The Federal Court has ruled that Apple pay a $2.25 million fine for misleading consumers that its latest iPad was compatible with Australia's long-term evolution "4G" broadband networks.
In a judgment delivered today, Federal Court Justice Mordy Bromberg said that the company had engaged in conduct liable to mislead the public and contravened Australian consumer law, fining it $2.25 million and ordering it pay $300,000 in costs.
Apple and the Australian Competition and Consumer Commission (ACCC), which brought the case against the global technology company, had agreed on the $2.25 million fine two weeks ago, however, Justice Bromberg had adjourned the matter to consider whether the fine was appropriate.
Justice Bromberg said that the most concerning aspect of Apple's contravention of consumer law was the deliberate nature of its conduct.
"Apple does not seek to deny the deliberateness of its conduct, and there are no facts before me which seek to excuse or explain the conduct, other than that the conduct occurred at the behest of Apple's parent company ... Apple Inc," he said.
The same campaign, "iPad with WiFi + 4G", was used worldwide, the judgment noted.
Justice Bromberg said that Apple was first told the device was not compatible with the Telstra 4G network on 8 March this year, the day of the new iPad's launch in Australia.
The risk of contravention of Australian consumer law would have been "reasonably obvious" to those at Apple that are familiar with the Australian market's understanding of the term 4G, he said.
"In that context, and in the absence of any other explanation, the facts to which I have just referred, suggest that Apple's desire for global uniformity was given a greater priority, than the need to ensure compliance with the Australian consumer law," Justice Bromberg said.
"Conduct of that kind is serious and unacceptable."
The reach of Apple's conduct was extensive, he said, with the "4G" term exposed to hundreds of thousands of customers. He said that the number of iPad cellular models sold during the period where Apple had displayed the misleading advertising was "substantial". The court was provided with sales numbers, but did not disclose them publicly for reasons of confidentiality.
"It is not possible to say, with any certainty, how many Australian consumers were misled by Apple's use of the term '4G'," he said. Although it also wasn't possible to discern how disappointed customers would have been when they didn't receive a device that had 4G speeds, he believed that they would have felt cheated.
"I have no doubt that, given the promotion by Telstra of the superiority of its 4G network, many purchasers will have felt decidedly short-changed, despite the fact that only a small percentage of them took up the opportunity of a refund, offered by Apple on 28 March 2012, as part of the undertakings given to the Court."
He took into account, however, the action Apple had taken to remedy the situation — Apple put signage in its stores and advised those that had bought the "4G" model that it was, indeed, not 4G compatible, offering a refund. He felt that this, and the media coverage of the issue, would have reduced the likelihood that consumers were misled.
Since he felt that the proposed penalty from the parties were "neither manifestly inadequate, nor manifestly excessive", he decided to impose the $2.25 million penalty on the company.