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BUS101 Introduction To Business Law

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BUS101 Introduction To Business Law

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Course Code: BUS101
University: Saylor Academy

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Country: United States

Question:

You should be aware from the judgment you have read that the following sequence occurred in the courts:

The ACCC brought proceedings against TPG
At the first hearing (before a single judge, called the “‘primary” judge ACCC was largely successful.
TPC appealed to (what is called) the Full Court (three judges) and was largely successful in reversing the outcome before the primary judge
The ACCC appealed against that decision to the High Court of Australia.  It is the decision of that court which you have  read (although contained within it is a summary of what the earlier courts decided).

Question 1
There were three problems with TPG’s advertising which the ACCC considered to be misleading;  state briefly what those three were [3 marks]
Question 2
The ACCC alleged that TPG’s advertising contravened two STATUTORY provisions; what were those statutory provisions (ie, which sections of which Act) and what did the ACCC say about the advertisements which contravened each of those provisions [4  marks – 1 each  for identifying each of the two statutory provisions and 1 each for stating how the advertisements contravened that provision]
Question 3
What were the findings (conclusions) of the primary judge about each of the following aspects of the advertising?  In your answer, consider the matters suggested in italics [3 marks total 1 for each of the following]

bundling (who did the judge believe would be the “target audience” and what was it about the advertising which could mislead that audience?) [1 mark]
the set-up fee (in what way was the advertising capable of misleading consumers about this?) [1 mark]
single price (in what way was this aspect in breach of the statute?) [1 mark]

Question 4
The Full Court came to two important different conclusions from those of the primary judge when deciding whether the TPG advertising was misleading? What were those two different conclusions [2 marks]
Question 5
The High Court decided that the conclusions of the Full Court were not correct. For what two reasons did the High Court differ from the Full Court’s reasoning? [2 marks]
Question 6
The Full Court, in coming to its conclusions, applied as a precedent the ratio from an earlier case called Parkdale Custom Built Furniture v Puxu (“Puxu”).  The High Court said that the Full Court should not have applied (ie, the Full Court should have “distinguished”) the principle in Puxu and it gave three reasons for this.  Briefly explain any two of the reasons the High Court said made the Puxu case different from the TPG advertising. [2 marks]
Question 7
If you were employed in the marketing section of an internet service provider or a fitness centre which was about to launch an advertising campaign promoting an attractive “plan” for membership in which there were several “parts” (costs and benefits) to be taken into account by potential customers, what advice would you give about the form the advertising should take, based on your understanding of the High Court’s ruling in ACCC v TPG? [2 marks]

Answer:

Question 1
The three issues with the TPG’s advertising included:

TPG failed to specify the price of supplying broadband internet ADSL2+service in a good way and as one figure. Instead of displaying a single price of the entire offer, TPG provided different prices which were kind of confusing the consumers.
TPG made a false and misleading representation by providing different prices various advertising medium (Paterson & Brody, 2015). For example, in its initial advertisement, the price provided on the internet was $125,000, TV set was $175,000, radio $150,000, and print $150,000.
TPG engaged in a trade that is misleading and deceptive (Shanahan & Round, 2014). The advertisement failed to display detailed information concerning the entire price of supplying broadband internet. Instead, the dominance information was only showing that the cost of unlimited ADSL2+ was $29.99, leaving out other costs such as the renting a home telephone and paying $30 per month.

Question 2

Breach of section 53C(1)(c) of the Trade Practices Act 1974

The Australian Competition and Consumer Commission (ACCC) alleged that the TPG Internet violated s 53C(1)(c) of TPA because of failing to prominently identify all about broadband internet and services and stating  a single price for the package (Humphery, Smart & Crawford, 2010). The provisions of section 53C(1) (c) of the Act 1974 states that a corporation involved in a the promotion by means of supplying goods and services to an individual need to state in a noticeable manner and as a single figure of the value of what is offered (Round & Shanahan, 2012). Because of the breach of this section, the justice also held that the singled price that was to be $509.89 was not revealed in a prominent manner in the newspaper, internet, and television advertisements.  Moreover, in another ruling the primary justice gave orders for the restrictions, corrective advertising, pecuniary punishments, costs and the execution of a submission program by TPG. Under the pecuniary penalties, the primary judge ordered TPG to pay $2 million

Violation of s52  of the TPA 1974

ACCC also alleged that TPG violated section 52 of the TPA by making varying prices of the same item in various advertising Medias; hence misleading consumers. Section 52 of the TPA prohibits companies from engaging deceptive or misleading conduct in trade (North & Flitcroft, 2016). TPG also failed to show the total amount of the package, and instead only showed a portion of the entire price required for the entire package. The Full Court was wrong by not appreciating that the continual advertisements of the TPG in misleading customers was not defused by the Full Court’s acknowledgement of awareness to customers that the broadband internet services might get offered as a bundle.
Question 3

Under bundling, the primary judge believed that the primary audience would be the first users of ADSL2+ services. The issue with the advertisement that could mislead the first users of the TPG broadband internet was the company failure to disclose to the consumers whether the offer was a separate or a bundled service. Meaning that the consumers were not sure what the advertisement entailed, but ended up relying on it for information (Morrison, Abraham & Sheargold, 2010). According to the primary judge every advertisement had equal dominant message that stated that “Unlimited ADSL2+ for $29.99 per month”. It was held that the leading advertisement message was deceitful since TPG said that when a consumer gets Unlimited ADSL2+ for $29.99 monthly, he or she is also forced to pay for a home telephone line that they provide, and to pay an extra $30 every month for it.  
The advertisement was able to mislead consumers about the set-up fee because it was not detailed and could have created the impression that there would be no extra charges before it was revised (Daly & Scardamaglia, 2017). Referring to the initial radio, newspaper, TV and internet adverts, it was established that none of them clearly stated the requirement of the setup fee. Therefore, the judge decided that according to the adverts, the customer would likely assume that there was no further fee needed by the TPG.
The company is required under section 53C(1) (c) of the TPA 1974 to state a single price of the goods or services offered (Round & Shanahan, 2012). Instead of putting the first advertisement with a single price of $509.89 in prominent manner, PTG gave out various prices that could have created confusion to the consumers.  Because of the breach of this section, the primary judge gave out a pecuniary penalty of $ million.

Question 4
The two important conclusions from the Full Court were that:

The primary judge made a wrong decision in concluding that the initial television advert was deceptive.
The primary judge was wrong in its conclusion that PTG violated section 53C(1)(c) of the Trade Practices Act 1974 (Round & Shanahan, 2012).

Question 5
The two reasons why the High Court found that the final judgment of the Full Court was that:

They made a mistake in setting aside findings of the primary judge in relation to violation of the TPA by the TPG (Svantesson & Clarke, 2013).
They made a wrong decision in the valuation of the suitable pecuniary penalty of $2 million, and the primary conclusion on the penalty should have been restored.

Question 6
The two reasons why the Full Court should not have applied Parkdale Custom Built Furniture v Puxu as a precedent in its conclusion was that:

The target audience of the Puxu did not involve the potential buyers engrossed on the business of their buying in the showroom where they had visited having buying in mind. In TPG’s case, the adverts were an unattempt interruption on the awareness of the target audience (Kwok, 2016). Even though, the advertisement may have captured the attention of the audience, it cannot have been anticipated to understand the advertisement. It is because the attention focused by the judges on viewing and listening to the advert gratified them to scrutinize such adverts for the purpose of the proceedings.
The failed to recognize that trend of the adverts to misinform was not to be decided by finding out whether they were suitable tempt customers to get into agreements with TPG. Although, by determining whether they were fit in attracting customers to negotiate with TPG but not with any of its competitors based on the mistaken belief prompted by the push of the TPG’s message.

Question 7
If I happened to be a part of the promotion team of an internet service provider or a fitness center planning to inaugurate an advertising campaign for a good-looking membership plan with several costs and benefits to be considered by esteemed customers, I would advocate for the best form of advertising. For instance, I would advise the team to have an advert that emphasizes on all the costs that would be involved in case the service or product has several parts with different costs and benefits (Healey, 2015). The advert is obliged to target the customers based on the assumption that people are likely to ignore some parts of the advertisements. As a result of this, it is important to put the products together and produce one single amount or even precisely indicate the price of each part to the target audience. This is particularly important because it will help the customers know what they will be purchasing, as well as, their actual prices.
References
Daly, A, & Scardamaglia, A 2017, ‘Profiling the Australian Google Consumer: Implications of Search Engine Practices for Consumer Law and Policy’, Journal of Consumer Policy, vol. 40, no. 3, pp. 299-320.
Healey, J 2015, Advertising Standards and Ethics, The Spinney Press, Thirroul, NSW, vol. 394, no.1, P.7-17.
Humphery, K, Smart, J, & Crawford, R 2010, Consumer Australia : Historical Perspectives, Cambridge Scholars Publishing, Newcastle, vol. 13, no.6, p. 97-119.
Kwok, JT 2016, ‘Audit Office confirms Govt adverts were false & misleading’, Advocate: Newsletter of the National Tertiary Education Union, vol. 23, no. 3, p. 9.
Morrison, A, Abraham, R, & Sheargold, M 2010, ‘Antipodean Alignment: Impact of the Proposed Australian Consumer Law’, Defense Counsel Journal, vol. 77, no. 3, pp. 353-365.
North, J, & Flitcroft, R 2016, ‘Businesses beware — when does the Australian Consumer Law apply?’, Governance Directions, vol. 68, no. 5, pp. 306-309.
Paterson, J, & Brody, G 2015, ”Safety Net’ Consumer Protection: Using Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business Models’, Journal of Consumer Policy, vol. 38, no. 3, pp. 331-355.
Round, K, & Shanahan, MP 2012, ‘From Protection to Competition: The Politics of Trade Practices Reform in Australia and the Trade Practices Act 1965’, Australian Journal of Politics & History, vol. 58, no. 4, pp. 497-511.
Shanahan, MP, & Round, K 2014, ‘Transforming Australian business attitudes to competition: Responses to the Trade Practices Act 1965’, Business History, vol. 56, no. 3, pp. 434-455.
Svantesson, D, & Clarke, R 2013, ‘The Trade Practices Act: A Hard Act To Follow? Online Consumers And The New Australian Consumer Law Landscape’, James Cook University Law Review, vol. 20, pp. 85-116.

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