The TPG case – the total price grapnel!
Jan 2014 |Introduction
On 12 December 2013, the High Court of Australia handed down a decision which completely destroyed the 2010/2011 marketing campaign of internet services provider TPG Internet Pty Ltd (TPG). In this article, we explain how this was done and what to look out for to avoid the penalty which TPG bore.
What happened?
Between 2010 and 2011, TPG started advertising its internet package deal under an advertising headline: ADSL2 + service for $29.99 per month.
The 'fine print' qualified the offer as reliant upon bundling with a minimum six months home telephone service contract for $30 per month plus a set up fee of $129.95, and a deposit of $20 on account of telephone charges. For six months thereafter, the ADSL2 package would cost you $509.89, if you took the time to read the fine print and use your calculator.
The Australian Competition and Consumer Commission (ACCC) took issue with TPG's advertisements under the Trade Practices Act 1974(Cth) (as it was at the time) for advertisements before 1 January 2011 and also under the Australian Consumer Law for advertisements after that date. The ACCC argued that the Trade Practices Act 1974(Cth) ss 52, 53(e) and (g) applied to the advertisements as being the outcome of misleading and deceptive conduct by TPG (also mirrored by similar sections in the Australian Consumer Law). Additionally, s 53C(1) of the Trade Practices Act 1974(Cth) (now s 48 of the Australian Consumer Law) was argued as having been contravened because the advertisements contained a representation about services which did not (as required by s 53C(1)) specify '…in a prominent way and as a single figure, the single price for the … services'.
The outcome
TPG was initially found to have contravened s 53C(1) of the Trade Practices Act 1974(Cth) and ordered to make corrective advertising, implement a compliance program and pay a $2 million pecuniary penalty. The judgment was overturned by the Full Federal Court but restored by the High Court, by a 4:1 majority.
The irony was that the 'fine print' in TPG's advertisements did state that there was a minimum charge of $509.89 (i.e. for a six months contract).
However, the majority of the High Court considered that you cannot convey a 'dominant message' in an advertisement headline and not prominently disclose the actual full cost.
The repercussions
With this win under its belt, the ACCC can be expected to pounce on advertisers who do not prominently provide a total cost in the advertising of their services. Put another way, you cannot rely on the small print for compliance. If you offer a tantalising price, make sure it is the complete price. The Commonwealth Attorney General's Department has published a document called 'Sales Practices' which will give you guidance on the law about pricing (as well as other compliance tips).