18 February 2014

Coverage and consumer confusion

In Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 Elliott J of the Victorian Supreme Court has referred to Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186 in considering television and web advertising by Optus, the second largest telecommunication company in Australia.

Telstra had sought an interlocutory injunction to stop the advertising, which first appeared in late January this year. It argued that the ads were misleading: consumers would construe claims in the ads as indicating that Optus' geographical coverage was only a percentage behind that of Telstra. Optus on the other hand argued that consumers would construe the ads as referring to coverage of the population.

In encountering ads from both enterprises last weekend my thought was that boasts about geographic coverage were, for many people, going to be less important than the quality of service along the main road spines (e.g. the Adelaide - Melbourne - Sydney - Brisbane corridor) and in the main population centres. Most Australians aren't going to spend a lot of time in the remotest and most inhospitable parts of central Australia.

The Court notes that consumers "may include the astute and the gullible, the intelligent and the not so intelligent, the well educated and the poorly educated". It also notes the High Court's analysis in ACCC v TPG -
Though the attention of a viewer might be “arrested” by the contents of a television advertisement, such a viewer cannot be expected to pay close attention to the contents of the advertisement; and “certainly not the attention focussed on viewing and listening to the advertisements by the judges obliged to scrutinise them” in legal proceedings. 
An advertisement may convey a misleading representation where “the target audience might be disposed ... to attend closely to some words of the advertisement and ignore the balance”. 
This observation concerning words in an advertisement is equally applicable to images broadcast in a television advertisement. An example where this may occur is where an advertisement selects some words or images “for emphasis and relegate[s] the balance to relative obscurity”
“[C]onsumers might absorb only the general thrust or dominant message” of an advertisement not because “of selective attention or an unexpected want of sceptical vigilance”, but as “an unremarkable consequence” of the contents of the advertisement.
Elliott J comments that
The principal circumstances surrounding the broadcast of the Advertisement are not in issue. Broadly speaking, the Population Coverage of the respective mobile networks of Telstra and Optus is similar. Telstra reaches approximately 99.3 per cent of Australia’s population, whereas Optus reaches approximately 98.5 per cent. 
In contrast to Population Coverage, the Geographic Coverage of the respective mobile networks is markedly different. As at 6 February 2014, Telstra covered 2.356 million square kilometres of the Australian land mass. In contrast, the mobile network of Optus as at 6 February 2014 covered approximately 970,000 square kilometres (ie only approximately 41 per cent of Telstra’s). I was informed by the parties that 2.356 million square kilometres represented approximately 28 per cent of the Australian land mass. 
The sizable difference between the percentages pertaining to Population Coverage and the percentages related to Geographical Coverage is attributable to the well known fact that Australian society is highly urbanised. 
Telstra alleges that the difference in Geographic Coverage is material and substantial. Although this was not expressly addressed in Optus’ defence, there could be no issue that the Geographic Coverage of the 2 networks is materially and substantially different. . . . 
The issues in this case do not raise any questions about the strength of any signal from the respective mobile networks.
Ellliott J was persuaded by Telstra's arguments.