June 21, 2012
SYDNEY: Apple was today fined A$2.25 million (US$2.29 million) for misleading Australian consumers about the local 4G capability of its next-generation iPad, in a case brought by regulators.
The tech giant was also ordered to pay A$300,000 in costs by the Federal Court in a case brought by regulators, who said the penalty sent a message to global companies that there were consequences for breaching the law.
Justice Mordy Bromberg found that Apple misled people with claims in its advertising implying that the “iPad with WiFi + 4G” could connect with fourth generation cellular networks in Australia, when it could not.
The judgment found the company engaged in conduct liable to mislead the public and contravened Australian consumer law.
“The conduct concerned was deliberate and very serious”, Bromberg said.
The Australian Competition and Consumer Commission (ACCC), which initiated the proceedings, said it was delighted with the outcome.
“The $2.25 million penalty reflects the seriousness of a company the size of Apple refusing to change its advertising when it has been put on notice that it is likely to be misleading consumers,” chairman Rod Sims said.
“This decision should act as a renewed warning that the ACCC will continue to take action against traders who take risks in their advertising, regardless of their size.”
Apple had offered in March to refund Australian customers who felt they had been misled, and publish a clarification about the popular tablet’s capabilities.
The product is now advertised outside North America as “Wi-Fi + Cellular” – a change that came into effect on May 12 – with a clear caveat on its Australian site that “it is not compatible with current Australian 4G LTE and WiMax networks.”
“Apple does not seek to deny the deliberateness of its conduct and there are no facts before me which seek to excuse or explain the conduct, other than that the conduct occurred at the behest of Apple’s parent company,” Bromberg said.
The iPad was the world’s best-selling tablet in the first three months of 2012, outgunning its Android-powered rivals, with sales more than doubling from a year earlier to send Apple’s profits soaring.
The iPad’s 4G capabilities are supported by some networks in the USD and Canada.
Matthew Rimmer, an expert in intellectual property at the Australian Nation University, said Apple had been “careless.”
“It shows some of the dangers involved in overhyping products and sets a very important precedent,” he said, adding that other countries would take not of the outcome.
Asked if it could open the floodgates to similar law suits elsewhere, he said: “It all depends on the nature of consumer regulations in each country.”
Earlier this month, Apple agreed to settle the case with the ACCC.
But Bromberg delayed an official ruling until he had details on how many iPads had been sold and were returned under the refund offer and further information on Apple’s financial position.
He said yesterday the risk of contravening Australian consumer law would have been “reasonably obvious” to Apple. – AFP