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Australia – A Picture Speaks A Thousand Words: Telstra Succeeds Against Optus In Comparative Advertising Case.

22 May, 2014

 

Legal News & Analysis – Asia Pacific – Australia – Dispute Resolution

 

Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35

 
What You Need To Know

 

  • Telstra succeeded in a misleading and deceptive conduct claim against Optus over an advertisement that claimed the coverage of Optus’s mobile network was comparable to Telstra’s. 
  • The advertisement contained a map of Australia featuring the words “Optus 98.5%” and “Telstra 99.3%” inside the map. There was also a voiceover which said: “When it comes to the percentage of Australians the Optus mobile network reaches, there isn’t much difference between us and Telstra. In fact, it’s less than 1%.” 
  • The Court found that the use of the map created a misleading representation that the figures referred to geographic coverage. The figures actually referred to population coverage (a subset of geographic coverage). This was misleading as Telstra’s geographic coverage is 2.5 times greater in land mass than Optus’s.

 
What You Need To Do

 

  • Comparative advertising is necessarily perilous as it will easily attract the ire of the competitor. Therefore, particular care is required to avoid creating a misleading representation. This is especially so in the light of the now firmly established principle that viewers’ attention and comprehension is low when receiving such representations by television advertisement. 

 
On 18 February 2014, Justice Elliott of the Victorian Supreme Court delivered judgment for Telstra in this case which concerned a comparative advertising campaign by Optus. Optus ran advertisements on television and Youtube which made claims about Optus’s mobile network coverage and compared it to Telstra’s.

 
The advertisement contained a map of Australia featuring the words “Optus 98.5%” and “Telstra 99.3%” inside the map. There was also a voiceover which said: “When it comes to the percentage of Australians the Optus mobile network reaches, there isn’t much difference between us and Telstra. In fact, it’s less than 1%.”

 
The case turned on whether the advertisements referred to the number of people within Australia who can be reached by a signal (known as population coverage), or whether they referred to the extent that the land mass of Australia is reached by a signal (known as geographic coverage).

 
Optus argued that it was clear from the spoken words of the voiceover that the advertisement referred to population coverage, not geographic coverage (“Australians”, not “Australia”). If that was so, the advertisement was factually correct and therefore not misleading. The Court did not accept this argument, finding that the dominant message conveyed by the advertisement was that the percentages shown had a relationship with coverage concerning the width and breadth of Australia, as depicted on the map. The voiceover did not cure that misleading representation; the dominant message in the advertisement was in the visual imagery, not the voiceover.

 

The map turned out to be Optus’s downfall. The Court found that a representation about population coverage could have readily been conveyed without using the map; the map’s inclusion, and the percentages within it, must have been a conscious decision by Optus to benefit its own business.

 
Optus contended that any ordinary or reasonable person would know that the percentages claimed could not possibly relate to geographic coverage. The Court found that it was seriously doubtful that such persons would turn their minds as to what percentage of the entire Australian land mass would be without any coverage. Critically, Optus’s argument failed because it was predicated on a “level of analysis and sophistication not readily attributable to this means of communication [television].” In this context, this case adopted the principles to be applied as set out in the majority judgment in the recent case of ACCC v TPG.

 
The Court found that Optus had engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law and also that Optus had made a misleading statement that the services offered by it on its network were of a particular standard, quality or grade or had performance characteristics, uses or benefits it did not have, in contravention of s 29(1)(b) and (g) of the ACL. Optus was ordered to remove the advertisements, and has since begun broadcasting a new advertisement which expressly refers to “Australia’s Population”. The new advertisement does not include a map of Australia.

 
On 31 March 2014, in a further judgment, Justice Elliott:

 

  • made declarations that Optus had engaged in misleading and deceptive conduct in contravention of the ACL; and 
  • ordered that corrective advertising be used to provide to consumers a summary of the misrepresentations and to advise them of their rights to cancel their Optus plan if it was selected because of those representations. The corrective advertising will be in the form of letters to Optus customers and will also appear in newspapers and on its websites, at point-of-sale in Optus stores and on its webpages.

 
This case is a timely reminder of the high level of care required when engaging in comparative advertising, particularly on television. Advertisers would be well advised to ensure that representations are not made in a way that leaves them open to interpretation, potentially in a way that renders them false, misleading or deceptive.

 

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For further information, please contact:

 

Amanda Ludlow, Partner, Ashurst 
amanda.ludlow@ashurst.com

 

Jane Burton, Ashurst
jane.burton@ashurst.com

 

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