Analysis Of Business Law

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Analysis Of Business Law

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Analysis Of Business Law

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Questions:
1. Briefly describe the nature of TPG’s advertising which caused ACCC to bring these proceedings.
2. What statutory provisions did ACCC allege that TPG’s advertising contravened.
3. What were the findings (conclusions) of the primary judge about the following aspects of the advertising.
i. bundling.ii. the set up fee.iii. 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 TPG’s 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 Court’s ruling in ACCC v TPG?

Answers:

The nature of TPG’s advertising that caused ACCC to commence the proceedings
The TPG Internet Pty Ltd (“TPG”) was involved in a multimedia advertising campaign where they primarily indulged in an offer to the consumers of giving an attractive price for ADSL2+ service. The service was basically involved in using the home telephone of the consumer to give a broadband service without any download data limit.
1. The advertisement prominently displayed that the company would supply a internet ADSL2+ service for $29.99 per month.
2. The advertisement in an ambiguous and less clearly stated that the offer was available when bundled with home telephone provided by TPG for $30.00 per month.

3. Additionally, the consumers also were required to pay a setup fee of $129.95 and a deposit of $20.00 for telephone charges.

4. These advertisements were considered misleading and deceptive by the Australian Competition and Consumer Commission.

The Statutory Provisions contravened by the company
A number of statutory provisions were considered to be contravened by the TPG Company.
1. Section 52 of the Trade Practices Act 1974, was contravened which stated that in trade or commerce no corporation should engage in conduct that is misleading or deceptive.
2. Section 53 of the Trade Practices Act 1974, was contravened which stated that no corporation is permitted to make false or misleading representation regarding the price of goods or the exclusion or effect of any condition, warranty or guarantee or any right.

The findings of the Primary Judge
1. With regard to the bundling condition, the primary judge stated that the condition needed to be more clear and prominent in order to clear the misleading impression in the message. He further stated that since the target audience was the first time users it was likely that they would rely on the dominant message of the advertisement hence creating a misleading impression.

2. With regard to the setup fees the primary judge stated that the advertisements did not specify clearly the further fees that were required in the broadband service.

3. Regarding the single price, the primary judge opined that in accordance to the section 53C (1) (c) of the TPA, the single price of $509.89 was not prominent in the advertisement.

The differences in principle between the approach of the Full Court and the approach of the primary judge
The judgment of the Full Court differed significantly from the approach of the primary judge in this case. In contrast to the decision of the primary judge the Full Court held a different view with regard to the dominant message given in the advertisements.
1. The court held that the messages assisted in determining whether they were to be considered to be misleading. Nevertheless, the conduct that is being complained of comprises of a number of words and according to the opinion of the court it would not be right to select some words and ignore the rest since they give meaning to those words.
2. The Full Court further disagreed with the view of the primary judge and stated that the advertisements were not misleading since the bundling condition cannot be missed by viewing it perfunctorily. Further it was stated that any reasonable and ordinary man would make an idea that the services that is offered would come as a bundle.

The High Court’s opinion of the approach taken by the Full Court
1. The opinion of the High Court was that the Full Court had erred in the judgment by holding the primary judge wrong. With regard to the ‘dominant message’ given in the advertisements, the message is extremely crucial.

2. The High Court stated that the statements of the Full Court with regard to the opinion of the CJ Gibbs in the case of Puxu were not decisive and not appropriately applicable in accordance to the circumstances of the case.

3. The High Court further stated that the Full Court also further erred as it did not appreciate the advertisement tendency of the company was neutralized by the attribution of the knowledge of the Court with regard to the target audience about the services of ADSL2+ being offered as a bundle.

Puxu was not a proper precedent to apply to the TPG advertising according to the High Court
In the case of Puxu, the claim on misleading conduct depended on the selling of goods by the appellant that was virtually identical to the ones sold by the respondent.
1. The High Court did not accept this precedent as proper since primarily the target audiences were not potential purchasers with a focus on the subject matter if the purchase.
2. Further it was opined by the High Court that the Full Court failed to identify the advertisement tendency was to mislead 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 trust of the message.

3. The High Court further stated that the case was not regarding the tendency of the TPG’s advertisements to mislead the customers arising due to the disposition of the target audience that is independent of the conduct of TPG in order to follow closely the wordings in the advertisements.

The approach of the High Court regarding the dominant message

With regard to the dominant message the High Court stated that the primary issue in the given case is not whether the advertisement fine print was enough to dismiss the dominant message that is conveyed in the headline. Instead the High Court stated that the question was related to the ordinary or the possible consumers of the internet services.
The essential question was that whether these potential consumers who are looking at the whole advertisement with a clear mind would probably form an impression of what was being advertised was a separate broadband internet service for a separate price of $29.99 per month.
The assumed level of knowledge in TPG’s target audience
With regard to the assumed level of knowledge of the target audience the High court opinion was similar to the opinion of the primary judge.
1. The opinion of the High Court was that even though the users of ADSL2+ were more knowledgeable about these services the 1+ users were not that knowledgeable to that extent.
2. Further this also did not imply that the ordinary or reasonable consumer will have that amount of knowledge.

According to the High Court is intention essential for the advertising to be misleading
1. With regard to the intention of the company to mislead the High Court opined that the intention to mislead is not considered as an element of the contravention charges against the company. Also there is not suggestion of such intention in this case.

2. Nevertheless, the High Court also states that there is no argument regarding the fact that the company did have an intention to create an impression in the mind of the potential consumers about the attractiveness of the offer.

Advise based on the understanding of the High Court ruling
After the ruling of the High Court in the given case, the probable advice to be given for the advertising format is that when preparing an advertisement it is necessary to make prominent and clear all the clauses of the services in the advertisement. All offers and payment information should be given equal weight age in order to avoid any deception.

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