By Dr Jeannie Marie Paterson and Veronica Wong
Section 18 of the Australian Consumer Law (previously s 52 of the Trade Practices Act 1974 (Cth)) contains a broad ranging prohibition on conduct that is misleading or deceptive or likely to mislead or deceive. Misleading conduct in advertisements by traders causes harm by distorting the purchasing choices of consumers. This may reduce competition in the market by leading consumers to favour products that don’t have the features that are promoted. It may also increase costs for consumers, incurred either by entering into contracts that are not in their best interests or by incurring search costs that are wasted when they discover that the product does not exist as represented.
In Australian Competition and Consumer Commission v TPG Internet Pty Ltd  HCA 54, the High Court confirmed importance of s 18 in protecting consumer interests by holding that so-called ‘headline’ advertising may be misleading notwithstanding the existence of a fine print disclaimer qualifying the representations in the headline statement.
The High Court also confirmed that deterrence should play a ‘primary’ role in setting the appropriate penalty to be imposed on a trader for a contravention of s 18. Specifically, the court should consider the need to deter offending conduct and any penalty imposed should be significant enough that it is not merely a cost of doing business. A majority of the High Court (French CJ, Crennan, Bell and Keane JJ; Gageler J dissenting) held that the Full Federal Court erred in setting aside the findings of primary judge and restored the pecuniary penalty of $2 million.
The decision of the High Court in TPG shows that whether an advertisement is misleading contrary to s 18 of the ACL should, as the words of the section suggest, be assessed by reference to the impressions conveyed by the advertisement in the circumstances in which it is delivered, and not merely by reference to the existence of technically correct information available to those consumers who choose to look for it or by reference to the presumed background knowledge of consumers. This approach, combined with the recognition that the penalty for contravention of s 18 is aimed at genuine deterrence of the offending behavior, is entirely consistent with the consumer protection purposes of the legislation. Continue reading