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TPG hit with $2m fine for misleading ads

After seven months of deliberating, the Federal Court has fined TPG $2 million for misleading ads dating back to 2010.
Written by Josh Taylor, Contributor on

After seven months of deliberating, the Federal Court has fined TPG $2 million for misleading ads dating back to 2010.

The competition watchdog — the Australian Competition and Consumer Commission (ACCC) — took TPG to court over ads for its $29.99 fixed-line broadband plan at the end of 2010, claiming that the ads failed to disclose the full cost of the plan, which included a $30 line-rental charge. In November 2011, Justice Bernard Murphy ruled in the Melbourne Federal Court against the telco, finding that although TPG advertised the unlimited plan for $29.99, it did not adequately disclose that the cost was $59.99 per month including line rental.

On Friday, Murphy handed down a $2 million fine and an injunction for both an initial advertising campaign that ran between 25 September 2010 and 7 October 2010 and an amended campaign that ran from 7 October 2010.

The ACCC sought fines of between $4 million and $5 million, while TPG argued that $450,000 would have been appropriate. Murphy settled on $2 million, stating that while he did not consider the ads to be the worst of the worst, he still felt that he needed to impose a high enough penalty that the fine wouldn't be viewed as just a cost of doing business for TPG.

"[TPG's] conduct was seriously misleading. It involved a deliberate marketing strategy to strongly emphasise the $29.99 component of the monthly price and de-emphasise the real price of $59.99 with the requirement to purchase another service. The qualifying information was minimised by clever marketing stratagems," he said. "TPG's behaviour indicates that there is a risk of repetition of similar conduct by it. Specific deterrence is a significant factor in my assessment of the appropriate pecuniary penalty in this case. In my view, it needs to be a penalty that is sizeable for TPG."

TPG will not be able to engage in similar conduct under a court injunction. The company has also been ordered to publish corrective notices and to maintain a trade practices compliance program for the next three years, as well as paying the ACCC's court costs.

ACCC chairman Rod Sims said that the decision should send a strong warning to telcos about taking risks in advertising.

"The ACCC is committed to taking a hard line to secure a culture of compliance by telecommunications providers, and improve marketing in the telecommunications industry. The ACCC will continue to take court action in order to achieve this," he said in a statement.

TPG has vowed to appeal the fine.

"TPG is disappointed at the penalty judgment of the Federal Court concerning the advertising of TPG's unlimited broadband with home phone plans. It has given instructions to appeal both the original findings of the court as to liability and the decisions about penalty," the company told ZDNet Australia in a statement.

In April, the ACCC handed TPG a much smaller $13,200 fine for misleading advertising relating to advertising for voice-over-IP (VoIP) calls.

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