attuned to the understandings and perceptions of Australian consumers and ensure that representations made by such campaigns will not serve to mislead. The penalty imposed in this case, needs to make that message clear."

It was open to the Court to impose a penalty of up to $4.4 million however the ACCC and Apple agreed, before the hearing, that $2.25 million was appropriate.  The Court accepted that amount. The penalty was imposed under the Australian Consumer Law (ACL), which prohibits conduct in trade or commerce which is liable to mislead the public as to the nature of any goods. 

The ACL requires that the following be considered when determining an appropriate penalty:

  1. the nature and extent of Apple’s actions and of any loss or damage suffered as a result;
  2. the circumstances in which Apple’s actions took place; and
  3. whether Apple had previously been found by a court to have engaged in any similar conduct.

Justice Bromberg stated that the most concerning aspect of Apple’s conduct was that it was deliberate.  Emphasising the importance of adapting packaging and marketing to the local jurisdiction, Justice Bromberg stressed the Court’s disapproval of the fact that "Apple’s desire for global uniformity was given greater priority than the need to ensure compliance with the Australian Consumer Law".  Apple’s conduct was described as "serious and unacceptable".

Justice Bromberg did express concern that Apple’s size "diminishes the meaning of the proposed penalty" ($2.25 million has been reported to constitute just 30 minutes’ worth of Apple’s profit).  However, his Honour also found that Apple had suffered damage to its brand through the media attention on case and was unlikely to be a repeat offender.