Law - Business Law Case Study Assessment Answer

November 27, 2018
Author : Andy Johnson

Solution Code: 1GBA

Question: Business Law Case Study

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Business Law Case Study

Assignment Task

1. Briefly describe the content of TPG’s advertising which ACCC considered to be defective?

2.  Which two statutory provisions did ACCC allege that TPG’s advertising contravened and what was it about the advertisements which contravened those provisions

3. What were the findings (conclusions) of the primary judge about the following aspects of the advertising ?

    • bundling

    • the set-up fee

    • single price

4.  In what two ways did the Full Court take a different approach from that of the primary judge in deciding whether the TPG advertising was misleading?

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Solution:

Question 1

“Unlimited ADSL2+” was a campaign that was launched by TPG in September 2010. The ad was about its new internet package that was shown on television along with print, radio, internet and billboard advertisement on which f $8.9 million were spent.

This add continued to be on aired in the same way till October 2010 when TPG had to alter the ad in response to the notice sent by ACCC that is Consumer and competition Commission in Australia.

The main reason due to which TPG received this notice was due to the prominent line of “Unlimited ADSL2+ for $29.99 per month”, and the cost of broad band set up and other terms and conditions in detail were not displayed in a prominent way.

This caused the buyers and potential buyers to perceive that they can get the internet package at

  • rate of $29.99 for entered month and it was a very economical cost
  • There is no need of any additional charges, set up costs and mandatory requirement to avail some other service as well.

The stance of ACCC on this kind of advertisement was that it was showed on part of TPG that consumers can avail their internet package in this less amount but in actual there was a setting up cost of  $129.95 for time of six months and a fee of $20. It was only for the clients who are using TPG land line and had to bear a combined charge if $59.99 each month.

Question 2

According to ACCC TOG was alleged to breach two statuary provisions:

  • As stated in “Trade practices Act 1974” (Section 52) that any kind of deceptive or misleading conduct should be avoided in trade and (Section 53) that explains the avoidance of deceptive representation of price or conditions
  • It  became the foundation of s 18, 29 in ACL
  • “Competition and Consumer Act 2010” that pertains with the right use of prominent message that can only be used in circumstances in which the consumers are assumed to be well aware about that information.
  • This is said on the basis of content of advertisement, as there was misleading and deceptive dominant Statement that a consumer can get the internet bundle for $ 29.95 for whole month while the other information’s that were related to charges in addition to this were not highlighted.
  • It was not stetted in a clear manner that only the present users of telephone service will be able to avail the offer at this rate and the consumer will have to bear the additional charges for getting the device set up ($129.95) and a fee of $ 20.

Question 3

The findings of primary judge are stated on the three main points

  • Bundling

  • The primary court stated that there were new users of broad band in the target market of TPG and it cannot be assumed that they had prior knowledge about the bundling concept.
  • There is diverse kind of internet packages available and no consumer had adequate knowledge in advice that either the service will be offered independently or in the form of bundle.
  • The ordinary clients will not be able to comprehend that the entire offer is not for $29.95, so this is false message delivered by TPG that entire service will be for this amount as contrary to this the whole package had additional set up and monthly charges.

  • The fee of Set Up

    • In the case of fee of setting up, the primary court said that it is reasonable to assume that this kind of services do have fee of setting up in 24 months and all similar services have this condition.
    • But the message of advertisement gave a false impression that there is no such fee or condition and it should have been mentioned in a clear way

  • Single Price

  • The single price of entire package was not mentioned in an explicit manner that sums up to $509.89
  • Rather than this only one portion of price was highlighted that gave an untrue representation that the entire package has single price of $29.95.

Question 4

  • The Full court judged the case in different perspective from that of primary court and stated that it cannot be said that dominant message approach is used.
  • The consumer of this kind of services is aware that they may be independent or may in the form of a bundle. It is the duty of consumer to read the full advertisement and understand all the terms and conditions in proper way.
  • They stated that it is the responsibility of consumer to know that what are the prominent commercial services and charges of set up in a specific industry.
  • In this way TPG cannot be held liable to have involved in a misleading and deceptive advertisement act.

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