BUS101 Case Study - TPG Advertising and the Australian Consumer Law

This case study examines the TPG Internet Pty Ltd advertising campaign from 2010-2011, focusing on the promotion of unlimited ADSL+ service at a specific price, while also requiring bundling with home telephone service and additional fees. The Australian Competition and Consumer Commission (ACCC) alleged that these advertisements were misleading and deceptive, breaching the Trade Practices Act (TPA) and the Australian Consumer Law (ACL). The case involved the trial judge, the Full Court, and the High Court, each with differing interpretations of the importance of the dominant message and the knowledge attributed to the target audience. The High Court ultimately found that the Full Court erred in its assessment, emphasizing the misleading nature of the advertisements and the failure to prominently display the total price. The case highlights issues of bundling, setup fees, and single price representations, and offers insights into crafting effective advertising for fitness center memberships, emphasizing the need for clear and comprehensive communication to avoid misleading consumers. The references provided support the legal arguments and decisions made throughout the case.

Answer 1. TPG Internet Pty Ltd had started an advertising campaign during 2010 and 2011. An
offer concerning unlimited ADSL+ service was widely publicized in these advertisements. It was
mentioned in these advertisements that the customers can avail these services at a price of $39.99
per month. However, the less prominent message present in these advertisements was that the
services need to be bundled with home telephone service of the company. In order to avail the
service, the consumers were required to shell out $30 per month more. Similarly, a setup fee of
$129.95 was also being charged by the company from the consumers. Another additional charge
that has to be paid by the consumers was in the form of $20 as telephone charges. The Australian
Competition and Consumer Commission alleged that these advertisements were misleading and
deceptive.
Answer 2. It was alleged by the ACCC that the advertisements issued by the company regarding
its ADSL+ services were in fact, misleading and deceptive. The Commission further claimed that
these advertisements resulted in the breach of section 52 of the TPA as well as s18, ACL. These
allegations were made by the commission in view of the fact that a difference existed amid the
prominent offer of the advertisements and less prominent terms qualifying the offer. The
commission also alleged that certain advertisements issued by the company can be considered as
being in breach of s53(1)(c). The reason given by the commission in this regard was the
advertisements have not prominently mentioned the price that has to be paid by the consumers as
a single figure.

Answer 3. For the purpose of deciding this issue, the trial judge also followed the claim made by
the commission that the advertisements of the company were in fact misleading and deceptive.
As a result, these advertisements amounted to the breach of s18 and 29, ACL. The reason was
that the leading business did not prominently mentioned from the price of the package. This was
considered as a breach of section 40, ACL. Therefore the trial judge favored the claim of the
commission that TPG advertisements were misleading.
Bundling: concerning the issue of bundling, it was found by the court that first-time users were
also part of target audience. Similarly, there are a number of Internet options accessible in the
marketplace, the normal consumers cannot make a preliminary assumption easily that the offer
of the company was a distinct offer or related with a bundled service (Fox v Percy, 2003). Hence,
the court stated that it was expected that the consumers may rely on the matter that has been
prominently mentioned in the advertisements in order to seek information regarding the service
that was being offered by TPG.
Set up Fee: although the court accepted the fact that generally broadband contracts are less than
24 months and generally a setup fee is also charged. The court also stated that under the
circumstances it can be expected that the audience (Branir Pty Ltd v Owston, 2001]). That was
the target of these advertisements would be aware of this fact but the court also stated that an
impression was caused by the dominant message of these advertisements that any other fee was
not going to be charged by the company (Elders Trustee v E. G. Reeves, 1987). Consequently,
the court stated that it needs to be clearly mentioned by the company in the advertisements that

the consumers will be under an obligation to be a further fee in order to use the service provided
to the consumers by TPG (Campbell v Backoffice Investments Pty Ltd., 2009).
Single price: the court stated regarding this issue that the advertisements of TPG did not
prominently mention the single price of $509.89. On the other hand, this was required in view of
section 53(1)(c) in the advertisements of the company that have been issued in various media
like newspapers, television and Internet.
Answer 4: there was a difference amid the approach taken on by the primary judge in this case
and the approach taken on by the Full Court. The first difference concerned the importance of the
dominant message that was given by the advertisements of TPG (SAP Australia Pty Ltd v
Sapient Australia Pty Ltd., 1999). There was another difference concerning the approach adopted
by the two courts concerning the attribution of knowledge to the audience that was the target of
these advertisements.
Answer 5: in this case, the High Court stated that there are certain reasons, in view of which the
approach of the Full Court was not correct. The first reason was that the full court had make a
mistake when it did not follow the conclusions made by made by the primary judge concerning
the importance of the dominant message given by these advertisements. The second reason of the
High Court was the failure of Full Court to understand the misleading nature of the
advertisements of TPG, that has not been used by educating knowledge to the audience and
which provided that ADSL2+ services may be presented as a bundle. Therefore, the High Court
stated that in view of the reasons mentioned above, there were differences present in the
approach taken of the primary judge and as a result, the Full Court had made another in its
appellate jurisdiction.

Answer 6: the High Court affirmed that the Full Court had made an error when it stated that the
conclusion of the primary judge was not correct according to which critical significance should
be attached to the leading message given by the advertisements of TPG (Arnison v Smith, 1889).
In this regard, the high court relied on the statements made in Puxu on which the Full Court had
relied, cannot be considered as decisive under the circumstances of this case (Parkdale v Puxu,
1982).
Answer 7: In order to offer an effective membership plan to the consumers of a fitness center,
there are certain things that need to be taken care of while making the offer in the advertisement.
For example, it has to be seen if the consumers coming to the business center are aware of the
bundling practices that are generally used in case of the advertisements related with fitness
industry. It is important that such knowledge of the consumers can efficiently diffuse the
tendency of the advertisements to mislead consumers. In the same way, it is also required that the
advertisements of the fitness center should not be such that the consumers only take a look at the
dominant message of the advertisements. Such a thing will happen when the advertisement is in
parts and as a result of advertising strategy; the consumers only pay attention to selective parts.
When the fitness Center has come up with an active membership plan that has several parts, it is
necessary that equal significance should be given to all the parts of the plan.

References
Arnison v Smith (1889) 41 Ch D 348
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25
Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332
Fox v Percy [2003] HCA 22
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44
SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821