Apple Inc and Apple Pty Limited (together
Apple) have just learnt a very costly lesson in
the Federal Court of Australia and the public eye about ignoring
warnings from the Australian Competition & Consumer Commission
Apple had intended that Australia be the first country in which
it would sell its new Apple iPad.
Apple set the launch date at 16 March 2012.
Prior to launch, the ACCC issued warnings to Apple about
promoting the product as 4G compatible when, the ACCC alleged, the
new iPad was not compatible with the only 4G networks in Australia,
being those run by Telstra and Optus.
Despite the ACCC's concerns, Apple proceeded with the iPad
product launch as it had planned. Apple asserted that despite its
incompatibility with existing Australian 4G networks, its device
was compatible with other networks classified as 4G by
ACCC's Urgent Court Action
On 28 March 2012, the ACCC applied to the Federal Court for an
urgent injunction to stop Apple's allegedly misleading
advertising for the new iPad.
The ACCC alleged that Apple had been misleading consumers by
advertising the new iPad as the "iPad with WiFi + 4G".
Apple argued that the references in its advertising were to the
"international meaning" of the term 4G and it had never
claimed the product worked on Telstra's 4G network.
The ACCC wanted Apple to remove any reference to the 4G network
in its advertising in Australia, claiming this advertising had been
driven by the company's marketing in the US rather than by
Apple considering the ordinary meaning of the claim to Australian
In response to the urgent interlocutory relief sought by the
ACCC, Apple provided an undertaking to the Federal Court that
before 5 April 2012, and until further order or hearing before the
court, Apple would:
Display the following statement in its promotional materials,
on its website and in its online store:
"This product supports very fast cellular networks. It is
not compatible with current Australian 4G LTE networks and WiMAX
Distribute signage with the same wording to resellers to be
displayed at points of sale.
Email all consumers who had purchased the new iPad in the
period 16 to 28 March 2012, stating that the tablet supports very
fast cellular networks, but is not compatible with current
Australian 4G LTE networks and WiMAX Networks. In addition, the
email was required to indicate to the consumer that they are
entitled to return the product and request a refund within a
timeframe specified in the email.
Apple said it would write to more than an estimated 50,000
consumers who had purchased the product since its launch, to offer
a refund before 5 April 2012. Apple also said it was confident that
few, if any, would take up the offer.
Lessons to Learn from Apple's ACCC Experience
Apple has learnt the hard way that the ACCC is an aggressive and
determined regulator. The publicity associated with the ACCC action
has overshadowed the new iPad launch in Australia and globally. In
addition to the negative publicity associated with the launch,
Apple has also incurred no doubt significant legal costs and
opportunity costs associated with being involved in a Federal Court
action and having to comply with a court-enforceable
There are a number of lessons for business more broadly to take
away from this ACCC action:
You should never ignore a letter from the ACCC. It is a very
aggressive regulator and ignoring its letters or calls will not
make it go away.
If you are not willing to attempt to reach an agreement with
the ACCC, it is not afraid to institute proceedings directly.
If you are a global company, you cannot assume that just
because claims can be made to your consumers in other
jurisdictions, they will also comply with the law in
The ACCC is not afraid to take on large multinational
On 2 May 2012, the Federal Court will ultimately decide the
ACCC's case against Apple on a final basis. We will keep you
The assistance of Simone Vrabac, Solicitor, and Sarah Krust,
Clerk, of Addisons in the preparation of this article is noted and
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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