The High Court has the last word on
misleading or deceptive claims in TV
advertising cases: ACCC v TPG Internet Pty
Ltd
Michael Cooley GILBERT + TOBIN
In Australian Competition and Consumer Commission (ACCC) v TPG Internet Pty Ltd1 (ACCC v TPG),
the High Court of Australia, by majority,2 found for the
Australian Competition and Consumer Commission (ACCC)
on its appeal against TPG Internet Pty Ltd (TPG) for
alleged contraventions of the Trade Practices Act 1974
(Cth) (TPA) and, following its passage into law, the
Australian Consumer Law (ACL). This article is an
update to a previous article on the earlier decision of the
Full Federal Court of Australia (FFCA).3
In what will become an often-cited decision in
advertising cases, the High Court appears to have drawn
a distinction between ephemeral advertising, on the one
hand, and static advertising, on the other hand. In doing
so, it has also greatly reduced the potency of a line of
authority that had over time resulted in ever-increasing
importance being given to the knowledge of the target
class of consumers. That line of authority culminated in
the earlier decision of the FFCA in these proceedings, in
which it found that — even in the context of ephemeral
advertising — such knowledge could operate as a
complete answer to a claim for misleading or deceptive
conduct.
Further, the High Court also took the opportunity to
re-affirm the principle that misleading or deceptive
advertising cannot be cured if consumers are disabused
of the false impression created prior to entry into the
contract for the goods or services advertised.
In short, the High Court’s decision represents a
re-calibration of the law in respect of such cases in
favour of consumers and against advertisers. This is
likely to have far-reaching consequences for advertisers
in coming years and will no doubt result in more cases
being brought by the ACCC and trade competitors.
Those consequences have already been felt in the
recent decision of Telstra Corp Ltd v Singtel Optus Pty
Ltd,4 discussed briefly below, which applied ACCC
v TPG.
26
Background
In September 2010, TPG launched an extensive
national advertising campaign, promoting the sale of
unlimited ADSL2+ for $29.99 per month.
A disclaimer accompanying the advertisements indicated that the rate was only available to customers who
bundled the ADSL2+ service with a home telephone line
from TPG at an additional cost of $30 per month. In
early October 2010, the ACCC wrote to TPG alleging
various contraventions of the TPA. TPG subsequently
revised the form of its advertisements in an attempt to
address those concerns, principally by increasing the
font size of the subsidiary statements and the disclaimer.
Despite those amendments, the ACCC commenced proceedings against TPG in respect of the advertisements as
initially published and as subsequently revised.5
First instance decision
At first instance, Murphy J found for the ACCC,
deciding that:
• all of the initial advertisements and all of the
revised advertisements (except for those that were
published in a brochure) conveyed a representation to the relevant class of consumers that they
could purchase unlimited ADSL2+ from TPG
without being obliged to acquire any additional
service and without the need to pay any additional
charge; and
• all of the initial advertisements conveyed a representation that consumers could purchase unlimited
ADSL2+ from TPG without any obligation to pay
a set-up charge for that service,
competition and consumer law news
March 2014
in contravention of s 52 of the TPA in respect of those
advertisements published before 1 January 2011, and
s 18 of the ACL in respect of those advertisements
published after that date.
Justice Murphy also found that all of those advertisements contained false representations with respect to the
price of goods or services and false representations
concerning the existence of a condition in contravention
of s 53(e) and (g) of the TPA and s 29(1)(i) and (m) of
the ACL.
Finally, Murphy J found that the initial television,
newspaper and internet advertisements failed to specify
in a prominent way the single price for TPG’s ADSL2+
service of $509.89, in contravention of s 53(C) of the
TPA.6
Justice Murphy subsequently ordered TPG pay pecuniary penalties totalling $2 million.7
Appeal to the Full Federal Court of Australia
In contrast to the first instance judge, the FFCA held
that the majority of the advertisements, when considered
as a whole in their full context, were not misleading or
deceptive, nor did they contain false representations
with respect to the price of goods or services and false
representations concerning the existence of a condition.
However, the FFCA upheld Murphy J’s findings that
several of the advertisements failed to specify in a
prominent way the single price for TPG’s ADSL2+
service, as they were required to do.8
In reaching the decision, the FFCA decided that
Murphy J had failed to properly apply the critical
question — namely, “whether, having regard to the
[accepted legal] principles…, the ordinary or reasonable
consumer would be led into error by the advertisements,
read or viewed as a whole, in their full context”.9
Instead, the FFCA contended that Murphy J had been
“led into error” by effectively applying a two-stage test:
first, determining what the dominant message was in
each of the advertisements before considering whether it
was misleading; and, second, determining whether it
was sufficiently corrected by the disclaimer such that it
would prevent the “inaccurate dominant message from
being misleading, or likely to mislead or deceive”.10
Analysing Murphy J’s decision in this way, the FFCA
found that his Honour had effectively failed to consider
the whole of the advertisement in its full context as
required.
However, it is plain from the reasoning of the FFCA
that what was ultimately determinative was the assumed
knowledge of the relevant class of consumers to whom
competition and consumer law news
March 2014
the advertisements were conveyed.11 In particular, the
FFCA found that those consumers had some familiarity
with the market for the provision of broadband services
and that “they would know that services such as ADSL2+
are offered for sale as either ‘bundled’ or ‘stand alone’”.12
The FFCA went so far as to say that it was this “prism
through which the critical question of the overall impact
of the commercials on the ordinary and reasonable
consumer must be considered”.13 With the attributes of
the hypothetical ordinary or reasonable viewer at the
front and centre of the FFCA’s analysis, it quickly
disposed of the majority of the claims by variously
stating that “the ordinary or reasonable viewer with the
attributes we have described would not be misled”,14 or
that “the attributes of the ordinary or reasonable viewer
provide a complete answer” to the claim.15
Despite the above, the FFCA did not disturb the
decision of the first instance judge in relation to the
initial TV advertisement. While it expressed a view that
it doubted that the hypothetical ordinary or reasonable
viewer would be misled, it was nevertheless not convinced that his Honour reached the incorrect decision,
having regard to the fleeting nature of the advertisement16 and the size of the graphics and font in which the
bundling condition and minimum charges are stated.17
With respect, this aspect of the FFCA’s decision is
anomalous. Given the FFCA’s findings in respect of the
stated knowledge of consumers, if followed to its logical
conclusion, consumers could not be misled irrespective
of how fleeting the advertisement or how small the
graphics and font stipulating the conditions.
Finally, in a separate judgment,18 the FFCA reduced
TPG’s penalties from $2 million to $50,000.
Decision of the High Court
In a resounding victory for the ACCC, the High Court
overturned all aspects of the FFCA decision.
Of particular interest, the High Court appears to have
drawn a distinction between ephemeral advertising, on
the one hand, and static advertising, on the other hand.
In doing so, the High Court distinguished the present
case, at least insofar as it applied to the television and
radio advertisements, from the seminal decision in
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty
Ltd,19 which was relied upon by the FFCA,20 in support
of its stated approach. In doing so, the High Court
emphasised the transitory nature of such advertising and
the fact that it represented an “unbidden intrusion on the
consciousness of the target audience” who could not “be
expected to pay close attention” to it.21
27
Tellingly, during the course of oral submissions,
Crennan J stated to counsel for TPG:
attribution of knowledge to members of the target audience
that ADSL2+ services be offered as a “bundle”.27
One problem, Mr O’Bryan, though, is that the advertisements are not static. The radio and television advertisements occur over a period of time. It is really quite a
different task from the task of looking at static text about a
product such as the labels on the furniture in Puxu. You are
really in a very different area, are you not, with non-static
advertising?22
Finally, the High Court rejected the argument raised
by TPG that “consumers acting reasonably in their own
interest, could be expected to obtain a clear understanding of their rights and obligations before signing up with
TPG”.28 Citing several decisions,29 the majority noted
that:
No doubt, with the non-static and ephemeral nature
of TV, cinema and radio advertising in mind, and
adopting the words of the FFCA, the High Court
emphasised that “many persons will only absorb the
general thrust” of the advertisements and that the audience “cannot have been expected to pay close attention
to the advertisement”.23
In turn, in this context, the High Court endorsed the
approach taken by the trial judge of attributing the
greatest significance to the dominant message conveyed
by the advertisements in order to determine whether the
advertisements were misleading or deceptive.24 In turn,
it rejected the approach of the FFCA, under which it
suggested that by viewing the advertisements as a
whole, a different outcome is reached.
Further, the High Court emphasised that any failure
of the target audience to take proper care of their own
interests by failing to appreciate the qualifications to the
general thrust of the advertisement did not arise because:
… the target audience might be disposed, independently of
TPG’s conduct, to attend closely to some words for the
advertisement and ignore the balance … [but] because the
advertisements themselves selected some words for emphasis and relegated the balance to relative obscurity.25
In this regard, the High Court found that, given the
nature of TPG’s headline strategy of advertising its
ADSL2+ service for $29.99 per month and effectively
burying the attendant conditions, it was open to the trial
judge to find the advertisements misleading or deceptive
because:
… consumers might be enticed to enter into negotiation
with TPG without appreciating that TPG’s services were, in
fact, being offered only as a “bundle”. It is pertinent to note
again that “many persons will only absorb the general
thrust”.26
In addition, the High Court was critical of the FFCA’s
approach of viewing the advertisements through the
“prism” of the attributes of the hypothetical reader or
viewer, finding that it:
… failed to appreciate that the tendency of TPG’s advertisements to mislead was not neutralised by the Full Court’s
28
It has long been recognised that [conduct may be misleading or deceptive] not only when a contract is entered into
under the influence of a misleading advertisement, but also
at the point where members of the target audience have
been enticed into the “marketing web” by an erroneous
belief engendered by an advertiser, even if the consumer
may come to appreciate the true position before a transaction is concluded.30
This can be contrasted to some recent decisions in
which judges have seemingly been prepared to find
potentially misleading representations conveyed by advertisements curable in the showroom or at the point of
sale.31
The High Court also reaffirmed the penalty of $2
million dollars imposed on TPG by the trial judge.
The implications
In considering the implications of the High Court’s
decision, the ACCC’s stated reason for pursuing the
matter all the way to the High Court, as described in oral
argument by its senior counsel, is illuminating and
provides additional context not only for the proceedings,
but also, arguably, for the High Court’s decision itself:
Why the ACCC regards this Full Court decision as wrong
in principle and not just a little fact case is what this says
to advertisers is, “Sit down with your product and work out
what it is. From within your product extract what you
regard to be a very attractive feature, including split the
price if you want to. Split a bundled product into two
products and split the price. Go out and get a hook into
people’s mind for one part of the product and one price and
provided you put somewhere in your ad words that can be
seen which expose the lie, you’ve complied with the
law”.32
While the advertisements in issue in the proceedings
were not limited to TV, radio and cinema advertisements, and included print advertisements (newspapers,
magazines, coupon booklets and brochures), it appears
from the judgment that the focus of the High Court’s
decision was on the TV, cinema and radio advertisements.33
competition and consumer law news
March 2014
With this in mind, the High Court appears to be
suggesting that, at the very least, in the context of
ephemeral advertisements, it is the general thrust of the
message that must be considered when determining
whether an advertisement is misleading or deceptive.
And, in certain circumstances, a disclaimer — even if
properly worded and of appropriate size — will be
insufficient to qualify such messages.
Despite this, what is not clear is whether the High
Court is also saying, by implication, that — in the
context of ephemeral advertisements — disclaimers,
however worded and however prominent, will be insufficient to correct dominant messages that are themselves
misleading or deceptive. While that would be a truly
radical outcome, it appears to be one that is open on the
face of the decision. It would also meet the ACCC’s
stated concern. Having said that, this may just be a
matter of characterisation — namely, to the extent that a
disclaimer is sufficiently prominent, it may be that there
is no dominant message conveyed so to speak, or that
the dominant message is not misleading or deceptive.
Further, the extent to which such an approach would
also apply to static advertising, where consumers have
much greater opportunity to consider an advertisement
in its entirety, including any attendant conditions, is
unclear, given that the decision also applied to various
print versions of the advertisements.34 It has long been
accepted that consumers are less likely to be misled or
deceived by print advertising, including as accepted by
the trial judge in this case.35
However, what is very clear from the High Court’s
judgment is the fact that consumers have a sophisticated
understanding of the product or service being advertised
to them will not generally operate to correct an otherwise misleading or deceptive claim — particularly so in
the context of fleeting or transient advertisements, such
as TV, cinema or radio advertisements. This is a departure from more recent cases, which have tended to give
far greater weight to this consideration as part of the
process of determining the lawfulness of particular
ads.36
In reaching this view, it is also clear that the High
Court was particularly swayed by this fact:
That consumers might absorb only the general thrust or
dominant message was not a consequence of selective
attention or an unexpected want of sceptical vigilance on
their part; rather, it was an unremarkable consequence of
TPG’s advertising strategy.37
Similarly advertisers cannot rely on subsequent material being provided to consumers prior to the point of
sale to correct what would otherwise be a misleading or
deceptive claim. As such, whether or not consumers
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March 2014
ultimately suffer any financial loss from relying on
advertising claims is irrelevant to determining whether
the claim itself is misleading or deceptive.
The ACCC and trade competitors will be closely
monitoring advertising claims and are likely to take
swift action to prevent traders from adopting advertising
strategies along the lines of the one used by TPG.
This has already been borne out by the recent
successful proceeding brought by Telstra in the Victorian Supreme Court against Singtel Optus.38 That case
concerned claims for misleading or deceptive conduct in
respect of a comparative advertisement, broadcast on
free-to-air television and on the Optus website, promoting Optus’s coverage for its 3G and 4G mobile networks.
In adopting the approach of the High Court in ACCC
v TPG, the Victorian Supreme Court quoted extensively
from the judgment and relied on it in:
• giving significant weight to Optus’s intention in
devising and broadcasting the advertisements, with
the court finding that because the misleading
representations “were part of a deliberate advertising strategy that was calculated to benefit Optus’s
business … it may properly and more readily be
inferred that the Advertisement had the effect
intended”;39
• giving little weight to the knowledge of the
relevant class of consumer generally40 — as such,
the court was not prepared to ascribe a high level
of knowledge to the relevant class of consumer
and, in any case, was not prepared to conclude that
an ordinary and reasonable member of the class
would have done anything other than “accept the
Representations at face value”;41
• emphasising that the nature of the television advertisements means that consumers cannot be expected
to bring to bear a sophisticated analysis of the
message being conveyed or to analyse the advertisement in any detail;42 and
• directing its primary attention to what was the
dominant message conveyed by the advertisement.43
No doubt this is only the beginning.
Michael Cooley
Lawyer
Gilbert + Tobin
mcooley@gtlaw.com.au
www.gtlaw.com.au
29
of the advertisements, including the print advertisements, or
the television and radio advertisements alone.
Footnotes
1.
Australian Competition and Consumer Commission (ACCC)
v TPG Internet Pty Ltd (2013) 304 ALR 186; 88 ALJR 176;
22.
Australian Competition and Consumer Commission (ACCC)
v TPG Internet Pty Ltd [2013] High Court Trans 261 (1 November 2013), Crennan J.
[2013] HCA 54; BC201315601 (ACCC v TPG).
2.
In a 4:1 decision.
23.
Above, n 1, at [47].
3.
TPG Internet Pty Ltd v Australian Competition and Consumer
Commission (ACCC) (2012) 210 FCR 277; [2012] FCAFC
24.
Above, n 1, at [45].
25.
Above, n 1, at [51].
190; BC201210930 (TPG v ACCC). See M Cooley “Considering the attributes of the ordinary or reasonable consumer
when determining whether advertisements are misleading or
deceptive: TPG Internet Pty Ltd v ACCC” (2013) 28(10)
Competition and Consumer Law News 174.
26.
Above, n 1, at [54].
27.
Above, n 1, at [45].
28.
Above, n 1, at [49].
29.
Trade Practices Commission v Optus Communications Pty Ltd
4.
Telstra Corp Ltd v Singtel Optus Pty Ltd [2014] VSC 35;
BC201400576.
5.
The ACCC did not claim that the revised advertisements
& Optus Mobile Pty Ltd (1996) 64 FCR 326 at 338–9; 34 IPR
176; (1996) ATPR 41-478; BC9600587; SAP Australia Pty Ltd
v Sapient Australia Pty Ltd (1999) 169 ALR 1 at 14; 48 IPR
593; [1999] FCA 1821; BC9908613 at [51]; Australian Com-
contravened s 48 of the ACL.
6.
Above, n 5, s 53(C), now s 48 of the ACL.
7.
Australian Competition and Consumer Commission (ACCC)
v TPG Internet Pty Ltd (No 2) [2012] ATPR ¶42-402; [2012]
petition and Consumer Commission v Commonwealth Bank of
Australia (2003) 133 FCR 149 at 171–2; [2003] FCA 1129;
BC200306147 at [47]. See also Bridge Stockbrokers Ltd
v Bridges (1984) 4 FCR 460 at 475; 57 ALR 401; 5 IPR 81;
FCA 629; BC201204202 at [140].
8.
The court agreed with Murphy J’s construction of the word
“prominent”, which his Honour said required it to “strike the
attention”, “be conspicuous”, “be easily seen” or “be very
noticeable” (Australian Competition and Consumer Commission (ACCC) v TPG Internet Pty Ltd [2010] FCA 1478;
BC201010043 at [130]). In doing so, the court also emphasised
that “the question of whether the single price is prominent or
conspicuous [in accordance with s 53C(1)(c)] depends on the
overall context” of the advertisement (above, n 3, at [131]).
(1984) ASC 55-374.
30.
31.
Above, n 1, at [50].
See, by way of example, the interlocutory decision of Rares J
in Samsung Electronics Australia Pty Ltd v LG Electronics
Australia Pty Ltd [2011] FCA 664; BC201104102 at [40]. That
case relied on the decision of the Full Federal Court in Knight
v Beyond Properties Pty Ltd (2007) 242 ALR 586; 74 IPR 232;
[2007] FCAFC 170; BC200710256. However, unlike Samsung,
which was a comparative advertising case, Knight concerned
9.
Above, n 3, at [100].
an action for the use of a name of a television program,
10.
Above, n 3, at [102].
Mythbusters, which was also the title of several earlier pub-
11.
This is also recognised by Gageler J in his dissenting judgment
at [75], where he says that “the essential difference between the
Full Court and the primary judge concerned the level of
sophistication each attributed to the ordinary and reasonable
consumer or potential consumer of broadband internet services
during the period of TPG’s advertising campaign in 2010 and
2011”.
lished books that were unrelated. In Knight, the FFCA affirmed
the decision of the first instance judge, finding that the conduct
complained of was not misleading or deceptive because any
misapprehension by consumers would be so insubstantial and
impermanent as to justify the conclusion that the conduct was
not in any significant way misleading (at [57]). The trial judge
in TPG distinguished Knight from the present case.
32.
12.
Above, n 3, at [98].
13.
Above, n 3, at [106].
Internet Pty Ltd [2013] High Court Trans 261 (1 Novem-
14.
Above, n 3, at [119].
ber 2013) (Mr Gleeson).
15.
Above, n 3, at [118].
16.
Above, n 3, at [112].
Puxu, the High Court said: “TPG’s target audience did not
17.
Above, n 3, at [109].
consist of potential purchasers focused on the subject matter of
18.
TPG Internet Pty Ltd v Australian Competition and Consumer
Commission (ACCC) (No 2) [2013] FCAFC 37; BC201301550
at [15] (TPG v ACCC No 2).
their purchase in the calm of the showroom to which they had
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982)
target audience. The intrusion will not always be welcome. The
149 CLR 191; 42 ALR 1; 56 ALJR 715; BC8200090.
very function of the advertisements was to arrest the attention
20.
Above, n 18, at [78]–[80].
of the target audience. But while the attention of the audience
21.
Above, n 1, at [47]. It is not entirely clear from the judgment
whether the High Court intended this comment to apply to all
might have been arrested, it cannot have been expected to pay
19.
30
33.
Australian Competition and Consumer Commission v TPG
By way of example, in distinguishing the present case from
come with a substantial purchase in mind. Here, the advertisements were an unbidden intrusion on the consciousness of the
close attention to the advertisement; certainly not the attention
competition and consumer law news
March 2014
focused on viewing and listening to the advertisements by the
34.
judges obliged to scrutinise them for the purposes of these
proceedings.” (Emphasis added).
In the more recent decision of the Victorian Supreme Court in
above, n 4, Elliott J at [34] noted that the observations of the
High Court in ACCC v TPG concerning television advertisements “cannot simply be transposed and applied in relation to
advertisements placed on a website. At least 1 clear distinction
between a member of the Class viewing the Advertisement by
this means rather than on television is that that person has
directed herself or himself to the website voluntarily and
proactively (presumably deliberately, but in some instances
perhaps inadvertently), rather than having the Advertisement
imposed upon her or him during a break in a television
program.” However, notwithstanding his Honour’s comments,
ACCC v TPG also concerned website and print advertisements
35.
Australian Competition and Consumer Commission (ACCC)
v TPG Internet Pty Ltd [2011] FCA 1254; BC201108516 at
[99].
36.
See for example Australian Competition and Consumer Commission (ACCC) v Singtel Optus Pty Ltd [2010] FCA 1177;
BC201008108.
37.
Above, n 1, at [52].
38.
Above, n 4.
39.
Above, n 4, at [53].
40.
Above, n 4, at [68]–[74].
41.
Above, n 4, at [72].
42.
Above, n 4, at [73].
43.
Above, n 4, at [92]–[94].
more generally.
competition and consumer law news
March 2014
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