On 21 June 2012, Justice Bromberg of the Federal Court of Australia imposed a $2.25 million penalty on Apple Pty Ltd following its breach of section 33 of the Australian Consumer Law
The case stemmed from a breach of section 33 of the Australian Consumer Law, which prohibits those engaged in trade or commerce from engaging in conduct that is liable to mislead the public as to the characteristics of the goods being sold. In this case, Apple admitted it breached this requirement during the promotion and sale of its newest iPad tablet device.
In short, Apple promoted the tablet as “iPad with WiFi + 4G” despite the fact the device could not directly connect with the only commercially available network in Australia that Australian consumers understood to be a 4G network (namely, the “Telstra 4G network”). During the proceeding, Apple admitted that its use of the product designator “iPad with WiFi + 4G” impliedly represented that the new iPad model could connect with the Telstra 4G network.
The ACCC proposed a pecuniary penalty be paid by Apple in the amount of $2.25 million as well as a $300,000 contribution towards the ACCC’s legal costs, reflecting a settlement reached between the ACCC and Apple. In considering this proposal, Bromberg J assessed whether the proposed penalty (to which Apple agreed) was appropriate in all the circumstances. His Honour took into account the deliberate nature of Apple’s conduct as well as the fact the risk of contravention of section 33 of the Australian Consumer Law was “reasonably obvious, and must have been recognised as substantial” by Apple. Bromberg J also recognised the “public interest in courts exercising restraint in overly scrutinising proposed settlements, so that settlements may be encouraged and potentially lengthy and expensive litigation avoided”.
Bromberg J also considered, as an ameliorating factor, that there was no evidence before the Court as to any actual loss or damage caused to consumers or to Apple’s competitors. His Honour also gave Apple credit for its “disposition to co-operate with the ACCC”. Ultimately, Bromberg J decided that the penalty proposed was neither manifestly inadequate nor manifestly excessive.
List G Barristers member, Colin Golvan SC, appeared on behalf of the Australian Competition and Consumer Commission.